The Sweet Spot of Document Assembly

Things have been rather busy at Exari during the last 12 months. Our customer list, user base, and revenues have doubled (or more) and there's no sign of a slow-down any time soon. Which begs the question: what's going on? Why are so many people embracing document assembly now when they didn't in the past?

The answer, we think, is that web-based document assembly tools have matured to the point where it's now practical to automate more than just consumer-oriented, high-volume, fill-in-the-blanks, standard forms. People are discovering that a large chunk of their business-to-business deals fall into a new category of "semi-standard" contracts. They're not standard form. But they do follow predictable patterns of negotiation and drafting. They do follow rules. And this is the new sweet spot for automation.

Before now, automation didn't extend much beyond consumer scenarios (think bank statements and consumer finance contracts). Back-office, standard form systems were built, and - because there was never any negotiation - they worked just fine.



But as soon as there are any negotiations (which is true for most business to business dealings), the standard form approach falls over (typically those systems are not designed to handle optional clauses, renumbering, cross references, etc). So, businesses have been forced to do those deals manually, in Word, which is both slow and costly.

Not any more. Advanced, web-based, document assembly systems now make it possible - and practical - to automate many more business contracts, as long as they follow predictable patterns of negotiation. Businesses are now seeking out these semi-standard sweet spots, so that deals can be closed quickly, without the costs and delays of manual drafting.



The best examples are in small and mid-sized business segments, for example, business lending documentation, business insurance contracts, sales proposals and contracts, services procurement, and commercial leasing. These are complex documents which, without automation, need to be prepared or reviewed by legal experts. But with advanced document assembly, all the predictable options and changes can be automated, and many deals can be completed by front line staff.

Bye-Bye Billable Hour

Cisco General Counsel Mark Chandler doesn't mince his words when it comes to law firms and their addiction to the billable hour:

As Cisco gets bigger, the share of revenue devoted to legal expense needs to gets smaller. Letters from law firms telling me how much billing rates are going up next year are therefore totally irrelevant to me... I don’t care what billing rates are. I care about productivity and outputs.

His speech to the Northwestern School of Law's 34th Annual Securities Regulation Institute conference describes a fundamental misalignment between most law firms (who want to sell billable hours) and most clients (who want to buy information, documents, etc, at low cost), which is leading to unhappy lawyers and unhappy clients.

But Chandler isn't just talking about the problem, he's changing things. He lists at least four areas where Cisco is now buying legal services on a fixed fee basis: patent prosecution; review of license offers; corporate secretarial work; US corporate, securities and M&A work; and US commercial litigation. In some cases, these fixed fees are structured to go down each year, not up. Cisco has also pioneered the use of internal productivity tools, like online contract drafting, so that many contracts can be created by front line staff, without the need for costly legal review.

The other way to respond to cost-cutting pressures is simply to get rid of some lawyers and stop checking low-value deals. But as Coles is discovering, this can lead to claims that you're dropping the ball on compliance.

FSA Goes Soft on Contract Certainty

I always thought "certain" meant 100% certain. How can something be "certain" if it's only 90% certain? It just doesn't sound right. But who cares what I think. In the London insurance market, it's what the FSA thinks that matters. And it turns out that 90% certain is certain enough for them.

The two-year deadline for contract certainty in the London insurance market has now passed, and the FSA has decided that the industry has done enough to dodge the bullet of regulatory intervention.

Never mind that, strictly speaking, the goal of contract certainty has still not been met.

In its self-assessment report, the Contract Certainty Steering Committee explains things like this:

"momentum is more important than perfection..."

and this:

"contract certainty is part of a journey..."

and this:

"contract certainty was never the end game..."

They stopped short of saying "contract certainty is a nice place to visit, but you wouldn't want to live there..."

And so the journey continues.