Technology and Drafting Contracts
There’s a piece in the current Lawyers Weekly, “Commodification of contract drafting,” about some of the work that U.S. lawyer Ken Adams does. (The whole piece is on Adams’ site, page 1 and page 2, or here in a single page.) Much of the article deals with the obvious, such as the need for precision in expression and the dangers of using old-fashioned boilerplate. But three things caught my eye as being interesting.
First, Adams suggests that firms need rules when it comes to drafting contracts. The thought is that a firm style should be imposed where, presumably, certain expressions are forbidden and others are mandated, elements within a contract are standardized, etc. Do any Canadian firms currently impose order on any aspect of the drafting of contracts, whether within departments or across the firm as a whole?
Second, he suggests that the basic work of fashioning a contract can be done, or at least facilitated, by technology. In a version of an expert system, a user could input certain information and have the “document assembly system” generate a contract, at least in its basic form. It’s clear to me that some firms build basic contracts by using a word-processor’s merge function to marry this and that clause, often resulting in a hotchpotch betrayed by odd stylistic discrepancies. Does any Canadian firm use a more sophisticated contract assembly technology?
Third, given his view that a firm’s contract drafting can be greatly improved by the adoption of modern language, explicit adversion to various risks, and standardized terms and formats where possible, etc., it’s perhaps no surprise that he says “firms should be able to outsource to a vendor the task of compiling language to articulate the terms of a given deal.” Does a contract drafting firm sound possible to you?
Hi Simon:
I like Ken Adams’ work.
Most major law firms will have a firm standard or template that standardizes not only logo (where appropriate – clearly not appropriate for many agreements), font, headers/footers, TOC/Outline protocols and the like.
There are a number of consultants who customize Word macros for law firms that can do some automatic insertion of clauses and the like. I experimented with HotDocs but, despite being fairly tech-savvy, found it too complicated and was too busy at the time to pursue it further (I think newer versions have easier-to-use features). There are other products out there, some of them quite sophisticated (although not quite on point, there is the Wilson Sonsini automated term sheet generator)as an example of some applications of these concepts.
Re contracting out contracts: this would depend on the firm’s practice. Many firms would take the position, quite reasonably, that the real value to the client is the lawyer’s skill and experience in negotiating with the other side, something which cannot as easily be contracted out to a drafting firm. And if the lawyer is already doing the negotiating, it makes sense to do the drafting. Even though this sounds like “bespoke lawyering” that Susskind sees as soon-to-be-out-of-date, it would only be the most standard, high-volume types of deal document that could be safely contracted out to a drafting firm.
Boilerplate is generally easy and most firms have that in a macro (although you can never take boilerplate for granted). The differeniating factor is the operative clauses and coming up with wording that best protects your client’s position.
Simon: Just to be clear, what I have in mind being outsourced isn’t the task of creating draft contracts, but rather compiling document-assembly templates and the related questionnaires. Users would complete a questionnaire for a given kind of contract, selecting from alternative deal terms, plugging in factual information, and as necessary consulting annotations. The system would then pull together, and adjust appropriately, the relevant provisions from language loaded on the system.
This system would capitalize on the fact that contract language is a commodity. Lawyers add value by devising strategy and assisting in negotiations. Putting the deal on paper should be a ministerial task.
Ken
“Novel Contracts call for a non-Boilerplate Approach”
The Boilerplate approach towards drafting of legal documents is permissible only for standard contracts like conveyancing, power of attorney and the like.
However, it will not replace the more complicated or novel contracts that call for a more comprehensive and innovative drafting requirements on all crucial contractual terms and conditions.
The best system is still hard work and real experience.
Nothing can beat or replace that.
After all, when lawyers meet up, they would want to know what big clients you have in your portfolio-not what new software/system you have installed at your law corporation.
………………
Jeong Chun phuoc
Lecturer-in-Law
Jeongphu@yahoo.com
Standardised contract wording certainly provides the greatest benefit to the contracting parties:
– lower transaction costs (from reduced lawyer time); and
– less uncertainty (often in the from of detailed supporting materials). However, to be effective, standardisation must be industry-driven (as has occured with ISDAs and LMA documents in the financial services industry). Document assembly systems enhance the process by accelerating the creation of execution-ready contracts.
In the absence of standardisation, document assembly is still valuable. Here, however, the objective is to quickly and cost-effectively produce a high-quality first draft. From that point, the lawyers negotiate the document and produce subsequent drafts using MS Word.
In either situation (producing execution-ready documents, or quality first drafts) automation is far more efficient than having highly qualified lawyers wasting time reinventing the wheel by cobbling together mismatched content, cutting and pasting from form documents and previous agreements.
Andrew Davis
Exari