While every contract has unique characteristics specific to the commercial transaction, there are certain features that lend themselves to standardization. Indeed, most contracts have been assembled by business and legal teams with a ton of “cutting and pasting” from various contract templates; however, with a lack of systemic control. This can create what is known as content customization, worse yet and a ‘legal exception’ given the amount of complexity and risk a simple word change can generate. That is, content changes in the document assembly process can trigger a significant change in the intent or context and not be caught by the ‘naked eye’ in such process. So, if your company is a behemoth, or the proverbial “800 pound gorilla”, then maybe you can get away with just locking down your assembly process so no internal changes can be made. And even not allow for editing or negotiation with your counterparty.
Certainly standardization of legal content and process can help the process. But it’s still a unilateral decision by each drafter, reviewer when pouring through the content to see if the language properly addresses each particular engagement. And uniformity of language and presentation certainly make the assembly process easier, review and execution faster. But at what cost? The same argument for locking down content and negotiation could also be made that you absolutely should make changes to properly address any additional terms or risk in the deal. But, undoubtedly, you will need technology, specifically, a “smart contract management” system to guide you and your team members through the process.
So how is contract assembly standardization achieved? Again, technology help in a big way. In recent years, the use of master templates has assisted in the standardization of contract assembly, but there have been additional improvements to supplement these templates, which can become cumbersome and unnecessarily repetitive. By utilizing interactive data gathering and breaking down contracts into sections or “modules,” contract lifecycle management (CLM) software can intelligently guide the contract assembly process. Further, industry specific design, legal requirements, and concerns can be integrated into the data gathering software thereby saving additional time and money.
There are potential drawbacks and risks associated with contract assembly standardization. Certain clauses and variables that make one contract clearer can make another, similar contract unclear. It can be argued that the creativity of the deal is lost amid over-used templates cluttered with legalese. These are valid points worthy of consideration. There can never be complacency in contract drafting and negotiation. What makes each and every contract different can’t be forgotten, so as to not jeopardize deal making. But the fact remains that standardization of contract assembly makes life easier for entities and individuals to negotiate and execute successful business deals. Ultimately, the software you incorporate into your contracting process should accelerate drafting and better control risk by avoiding content from constantly being created from scratch.
ContractRoom offers a transformative solution to accelerate and control contract content creation and assembly. It is the smartest contract lifecycle management platform for the enterprise market, optimizing the way we get to the “yes”. ContractRoom software is uniquely powerful in its ability to transform the user experience (UX) end-to-end and by leveraging AI machine learning to make the “process simple and decisions smart”. This complete CLM approach means every aspect of negotiations and contracting is faster, more accurate and with better business and legal outcomes.
Assembling contracts in a faster and safer way with the smartest Contract Lifecycle Management platform. Cut document and contract assembly by 1000x - as with one of our use cases, the client cut assembly and approval time from 3 days to 3 minutes.
This is the 2nd in a series of 5 blogs on core ‘CLM Modules’:
- contract drafting (blog 1)
- contract assembly (blog 2)
- contract operations (blog 3)
- contract management (blog 4)
- contract compliance (blog 5)