I subsequently figured out that law-firm KM people were too busy trying to avoid utter irrelevance. And since then KM has lost whatever buzz it had. The spotlight has moved on—currently it’s trained on “social media.”

If you ever thought the notion of KM made sense, I have some depressing reading for you: this post by Greg Lambert on 3 Geeks and a Law Blog. In it, Greg shares some thoughts prompted by a recent KM conference, leading him to wonder “if KM just needs to be scrapped at law firms altogether.”

What caught my attention was one of the comments—presumably offered by a panel member—that Greg says he heard at the conference:

When asked about “who” creates the documentation behind a firm’s model documents resource, the answer was that this would be a good opportunity for those in KM who were former practicing attorneys. (Translated: “You’ll need to have someone in KM do this, because no one else in the firm will.”)

I agree with Greg—if your attorneys play no part in your template initiative, that doesn’t bode well. But law firms are ill-suited to implementing and maintaining a rigorous template initiative, so benign neglect may be the best that you can expect. (For more on that, see this October 2009 blog post.)

But there are exceptions. Wilson Sonsini comes to mind; see this April 2009 blog post.

Aside from issues that relate specifically to law-firm template initiatives, a broader existential problem for KM is that knowledge, aka information, is increasingly a commodity, and the real action is in applying information to the facts. That’s why law firms are increasingly outsourcing the KM function to vendors such as the Practical Law Company. And that’s where Koncision comes in.

In any event, I no longer seek out KM people at U.S. law firms. (As with so many other things, Canada is a different matter.)

This isn’t an issue I have any experience with, as I no longer do deals, but the idea of locking Word documents strikes me as beyond pointless: It can be easily circumvented. It’s vaguely insulting. Document-comparison software provides greater protection and is more discreet. (For more about document comparison, see this July 2010 blog post.) And the idea of your average law firm or law department locking their documents to protect their copyright is, on several levels, outlandish.

Here’s Jim’s initial salvo, a post to a discussion forum of the Association of Corporate Counsel:

I find it annoying and not very collaborative when opposing counsel tries to lock a Word document with a password in order to limit or track changes. (Same with sending PDF documents to discourage changes.)  As a public service I therefore present:

How To Unlock and Edit a Password Protected Word Document

This works with Word documents that have been password protected to track or prevent edits. It does not unlock Word documents that have a password that prevents opening the file.

• Open with Microsoft Office Word the password protected DOC or DOCX document
• In Word’s File menu, select “Save As” and save the document as an HTM formatted file, noting the saved file location
• Close the document in Word
• Find the saved HTM document file and right click the icon
• Select “Open With” and choose Wordpad
• In Wordpad, search for the text string <w:DocumentProtection
• Highlight and delete the entire line that begins with <w:DocumentProtection and the line directly underneath it that begins with <w:UnprotectPassword.  Make no other changes.
• In Wordpad’s File menu, “Save” the HTM file and exit Wordpad
• RIGHT click the HTM file icon and again select “Open With” but this time choose Microsoft Office Word
• The document is now unprotected, you can edit at will (with or without tracked changes)
• In Word’s File menu, select “Save As” and save the document with the .DOC or .DOCX format

Another friend of the blog, David Munn, general counsel of Pramata Corporation, chimed in:

There’s an even easier way to crack a “protected” Word document.

• Save the document to your hard drive or other location
• Open a new blank document in Word
• In Word 2007, in the Insert menu, select Object and the Select From File. (In Word 2003 I believe it’s simply Insert File from the Insert menu)
• Navigate to the original file and select it. The text of the original document will be inserted into your new document. The document is now unprotected, you can edit at will (with or without tracked changes).

The other lesson from this is that you should never rely on the “protection” in Office if you really need to protect a document.

Jim subsequently received an email from another general counsel:

Rather than make this a public debate, where I run the risk of apparently if not intentionally chastising you in front of our peers, who dismayingly seem, in large part, to agree with you, I find the efforts to subvert the locked document to be less than professional.

If the sender wants to ensure that no one edits the text, those wishes should be respected, if not as a basic matter of copyright law, than as a matter of professional courtesy.  How else can one protect oneself from our unscrupulous brethren who may make changes in a document that runs on for a hundred pages without identifying those edits, whether on purpose or unintentionally?

This kind of “trick” is exactly why laypeople hold us in such disrepute.

Jim responded directly to this email, but it also prompted him to post this follow-up comment on the ACC forum:

My post under this title prompted some interesting discussion about the state of etiquette in modern contract drafting. It seems we lack clear guidelines on aspects of appropriate behavior when sharing electronic copies of draft contracts.

