RIP Templates. Meet the data-driven contract drafting experience

Originally published on Larcier Managing Lawyer 

They say data is gold. And they aren’t wrong. But we would like to add something to the saying though. Data is gold, and templates are old. Because although the data are available, we still see far too many organisations that build rigid templates for all types of contracts instead of actually looking for systems that make their database actionable. Although a good template approach is better than no approach at all, building those templates requires a lot of energy, time and effort, and in many cases only to end up in the deepest abysses of the law firm’s so-called ‘template library’ – a collection of templates based on the assessment and preferences of one or a few colleagues and that is quickly out of date. A very ineffective system is set up in the name of efficiency. It’s time for the data-driven contract drafting experience to take the stage.

 

Have you ever spent hours building a template to help you and your colleagues save time in the future, only to find out very soon after that A) it isn’t being used or B) it is already outdated? It’s safe to say you’re not alone. In our quest to help lawyers draft faster, we’ve seen all sorts of templates for all sorts of contracts and documents. Compared to almost any other profession, where a limited number of documents are being used repeatedly, lawyers need to work out a tailored contract for every specific case they are working on (or, if not, a very large set or contracts that they can adapt).

The amount of templates available soon becomes so confusing that it’s almost impossible to find the right one. And even if you are able to find your way to the template you were looking for, it might not be the holy grail you were expecting. While the builder of the template often attempts for it to be a document with every possibility built into it, in our experience, most templates still need to be adapted to a specific situation, and thus require customization (or in other words, stepping away from the template)- one size just doesn’t fit all.

And, on top of that, the templates are often installed top-down, but when you are negotiating a contract, it’s hard to stick to it. So in general, associates don’t perceive the templates as adding a lot of value to the negotiation table, which results in not updating them. And in turn, as they are not being reviewed from time to time, the templates are soon outdated. And this, consecutively, results once more in the templates being perceived as adding limited value by those who would actually benefit most from them… Enter the negative, downwards spiral of contract templates.

While working on a template is, in general, seen as non-billable time, updating a previously written contract to a new context is not. So instead of starting from a template, employees are far more likely to reach for their last contracts to “copy and paste” or “find and replace” whatever they think needs updating. Although this might feel familiar and easy, it’s making the margin of error very high and version management hard to maintain.

So what is the alternative? The idea behind the templates – working with preconfigured clauses or definitions that allow lawyers to tap into the collective memory in order to not have to invent the wheel every single time – is, in itself, not wrong and has been used for contract automation solutions, that use “dynamic” templates and a set of questions to generate a contract. Yet, these tools fail to deliver when trying to enable legal professionals who draft more complex contracts. Although they might be a step in the right direction, the built-in logic is once again built and maintained by a person trying to ensure its pre-set contract modules fit all potential scenarios. Which works perfectly for standard contracts like employment agreements, NDAs or sales contracts, but quickly falls short for more complex scenarios. Because what happens when, for example, the counterparty of the client is not happy with the automated contract? Or when a senior partner doesn’t agree or even believes the logic is no longer relevant?.... Yes, back to the downward spiral where maintenance is key to remain relevant.

Enter the data-driven lawyer. While lawyers are extremely good at assessing the context of a contract and understanding the significance of a certain clause or definition, computers are really useful to process large databases and extract and provide the drafter with processed pieces of information. Instead of having to stop drafting, open a previously written document or a template and look for a specific clause, suggestions are being offered by the computer within the Word environment. These suggestions are based on all contracts and clauses available in the company’s database and can be ranked by frequency or preference. Making it as easy as one, two, three for junior colleagues to make educated decisions, as these suggestions have been vetted and they have the data to understand why. Leaving them with the certainty that they aren’t using some outdated template or an old document that has been altered one too many times.

Joanna Pomian, Digital Director at LPA explains: “Many knowledge management efforts in law firms consist of creating static tools: template databases, reference databases, client case databases, etc. However, all these approaches lead to stocks of data that will probably never be updated and will quickly become obsolete and useless. And thus, the time needed to create them will be time wasted. The only valid approach to knowledge management, in my opinion, is to organize the way it flows. Because, just like money, knowledge only becomes valuable when it circulates.”

“Let’s take the writing of a document for example”, Joanna continues, “a current situation in many lawyer’s offices. It is obvious that to speed up the writing of a document, the reuse of relevant parts of previous documents allows to save time. If these documents are stored in a static repository, searching, downloading, reading and checking the quality takes a lot of time and in the end, nobody does it. What software such as Henchman proposes is the dynamic use of knowledge. I write, I need an excerpt, a clause or a paragraph, I search for them directly from my text editing software (Microsoft Word), I sort them, and I choose the drafting that best suits my needs. Moreover, I can immediately annotate or comment on the proposals chosen by the softwarethat are, for example, obsolete or that should be used with caution. This only takes me a few minutes (an obvious gain compared to the hours spent creating templates) and enriches the knowledge right away, thus creating a really useful living knowledge base.”