I’ve recently seen and heard references to companies offshoring the task of drafting contracts. For example, this article in today’s London Times says that Rio Tinto has hired a team of Indian lawyers “to work for it on tasks such as reviewing documents and drafting contracts.”
If that means having your offshore lawyers handle hundreds of equipment-lease deals by revising an approved set of templates, that makes sense. But I wouldn’t really call that contract drafting—contract tweaking, more like.
To my mind, contracting drafting entails coming up with contract language that reflects all or a large part of a transaction. And I’m not crazy about the idea of outsourcing that task, at least when it comes to a company’s template commercial contracts. They’re sufficiently important that I’d have thought quality, rather than price, should determine who drafts them.
In that regard, here’s what I said in my April 2007 article in the New York Law Journal:
I wouldn’t want to treat an offshore [knowledge-process-outsourcing] organization, whether a captive or a vendor, as an offshore law firm. For example, having an offshoring organization draft a template contract wouldn’t play to its strengths, as offshoring organizations would most likely be subject to the problems of quality and process that generally arise when law firms serve this function.
My complaint isn’t that Indian lawyers wouldn’t do as good a job as a law firm in the home jurisdiction, wherever that might be—it’s that they, like any law firm, likely would produce work that reflects the shortcomings of mainstream contract drafting.
If you want quality, go to whoever has demonstrated a commitment to clear and rigorous contract language, as opposed to recycling traditional verbiage and perpetuating contract-drafting urban legends. That might be someone at a law firm, someone at your company, or some lone-wolf consultant.
Drafting contracts is not a task that can be done entirely remotely, in my view. You need some occasional “face time” with the client, sometimes at short notice. Otherwise I would be tempted to run my (mainly UK) practice from the South of France.
I can understand some due diligence and other routine tasks being done remotely, but drafting significant contracts such as mining joint ventures or uranium supply agreements? Surely not? I can only assume that this is an eye-catching headline that doesn’t bear close scrutiny.
I say this as the husband of someone who was an in-house lawyer at Rio Tinto from 1991 to 1999.
The reason why outsourcing legal work of any kind won’t work is that there is too large of a cultural (and language) divide. Yes, they speak English, but they express differently and have a different experience, to say nothing of a different legal system with different rules and different outcomes. Keep this up and there will be some really humorous cases coming up in the courts.
Cliff Tuttle
Pittsburgh Legal Back Talk
Cliff: You might be throwing the baby out with the bathwater, as some activities are more amenable to offshoring than others. You say that offshoring “won’t work,” but Oracle and some other companies would probably say that it has been working for them for some years now. Ken
Mark Anderson, what’s your opinion on virtual meeting rooms? Wouldn’t that go some way to answering the problem of distance from the client?
Ken, frankly speaking I’m not clear about the point you are making here. You suggest in one paragraph that drafting ‘commercial template contracts’ is not drafting as such but ‘tweaking’ and then say otherwise. Also, I’m not clear on whether you believe that an external law firm can deliver a good drafting service as an in-house lawyer.
As long as the lawyers have good communication lines with the business people in the company then it shouldn’t matter whether you are off-shore or in-house. The main thing is, though, they they adhere to principles of good contract drafting.
Gil: If I’m churning out hundreds of deals by making, according to a script, modest adjustments to a template, that’s very different from drafting an entire contract.
And the odds are that whoever drafts your contracts will do a poor job of it, just because mainstream contract drafting is dysfunctional. That will be the case even if a law firm is doing the work, the only difference being that you’ll be paying a steep price. It’s not so much what hat your drafter wears as whether they’ve established credentials for clear, no-bullshit drafting.
Ken
Gil, In my experience, there is no substitute for being in the same room as someone, breathing the same air and getting all those non-verbal signals that cannot be seen on screen. I am not saying that every meeting needs this, but from time to time it is useful for establishing and maintaining the client relationship.
I agree with Ken’s comments about drafting minor revisions versus a complete contract. If Rio Tinto is offshoring employment contracts where details need to be completed in a template, that is understandable. But I just don’t see it working with a major or complex transaction, where the draftsman needs to be part of the client’s team and to have a close understanding with his or her commercial colleagues.