Ye Olde Insurance Policy

All buyers of insurance require evidence of their purchase whether they are a Fortune 500 company or an individual looking for personal lines cover.

Large clients have the resources to develop bespoke wordings tailored to their requirements. These have often been developed with their broker over many years and will include coverages designed to protect the company’s unique global operations.

Personal Lines business is far more of a commodity, with price being the determining factor for most buyers. The policy arrives pre-printed and is the same for all customers.

Between those two extremes is business that is not large enough to qualify for a team of dedicated wordings experts but too big to be served by an off-the-shelf insurance product. Whether described as Mid-Market, SME or Non Risk-Managed accounts, the production of their insurance policies still reflects many of the habits learned in the days of the typewriter.

The common practice, even today, is to establish a standard Wording that describes the general terms, coverages and exclusions for the class of cover being provided. This is then amended to the client’s needs by physically attaching endorsements that either extend or reduce cover. The resultant document is often confusing to the client, overly verbose and open to errors and omissions.

Market practitioners defend this process, however, claiming that it is easier to learn the coverages within a static wording than having to review documents from scratch for each client.

However, document automation technologies and some forward thinking underwriters are beginning to challenge this practice by providing insurance products designed to be precisely tailored to a client’s needs. Templates are being established that contain various permutations of cover, exclusions or other terms which assemble a quality client document by answering a series of questions in a web-based interview.

Not only are these documents clearer for the client to understand, better structured, more relevant and shorter, but the automation process enables them to be produced more consistently and accurately than before and in a fraction of the time.

Using insurance document automation tools, it is now possible to provide a quality, bespoke insurance product to all commercial buyers, large or small.

This post was authored by Martin Kett, Exari's Vice-President of Insurance Client Development. Martin will be at both the RIMS Conference in Boston, MA this week and the AAMGA Annual Meeting in Palm Desert, CA next month, if you would like to learn more about insurance document automation.

Photo courtesy of greg.turner

What is a contract?

What defines a contract? Does it need to be a piece of paper?

A contract used to be a piece of paper or parchment or some writing on some thing that outlined the commitments between two parties. The launch of the iPad the other day, however, led me to think about another kind of contract that may be in our future. [Full disclosure: The Exari Boston office is one block from the Apple Store and you couldn't miss the line outside.]

Couldn't a contract simply be information about a commitment that has been distributed to the appropriate people at the right time and the right place? A contract as a piece of paper in a drawer or a file in a document management system just doesn't empower your organization to truly optimize the commitments in your contracts.

For example, what if two companies were to write up an agreement on an iPad and send it out for esignature. Then the company that was going to deliver the services would receive the delivery instructions and service level agreements in their ERP system, the payment information in their accounts receivable system and the renewal information and pricing in their CRM system. The company that was receiving the services would get the payment information in their accounts payable department and the delivery information in their Supply Chain system. Is that still a contract?

Digital contracts that can be created as part of the document assembly process and that leverage technologies such as XML allow companies to distribute the right information to the right people in real time so that they can optimize the commitments in their contracts. Creating contracts digitally also allows companies to risk-rank their contracts as they are being created to incent sales and negotiation personnel to course correct and create the best long term asset for their company.

This enables companies to create better commitments, get paid faster, ensure relationships continue to prosper and renew on time, ensure that shipments go out on time and that the people who manage these processes have access to the right information.

What do you think? Are you capitalizing on the digitization of contracts at your company? Do you use document assembly or contract management today?

Now back to that iPad. Do you buy it now? Wait for 3G or wait for version 2.0?

2 Articles on Using Document Assembly to Increase Value for Clients

It's almost that time of the year again (in Australia, anyway). 1 July is traditionally when law firms increase their rates. Of course, with legal budgets having been cut, clients no longer tolerate this particular 'tradition.' So, what can you do?

Gilbert + Tobin came up with a novel solution for Telstra by offering the telco a compelling all-you-can-eat deal. Now, not everyone can do a G+T, but the question remains... what steps can you take to increase value for your clients?

This month's edition of Law Technology News has a couple of interesting stories on how document assembly can help.

1. Creating a Starter Kit

David Jensen, senior director of knowledge management and information systems at DLA Piper, explains how the world's largest law firm is letting clients help themselves to basic documents.

And he predicts that document assembly is only going to grow in importance: "We expect that demand for document assembly applications will increase as alternative billing models become more prevalent and clients apply rate pressure on repetitive legal work."

2. The Future Is Now?

Michael Mills, a consultant at Kraft Kennedy, looks at how other firms have been using document assembly to provide more cost effective legal services. Mills thinks all providers - including high-end firms - should be investing in document assembly. (And he should know. He was previously the chief knowledge officer and co-head of technology at Davis Polk & Wardwell for 20 years. And before that he was a partner at Mayer Brown.)

