For most of us, using document-assembly to draft contracts remains an apparently distant prospect. But for some, it’s a fact of life.
But a particularly interesting example of document assembly’s being used to great effect is LaserPro, a document-assembly system for generating loan documentation. It’s a service of Harland Financial Solutions, an indirect subsidiary of M & F Worldwide Corp.
I first heard of LaserPro when someone at a CLE session I attended mentioned that it was a secret weapon used by many banks. I decided to find out more, and Mitch Lucas, managing senior compliance counsel at Harland Financial Solutions, was kind enough to spend some time talking with me.
Launched in the 1980s, LaserPro now has over 3,000 customers. In particular, more than 2,800 of the approximately 7,500 banks in the U.S. use LaserPro. It generates about $100 million in revenues per year.
LaserPro is a client-server application used by loan officers to generate consumer loans, secondary-market (FannieMae, FreddieMac) real-estate loans, and lower- to mid-market commercial loans (less than $15 million to $25 million). (LaserPro can be used for bigger commercial deals, but more customization is required.)
At the heart of LaserPro is a proprietary document-assembly system that pulls together, based on loan-officer responses to prompts, language from more than 13,000 paragraphs crafted over the years by LaserPro personnel. The system allows for a considerable degree of customization. For example, Mitch says that LaserPro’s payment-provision language could be put together some 4 million different ways.
An important part of LaserPro is its 50-state coverage. In addition to a staff of six lawyers and four compliance professionals, LaserPro has lawyers on retainer in every jurisdiction, with the aim of incorporating into LaserPro’s language any change in statutory law and case law. Mitch said that they pride themselves on having access to local experts who know not only what the black-letter law is, but also any quirks in how it’s applied in a given county. One indication of their confidence in this area is the “limited $1 million Compliance Warranty” they offer.
I asked Mitch what implications LaserPro has for law firms. He suggested that if a given bank adopts LaserPro, then a law firm that might previously have been retained to draft loan documents for a given commercial loan would likely instead just be asked to handle negotiating the terms. That, of course, is the goal of any document-assembly system—to shift resources from what should be drudgery to higher-value tasks.
I’m no technologist, but I don’t get the sense that LaserPro’s proprietary technology is particularly cutting-edge. And the language used in its loan agreements is, ahem, representative of mainstream drafting. (I wouldn’t have expected otherwise—lending lawyers tend to be ultraconservative.)
Instead, LaserPro’s success can perhaps be attributed to the following factors: (1) the documentation is high-volume and relative high-value; (2) it contains a level of deal-specific customization that’s high enough to render the traditional scissor-and-paste process inefficient but not high enough to rule out document assembly aimed at loan officers rather than lawyers; (3) keeping track of how the relevant law varies from jurisdiction to jurisdiction requires a commitment of resources that would be beyond most banks; and (4) LaserPro’s early start has given it an advantage over the competition.
To be successful, any contract-drafting document-assembly solution aimed at other industries would need to benefit from a similarly happy confluence of circumstances.