Some Thoughts on the ACC’s “Contract Advisor”

Last week saw the launch of the ACC’s “Contract Advisor.” Lawrence Hsieh (aka @ContractAdviser—no relation!) craftily suggested on Twitter that he was looking forward to hearing my views on Contract Advisor. Now here I am, taking the bait.

That’s because the only reaction I’ve seen thus far is Bob Ambrogi’s just-the-facts assessment (here) and some hyperventilating tweets. Someone should take a take a closer look at Contract Advisor, and I’m an obvious candidate. I’m not always keen to stick my neck out by reviewing what others have to offer, but as Eric Goldman noted in this comment to a 2010 post on AdamsDrafting, if I’m not willing to critique stuff that falls within my area of expertise, how can I expect others to do so?

But the operative phrase is “closer look,” not “close look.” The system is for use by ACC members; I’m not a member, so my views are based solely on what’s available on the Contract Advisor home page (including four video tutorials). I haven’t asked the ACC for a temporary password to allow me to kick the tires, as I’m not interested in offering anything more than a view from 30,000 feet. But I consider myself a friend of the ACC—I’ve spoken at two of the last three ACC annual meetings—so my aim is to provide constructive criticism.

Regarding what Contract Advisor consists of, here’s how Bob Ambrogi summarizes it:

Contract Advisor offers four primary features:

  • Model contracts. These standard contracts are described as a synthesis of the most common language and clauses drawn from a collection of sample contracts and from member-submitted forms and policies. For its initial launch, Contract Advisor includes 10 contracts and policies. New forms and policies will continue to be added, the site says.
  • Clause library. For each contract type, select from a wide range of thousands of clauses. It is organized by agreement and clause type. For each clause, it shows you both a model clause and a full selection of other clauses within the database.
  • Benchmark tool. Use this to compare a contract you drafted against the Contract Advisor database. It will show you matching clauses, divergent clauses and missing clauses.
  • Source documents. A user can access any of the source documents contained within the system.

Contract Advisor is fully searchable, so that a user can search all documents for specific language. Model contracts and clauses can be downloaded in Word or PDF formats.

Conceptually, the ACC’s implementation of Contract Advisor is a heartening development. Progress in contract drafting requires centralized, technology-aided initiatives that are sufficiently rigorous to encourage users to surrender their autonomy—autonomy that allows them to endlessly recycle deficient contract language.

Contract Advisor is centralized, and it’s technology-aided. To see how rigorous it is, let’s consider each of its four components.

MODEL CONTRACTS

Contract Advisor’s ten model contracts aren’t compelling.

All I have to go on is what’s on display in the related video tutorial—half a page of a “consulting services agreement.” (See a copy below.) But I’m comfortable extrapolating from that.

 

Language

Consider first the language used. It’s full of the shortcomings of traditional contract language. Such language is acceptable only if you don’t know any better, or if you think that it’s best to offer ACC members verbiage of the sort that they might well be used to, no matter how suboptimal. For purposes of Contract Advisor’s model contracts, “model” simply means something to be copied, as opposed to something exemplary.

That’s because Contract Advisor is powered by the automated-document-analysis software kiiac. The man behind kiiac is Kingsley Martin. (See this 2009 post on AdamsDrafting for my extensive Q&A with Kingsley.) As I noted in this June 2011 post and this follow-up July 2011 post, kiiac can tell you only what’s in a group of precedent contracts, not how clear or relevant it is. Kingsley’s view has been that that’s all you need.

Kingsley has described his approach in this blog post. For Kingsley, finding what to put in a contract was (at least when he wrote that blog post) amenable to a technology-only solution. But my 2011 blog posts demonstrate, beyond reasonable argument, that without firm editorial control, using automated document analysis to determine what to put in your contracts is a disaster waiting to happen.

In the Contract Advisor video tutorial about the model contracts, Kingsley refers to them as being “lawyer-refined.” So perhaps he now thinks that technology is no longer enough.

But going from the position that creating optimal contract language is amenable to a technology-only solution to a more nuanced approach can’t be accomplished by flicking a switch. And that’s borne out by the language on display in the video tutorial.

Furthermore, who are the one or more lawyers who ostensibly refined this model contract? If you want people to make the leap of faith that’s required to use a model contract, you need to be clear about the credentials of those who are responsible for it.