There is a consensus that it is unprofessional to send a reply draft that is marked to show less than all of the changes from the prior draft – even when that inaccuracy is inadvertent (e.g., due to internal versioning problems). There is a perception that it is appropriate behavior for the commenter to provide an accurate, electronic redline draft. There is some debate about the appropriateness of sending an electronic copy that is password-protected so that opposing counsel is “forced” to show all changes.

Earlier posts have already demonstrated that password protecting Word documents is easily defeated and ineffective. Some commenters (publicly or privately) have criticized removing password protection as poor behavior. Other commenters opined that it is poor behavior to apply password protection in the first place.  This post examines those opposing viewpoints.

Attorneys in most, if not all, U.S. jurisdictions have an ethical obligation to ensure that their client’s confidential information is not disclosed to opposing counsel within metadata contained in Word documents. That hidden metadata can contain (depending on software versions and settings) internal versions of the same file, embedded comments, details of proposed changes, identities of persons who reviewed the document and more types of confidential information.

Microsoft provides online guidance about how to redact hidden metadata in Office documents, specific to each version of Office. See this linked white paper from Payne Consulting (which offers consulting services and metadata redaction software) for more information about what kind of information can be found in hidden metadata, and lawyers’ ethical obligations to redact metadata. http://www.payneconsulting.com/pub_books/white_papers/pdf/PayneJuly2006ArticleonMetadata.pdf

To my knowledge, metadata cannot be redacted from a password-protected Word document. That means reviewing counsel who use a password-protected Word document to send their client’s comments to opposing counsel must either (i) disclose whatever metadata is captured in the locked document and risk legal malpractice, or (ii) enter into the locked document only the final changes that the client wants to transmit to opposing counsel.

Many companies would, in their normal process of commenting on a draft agreement, route the electronic copy through various departments, with each inserting proposed changes, questions and embedded comments. The metadata in the resulting agreement can then be expunged, and a redline created by comparing the original to the “cleansed” final version. If the company cannot redact metadata from a locked document, then counsel would need to start from the original version of the locked draft and input into that version only the final changes that the client wants to transmit to opposing counsel. That seems inefficient.

The principal explanation I’ve heard for password protecting Word documents is that the originating counsel lacks confidence that opposing counsel will accurately track changes. There are ways to solve that perceived problem without locking the Word document with a password. Ronald Reagan often quoted the Russian proverb “trust but verify” and that is a good way to treat opposing counsel in contract drafting.

It is easy to use Word or commercially-available document comparison software (e.g., Workshare’s Worksite f/k/a DeltaView) to compare the reply draft from opposing counsel to your own last transmitted draft. Doing your own comparison does not create for opposing counsel the dilemma of either turning over their client’s confidential metadata or slowing down the drafting process. There are also opinions indicating that counsel who rely on opposing counsel’s redlined drafts may be committing legal malpractice and that they should instead do their own document comparison and complete read-through.

Another explanation I’ve heard for password protecting Word documents is that the originating counsel perceives they own the drafting process or the document, some even asserting a copyright.

Attempting to control the drafting process by controlling the electronic drafts was in vogue when I started in big firm practice in the early 1980s but has largely disappeared as electronic documents are now easily shared via email or portals. Contract drafts are now largely a professional collaboration. Many contracts even contain a provision stating that the contract is the product of joint drafting and therefore should not be interpreted against either party as the principal drafter.

Although it is theoretically possible for copyright to exist in a contract, the concept does not apply to the vast majority of contracts because they are not sufficiently creative or original. See Ken Adams’s discussion of contract copyright in this article. http://www.adamsdrafting.com/downloads/Copyright-NYLJ-8.23.06.pdf

Some have noted that reviewing counsel who receive a locked document can simply call the authoring counsel and request an unlocked version.  If the authoring counsel is willing to provide an unlocked version on request, then why make reviewing counsel ask for it? Some counsel or contract administrators send fax versions of documents, presumably to discourage comments. One can call and ask them for an electronic copy, too. As we are trying to define drafting etiquette, however, the question is, Why not send an unlocked electronic copy in the first place?

That makes sense, but it wasn’t what caught my eye. Instead, I noted this table, which is from Stewart J. Schwab & Randall S. Thomas, An Empirical Analysis of CEO Contracts: What Do Top Executives Bargain For? The table is entitled “Actions Defined as Just Cause for CEO Termination,” and it shows that in the contracts examined, the most commonplace basis for just-cause termination was “moral turpitude”—it appeared in 72% of the contracts.

