The history of law-firm template-contract initiatives is not a happy one. Various factors conspire against a law firm successfully implementing and maintaining rigorous templates:
- Law firms are generally asked to draft a broad range of documents. Any one law firm may not be asked to handle a given kind of transaction often enough to warrant devoting resources to creating and maintaining template contracts.
- Law firms generally can’t accurately predict what kinds of contracts they’ll be asked to draft. That makes it difficult to determine what template contracts to devote resources to.
- In an eat-what-you-kill world, partners and associates are loath to spend their time on the nonbillable work required to create and maintain template contracts.
- In the Balkanized world of law-firm management, a set of template contracts might fall into disuse if a partner who championed the project moves on.
- Unless a law firm adopts a rigorous style guide, the drafting in the templates it produces will simply reflect the idiosyncratic, inconsistent, and unreliable language of mainstream contract drafting.
- Partners may well be reluctant to engage in the sacrifice of autonomy that goes along with using templates prepared by others.
Given these challenges, I wasn’t surprised to see what Above and Beyond KM had to say on the subject today:
[L]awyers (being people who write professionally) have historically placed a high premium on model documents. (For those of you outside the legal profession, these are contracts that do not contain client-specific information, but generally do collect the firm’s knowledge of that type of contract by providing annotations containing drafting advice and negotiation guidance.) Most lawyers would love to have a model document for every kind of contract they typically prepare for their clients. To be honest, some lawyers dream of a fill-in-the-blanks model that they can just pull off the shelf and use. In reality, however, model documents can be extremely time-consuming and expensive to produce. And, they can be a bear to maintain. In short, they are an expensive undertaking. Nonetheless, many law firm knowledge managers have assumed that a top priority should be creating a comprehensive set of model documents. But does your firm have the human commitment and financial resources necessary to provide properly maintained model documents? And, even if it does, is this a good use of its resources?
Document assembly makes the whole template process much more efficient. But I expect that relatively few law firms, as compared to companies, will devote significant resources to contract automation. (One such firm is Wilson Sonsini; see this April 2009 blog post.)
For many law firms, it would make sense to outsource to a vendor the task of creating and maintaining document-assembly templates. Given that there’s nothing proprietary about deal terms, such a vendor would be able to achieve economies of scale that are beyond the reach of any law firm.
Ken,
As an FYI.
Note that in the world of financial transactions, trade associations — e.g., ISDA [International Swap and Derivatives Association; develops OTC derivatives agreements], SIFMA [Securities Industry and Financial Markets Association; develops agreements for repurchase, securities lending, and cash forward-settle transactions among others], NAESB [North American Energy Standards Board; develops agreements relating to energy trading] — devote resources to developing form agreements for use by market participants (e.g., investment banks, broker-dealers, and energy companies) who regularly trade in the relevant covered products.
All such agreements generally have a schedule of some sort wherein amendments and elections are made to the boilerplate by the contracting parties.
The agreements developed and published by such trade associations are widely used. Large law firms turn a tidy profit in advising on such agreements as well as negotiating those agreements on behalf of their clients.
Regards.
With hourly billing, the short-term economic incentives all favor the custom drafting jobs — including defensive lawyering to protect the lawyer against later malpractice claims.
In that vein, I suspect that lawyers unconsciously assume that a pre-packaged form (from a vendor of uncertain substantive expertise) can’t do as good a job of protecting them from later criticism, as would a document that they have custom-tailored to meet the client’s specific needs.
The psychological analysis is different when an industry-standard form is available: Lawyers feel less vulnerable to criticism when they’re using a form that the client’s industry group has blessed.
Whoa, I never realized there could be so many barriers to having a simple law firm template. Good points made.
-Jack