Substance

Language and substance aren’t two distinct features of a contract. Instead, language bleeds into substance, in that changing how you say something has a way of changing what you say. Suboptimal contract language is invariably accompanied by suboptimal substance. It follows that shortcomings in the language of Contract Advisor’s model contracts bode ill for their substance.

But the problem goes beyond that. The video tutorial on the model documents says that each model document is “based on the most common clauses and language used in that contract type in ACC’s database.” But as I discuss in my 2011 blog posts, the frequency with which a given concept appears in a contract is no guarantee that it makes sense in that context, or at all.

The snippet of contract language on display in the video tutorial obviously gives me little to work with, but it does contain a hint at what to expect in the rest of the document: Section 1 says “Effective __________, _____, Company shall retain Consultant.” But it’s awkward to impose on Company an obligation to retain Consultant at some stated date in the future. How would it comply with that obligation? By entering into an additional document? It would be clearer and more logical to say “Company hereby retains Consultant,” with the nature of the work to be performed stated in future statements of work issued under the contract.

When it comes to model contracts, you need both competence and an aura of competence. Contract Advisor gives me little reason to have confidence in how its model contracts handle any given issue.

Lack of Customization

Leaving aside any shortcomings of language and substance, Contract Advisor’s model contacts are one-size-fits-all—they offer no customization. That’s a fundamental shortcoming: in any contract, even ostensibly simple ones, a drafter could address many different issues in many different ways. Turning a Contract Advisor model contract into something suitable for a given transaction could require a lot of time and expertise.

Lack of Guidance

The utility of the model contracts is further undercut by the lack of any guidance regarding the implications of any given provision and the potential alternatives.

CLAUSE LIBRARY

If you want to use a Contract Advisor model document as a starting point, you could also use the associated clause library. It allows users to explore how the contracts in the associated “vast collection” of sample contracts handle a given issue. That could allow users to consider how to revise or supplement a given model contract.

But using the clause library would still require of any drafter a lot of time and expertise. The bigger and more heterogeneous any group of contracts, the greater the range of alternative language the drafter would be presented with. After a certain point, it becomes difficult to make sense of it all, particularly given the lack of any guidance. That’s why I found automated document analysis unhelpful when I was preparing Koncision’s confidentiality-agreement template. Any given user of Contract Advisor might come to the same conclusion.

BENCHMARK TOOL

Contract Advisor’s benchmark tool allows users to compare any given contract to one of Contract Advisor’s model contracts. You’re shown how a provision in your contract addressing a given issue compares to a provision in the model contract addressing the same issue.  You’re also shown whether the model contract contains provisions missing from your contract, and vice-versa. (For my discussion of GreenLine Legal, a service that performs a similar function, see this blog post.)

The benchmark tool can serve as a way to quickly check a draft. But because users have no way of knowing whether any given model contract is suited to the circumstances of their transaction, and because they can’t rely on the language or substance of the model contract, the benchmark tool is of uncertain utility.

SOURCE DOCUMENTS

Contract Advisor allows you to word-search the collection of sample contracts and retrieve any that you’re interested in. For those who aren’t willing to pay a service for enhanced word-searching of the SEC’s EDGAR system, being able to search Contract Advisor’s collection might be helpful. But it’s hard to know how helpful without knowing more about what’s in the collection.

SUMMARY

Is Contract Advisor “disruptive,” as has been suggested? I don’t think so. Based on the little I’ve seen, it appears moderately useful, or not, depending on your needs. Here are my more specific conclusions:

  • Model Documents: Apparently mediocre language and substance; one-size-fits-all; and no guidance. The best you can say is that they’re likely no worse than lots of contracts out there.
  • Clause Library: Potentially a useful way to assess how drafters have addressed a given issue. But you should be prepared to spend time winnowing through the alternatives and figuring out the implications—time that you might decide you’re not willing to spend.
  • Benchmark Tool: A quick way to check a given draft against one of the model contracts, whatever that’s worth.
  • Source Documents: A potentially useful free alternative to word-searching EDGAR.

In terms of the confidence that it inspires, I’d give Contract Advisor a failing grade—I’m unwilling to take a leap of faith based on contract language selected by technology and “refined” by mystery lawyers.

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