Mills points to the 2010 Hildebrandt Client Advisory which states: "Growing client insistence on efficiencies in the delivery of legal services, however, combined with increasingly sophisticated technology may well force a redefinition of commodity work and underscore the importance of all firms (including high-end ones) being able to deliver more standardized work products along with their more specialized services." [Emphasis added]

Isn't it time for your firm to work out how document assembly can help serve your clients?

The End Of Legal Practice As We Know It

Since the start of the GFC, we've been hearing that the legal industry is changing irreversibly, with endless examples 'proving' that, from now on, law firms need to increase productivity to survive.

Is it true? I’ve got no idea. But that doesn't stop me marvelling at the stories I’ve been reading. Below is a summary of recent stuff.

Walls coming down on offices (26 March)

An article in the Australian Financial Review (subscription required) notes that Mallesons Stephen Jacques – oft cited as Australia’s premiere law firm – has started embracing open plan offices; a move which is still rare amongst law firms, both in Australia and overseas.

The article goes on to say that consultancy, Hildebrandt, is predicting big changes as a result of cost pressures:

“Typical law firms have more than twice the square feet per person as a typical US corporation… Changing longheld assumptions about space needs has the potential to cut occupancy costs in half and some firms are starting to seriously consider this step.”

Mallesons Moves to Fixed-Fee Arrangement (25 March)

Given Telstra’s much publicised fixed-fee arrangement with Gilbert+Tobin, it was interesting to read on Australian legal gossip site, Firm Spy, that Mallesons has agreed to a fixed price

“for legal services to Telstra for the remainder of the financial year. Subject to involvement in a major transaction not contemplated by the agreement, Telstra will be able to use as much, or as little, of Mallesons services for a set fee under the arrangement.”

As little as 12 months ago, such a move by a top tier firm would have been unthinkable.

Law firms sharpen up as recession cuts legal sector to size (22 March)

Eversheds released its Law firm of the 21st century report (registration required). The report:

“warns law firms that that [sic] they need to modernise or lose out as a major power shift is taking place in favour of the in-house client... and that value and efficiency are now the non-negotiable attributes a client looks for in a legal partner.”
Eversheds is one of the few large firms taking a pro-active approach to changes in the legal industry.

Law Firm Evolution: Brave New World or Business As Usual? (21-23 March)

From 21-23 March, Ron Friedmann live-blogged the conference, Law Firm Evolution: Brave New World or Business As Usual? Some sound bites from Ron’s detailed posts:

• Firms will have to embrace rather than shun commodification curve.


• Conditions today are favorable for innovation.


• Clients have been improvident in paying large firms so much money.


• ROI maximization requires measuring, managing, and improving (commoditizing).

Other BigLaw Posts

Ron also published a couple of other posts on the subject:

• Recent Takes on the New Normal for BigLaw, which is a roundup of recent blogosphere commentary suggesting “that the economic crisis has caused a lasting change in the legal market”


• Hildebrandt / Citi Report: Tough Times Persist for Big Law summarizing the findings of the 2010 Hildebrandt Client Advisory

All-in-all, a huge month for the end of legal practice as we know it.

So, what do you think? Has the legal world changed forever?

photo credit: tlraum

The Not-Quite-Right Tool For the Job

Latham & Watkins is a large law firm with a significant outsourcing practice. They realized that, like most firms, they hadn't been preparing deal documents as efficiently as they could. In last month's issue of Metropolitan Corporate Counsel, partner, Alexander Hamilton, described the situation:

"The problem at the beginning of a deal is that the client is still trying to work out what direction it wants the deal to take, and often struggles to articulate what its requirements are. Up to now, lawyers and consultants usually ended up by pulling out a previous similar deal and through much anguish and pain for both client and counsel marking-up the prototype to suit the deal.

This struck me as absurd – there had to be a better way to get these deals underway faster by extracting from our clients in as painless a way as possible what their requirements are so that we can actually draft documents that had some bearing on what they really wanted in the deal."

Breaking down the above, Latham needed a data capture component and a document creation component. Another objective was to be able to give the client a competitive fixed price for that upfront part of the deal.

Kudos to Latham for acknowledging that the traditional approach to preparing draft documents is broken, and for deciding to tackle it.

So, how did they solve the problem?

The answer is... they half solved it. They created something called 'Capture', which appears to be a set of dynamic Adobe PDF forms. Hamilton describes it as "an interactive set of forms that are completed by the client’s team. As the client answers a question, other relevant questions automatically follow."

Simplifying the data capture aspect is a step in the right direction. But, given that Latham is fixed pricing the work, neglecting to automate the document creation part is a massive lost opportunity.

I can only conclude they weren't aware that the right tool for this job is a document assembly platform. As Wikipedia explains, document assembly is a template-based system "where the user answers software-driven interview questions... The information collected then populates the document to form a good first draft." Just what Latham's client's need.

Couldn't your law firm benefit from preparing deal documents more cost effectively?

[Note: While this post focuses on the legal practice area of outsourcing, it has equal application to other practice areas that do large, complex transactions, such as M&A, project finance and capital raisings.]

Photo credit: Cayusa