But the phrase moral turpitude is unhelpfully vague, and it has given rise to a least one head-scratching court opinion. See this December 2007 blog post and MSCD 12.176–194 (the more recent version of my analysis). I’d never use moral turpitude in a contract; I recommend that instead you use clearer alternatives.

I point this out just to suggest that if you hold a popularity contest to determine what goes in your contracts—if, in other words, you’re looking for conformity—you’re likely going to include in your contracts a lot of language that may be prevalent in mainstream drafting but is nevertheless dysfunctional.

The prevalence of a given provision could be an indication of how much resistance you’re likely to meet in seeking to include it or exclude it from a given contract. But use it at your peril as an indication of how suitable the provision is.

So, is contract drafting deadly? For junior lawyers, it’s unlikely to be a walk in the park. Exactly how frustrated you get presumably depends on your temperament and ambitions. If you’re a real-estate billionaire-in-waiting, “deadly” sounds about right.

It could hardly be otherwise: You’re likely given little or no training in contract drafting, and you’re asked to base your drafts on precedent contracts containing impenetrable language that would try anyone’s patience. So, on a wing and a prayer, you engage in grand cut-and-paste jobs. I don’t know how anyone could find that gratifying.

But with time your drafting might well become a source of pride. Yesterday I spoke with someone who compared drafting to sculpting—turning a rough block of stone into a work of art. That might represent progress, except for the fact that the language might well still be something of a mess—you’ve just gotten used to it.

Furthermore, what’s deadly about the traditional process of drafting contracts isn’t just the suboptimal language. You shouldn’t be crafting works of art, you should be cranking out Model T Fords on a production line. The action in dealmaking is devising strategy and assisting with negotiations. Papering the deal is scrivener’s work; it should be commoditized. Sure, figuring out how to articulate some complex deal point can be a gratifying challenge, but that sort of drafting represents a small fraction of the drafting required for a given deal.

Frank McCourt’s lawyers have said Silverstein simply made a drafting error and corrected it. In his testimony, Frank said Silverstein did not materially change the agreement by substituting an exhibit that read “inclusive” for one that read “exclusive” after the parties had signed the document.

Unsurprisingly, this change has become an issue in the McCourt’s dispute, and it could create problems for Silverstein. The moral of this story? Don’t make any changes to a signed contract without getting everyone’s consent.

Incidentally, when drafting I avoid inclusive and exclusive, for purposes of stating dates or otherwise, so I expect that the provision in question was not a thing of beauty.

For a good example of that, I point you to this post by Steven M. Davidoff, the New York Times’s “Deal Professor,” on “The Battle for Stuyvesant Town.” Steven describes how the fate of a giant housing complex in lower Manhattan hinges on one provision in a contract. On one side of this dispute are two investment funds; on the other side are the senior lenders to the project.

I wouldn’t dream of attempting to boil down Steven’s account. Instead, I’ll just note that what caught my eye was the following:

So ultimately, as odd as it sounds the funds here may have the winning argument. But I think it is close. I say close, because this is most likely a fault in these documents themselves. In future intercreditor agreements, no doubt senior lenders will want to include provisions to prevent what is occurring here. In fact other intercreditor agreements are much more specific and do require that the senior loans be paid in full in all circumstances when the mezzanine lenders attempt to seize the equity collateral.

In other words, perhaps lawyers for the senior lenders might have done a better job policing the “what ifs.”

[Updated September 10, 2010: For D.C. Toedt's blog post explaining his approach to figuring out the "what ifs," click here.]

You also have to consider factors particular to the different players. Law firms—the supply-side of the market for legal services—have a reputation for being resistant to change. When it comes to contract drafting, I’ve found that to be as accurate as any generalization can be. For example, an eat-what-you-kill regime acts as a disincentive to investing time and resources in the sort of centralized initiative necessary for a rational drafting process.

By contrast, change should be within the reach of company law departments—the demand side of the equation. Because they’re paying the bills, they should be in a position to set the rules.

Change should also be easier to implement at law departments when it comes to the drafting done in-house. Whereas law firms are faced with creating a broad and unpredictable range of contracts, most contracts generated by companies are based on templates. That kind of drafting is particularly suited to commoditization.

Yet I’ve seen little interest on the part of law departments in instituting the sort of systemic change required to put your contract process on an efficient footing—adopting a style guide for contract drafting, training your personnel, redrafting your templates, and, depending on your contract volume, implementing a document-assembly system.

Plenty of others have noted this resistance to change. Today Adam Smith, Esq. posted this item on the subject. In it, he quotes Alex Novarese as saying, in this article on legalweek.com, that “clients—the demand side of the equation—are not only generally failing to enforce change, they are, if anything, more conservative than the law firms, which is saying something.”

