Real Change: Not from the Demand Side or the Supply Side, But from the Outside

When it comes to contract drafting, change is tough. For one thing, it’s precedent-driven. And it’s a team sport—instead of being able to draft in splendid isolation, you may well have to take into account the preferences of others on your side of the transaction, not to mention the preferences of those on the other side. And in the fast-paced transactional world, people aren’t inclined to set aside time for retooling the machinery.

You also have to consider factors particular to the different players. Law firms—the supply-side of the market for legal services—have a reputation for being resistant to change. When it comes to contract drafting, I’ve found that to be as accurate as any generalization can be. For example, an eat-what-you-kill regime acts as a disincentive to investing time and resources in the sort of centralized initiative necessary for a rational drafting process.

By contrast, change should be within the reach of company law departments—the demand side of the equation. Because they’re paying the bills, they should be in a position to set the rules.

Change should also be easier to implement at law departments when it comes to the drafting done in-house. Whereas law firms are faced with creating a broad and unpredictable range of contracts, most contracts generated by companies are based on templates. That kind of drafting is particularly suited to commoditization.

Yet I’ve seen little interest on the part of law departments in instituting the sort of systemic change required to put your contract process on an efficient footing—adopting a style guide for contract drafting, training your personnel, redrafting your templates, and, depending on your contract volume, implementing a document-assembly system.

Plenty of others have noted this resistance to change. Today Adam Smith, Esq. posted this item on the subject. In it, he quotes Alex Novarese as saying, in this article on legalweek.com, that “clients—the demand side of the equation—are not only generally failing to enforce change, they are, if anything, more conservative than the law firms, which is saying something.”

Regarding factors contributing to law department resistance to change, I leave you to read the Adam Smith, Esq. piece and the articles he cites. Instead, let’s consider the following passage from Alex’s article:

Most of the innovations seen in recent years have been about firms trying to get an edge on rivals and have often been largely driven by the internal economics of law firms. Outsourcing, offshoring and attempts to unbundle legal service provision—experiments in these areas are being pushed more by managing partners than pulled by clients.

It’s telling that the innovations that Alex cites all involve laws firms ceding work to others. Acknowledging that others are better positioned to do some of your work more efficiently—as innovation goes, that has to rate pretty darn low.

So law firms don’t innovate, except to the extent that they farm work out to others. And law departments are no champions of change either.

That’s why I feel safe in saying that real change doesn’t come from law firms or from law departments, but instead from nimble vendors developing and employing disruptive technologies. I plan on doing what’s necessary to include Koncision Contract Automation in their ranks. Thanks to document-assembly technology, economies of scale, and the sort of quality control that a law firm or law department could only dream about, I expect that we’ll be able to cut through the inertia that has precludent meaningful organization-level change in contract drafting.

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.