In Business, Why Should Contracts Be the Laggard?

Today’s New York Times contains a column by Thomas Friedman (here) about innovation at a General Electric research lab.

Here’s what Friedman says about such research centers generally:

These centers are places where scientists and engineers from dozens of nationalities are using collaboration and crowd-sourcing to push out the boundaries of medical, manufacturing and material sciences, where possibilities seem infinite, where optimal is the norm and where every day begins by people asking: “What world are we living in, and how do we thrive in that world?”

And here’s what he says regarding one instance of innovation, use of computer-aided design and three-dimensional printing in designing and building parts:

“The feedback loop is so short now,” explained Iorio, that “in a couple days you can have a concept, the design of the part, you get it made, you get it back and test whether it is valid” and “within a week you have it produced. … It is getting us both better performance and speed.”

That’s certainly exciting.

But you know what’s at the other end of the spectrum from that excitement? The contracts process at the overwhelming majority of companies. (I don’t know what the process is like at GE.) You have bloated and turgid contract language, instead of language that addresses clearly and economically exactly what the company’s interests are. And you have a sluggish copy-and-paste contract process, instead of one that uses document-assembly and other information technology to spit out and monitor drafts contract with maximum efficiency.

It would be nice to have a contracts process that keeps up with the most innovative aspects of a company’s operations, instead of always being a laggard.

About the author

Ken Adams is the leading authority on how to say clearly whatever you want to say in a contract. He’s author of A Manual of Style for Contract Drafting, and he offers online and in-person training around the world. He’s also chief content officer of LegalSifter, Inc., a company that combines artificial intelligence and expertise to assist with review of contracts.