Regarding factors contributing to law department resistance to change, I leave you to read the Adam Smith, Esq. piece and the articles he cites. Instead, let’s consider the following passage from Alex’s article:

Most of the innovations seen in recent years have been about firms trying to get an edge on rivals and have often been largely driven by the internal economics of law firms. Outsourcing, offshoring and attempts to unbundle legal service provision—experiments in these areas are being pushed more by managing partners than pulled by clients.

It’s telling that the innovations that Alex cites all involve laws firms ceding work to others. Acknowledging that others are better positioned to do some of your work more efficiently—as innovation goes, that has to rate pretty darn low.

So law firms don’t innovate, except to the extent that they farm work out to others. And law departments are no champions of change either.

That’s why I feel safe in saying that real change doesn’t come from law firms or from law departments, but instead from nimble vendors developing and employing disruptive technologies. I plan on doing what’s necessary to include Koncision Contract Automation in their ranks. Thanks to document-assembly technology, economies of scale, and the sort of quality control that a law firm or law department could only dream about, I expect that we’ll be able to cut through the inertia that has precludent meaningful organization-level change in contract drafting.

That raises a general question: Do you ever consult litigators when drafting? Do you think it adds value to do so?

It would seem sensible to consult litigators in this manner. But as there seems to be little consensus among litigators when it comes to dispute-resolution strategies, you might get all sorts of advice of uncertain reliability.

In my cloistered way, I pay real attention only when the discussion touches on contract drafting. And here’s what Peter had to say on that score:

In legal practice, however, it is only the quality of the words that matter. Whether contract language originated with the lawyer who drafted the contract or a paragraph in a brief explaining a line of authority relevant to the brief’s argument was cut-and-pasted from a brief the lawyer who submitted the brief found online doesn’t matter. What matters is the effect of the words themselves. And, in fact, lawyers almost always begin drafting contracts by cannibalizing other contracts and forms. Yet they never cite to or otherwise acknowledge those sources. There is no reason for them to do so. And, as the passage from Hyde above makes clear, judges cut-and-paste from lawyers’ briefs. In fact, the entire arena of legal writing in practice is rife with unacknowledged borrowing.

And of course it’s no sin. That’s the point.

I added the following comment to Peter’s post:

To discuss contract drafting in the same context as briefs and opinions is to compare apples and oranges. In mainstream drafting, copying-and-pasting from other contracts is certainly no sin. But that’s not because unauthorized copying is OK. Instead, it’s because everyone is copying from a common pool of contract verbiage that they tweak to suit their own purposes. It can’t be attributed to a single source, so there’s no one to provide consent for copying. And no one is in a position to claim that they’ve been harmed by the copying.

But if you invest resources in preparing contract language that improves on the dysfunction of mainstream drafting, that work would be entitled to copyright protection. And you’d likely be none too pleased if someone took the liberty of copying it wholesale.

I discuss these issues in my 2006 New York Law Journal article “Copyright and the Contract Drafter.” A PDF copy is available at http://www.adamsdrafting.com/downloads/Copyright-NYLJ-8.23.06.pdf.

Pardon me if I missed a blog discussion on e-signature (have you had one?), but recently a bunch of companies have requested that we sign our contracts with them using e-signature through a company called EchoSign.

Nice idea in principle, but I have a three issues.

First, I think that it’s poor etiquette for someone to e-sign a contract and process it through Echosign without the other party’s consent. For example, this morning I received an email request that I sign an unspecified document, and when I followed the link to my surprise I found, residing on EchoSign’s server, a contract that I had drafted and regarded as confidential. I was not pleased.

Second, how secure and dependable are services such as EchoSign? Should they be reserved for low-value transactions? Should any contract that contains confidential information be signed with actual signatures only? As an attorney for a publicly traded company in the pharmaceuticals industry, I expect that I’d have to jump through a series of hoops if I wanted to implement a signature-automation service (written statement of purpose, pre-qualification audit, annual review).

And third, if we elect to remain in the Stone Age, how about stating explicitly in a contract that it will be enforceable only if each party signs using a manuscript signature? (I’m on the point of including such a provision in my contracts, as I don’t want to see another of my documents on EchoSign’s servers.)

I’d be interested to know your thoughts.

I have in fact written about EchoSign, in this May 2007 blog post. I mentioned other vendors in this April 2008 post and this May 2010 post. But given the nature of my work, I don’t have occasion to use signature automation, so I’ll let others take a first crack at responding to Fitz.