In our whitepaper, I discuss the uncollaborative nature of contracts that live in Word, and the consequences of trying to drag static documents into a data-driven world.
Contracts are crucial to every business; people manage them horribly; and everyone hates them.
Let’s look at the facts: according to IACCM, roughly 80% of revenue flowing between businesses is governed by contracts. At the same time, 80% of contracts are handled using manual, unscalable processes — creating the document in Microsoft Word, emailing, tracking changes, converting to PDFs, printing, signing by hand, and scanning.
Perhaps worst of all is that a staggering 83% of people are dissatisfied with the contract process. So why do we still do it? The answers are obvious but stubbornly resistant to change.
Lawyers are, and want to remain, special 😇
Historically, lawyers own contracts, and lawyers are special. They study for an extremely expensive qualification that gives them a licence to do something that regular people can’t — and I’m speaking as a former lawyer.
They find a working life centred around Microsoft Word, email and PDFs. Contracts are one of the key products that lawyers deliver to clients, but usually the other party signing the contract — particularly in a business setting — has a lawyer of their own. This means that contracts are designed by lawyers, for lawyers. Never mind that the people affected by these contracts aren’t lawyers. The main people reading these things are lawyers, and they like to work where they worked in law school and during training: in Word.
"Lawyers are incentivized financially — generously — to be professionally risk-averse. That means that when it comes to processes involving lawyers, change management can be really difficult to achieve"
Change management? Forget it 🙅
The second reason is to do with what lawyers are for. It’s a lawyer’s job to spot and reduce risk for their clients. They’re incentivized financially — generously — to be professionally risk-averse. They’re exceptionally good at it. That means that when it comes to processes involving lawyers, change management can be really difficult to achieve.
Some sectors have embraced change quickly, with diverse industries like finance, food delivery, travel and property leading the way; but if you walk into a small legal practice you’re likely to find many of the same processes and systems you did 20 years ago. In a bigger law firm or legal department, you’ll probably find various failed IT deployments gathering dust. This isn’t an industry that accepts radical change readily — it’s risk-averse by nature. Worse, lawyers have been let down by new software providers - not just in contract management - that overpromised, but under-delivered, leaving new tools gathering dust on the shelf.
This partly ties back to how lawyers are paid. If the money’s good, work is plentiful and you’re charging by the hour, it’s not always easy to make the case for why you should do that work faster and bill fewer hours. Would you?
"Word documents are ultimately static files: if contracts want to join the ranks of other processes transformed for the better by data, then they need to break out of .doc and .pdf"
That leather-bound book smell 📚
The third reason is to do with the actual people who buy legal services — remember them? The people who mainly hate contracts? They have a role in maintaining the tyranny of the Word processor too. One reason people are still prepared to submit to ancient manual processes, and go to a lawyer’s office to sign a commercial agreement, is down to the lawyer herself, and the trust and confidence you feel from having her in front of you.
Getting help from a highly qualified, deeply responsible person, who looks and sounds authoritative, with certificates on the wall, and a big study full of leather-bound books, is comforting. It makes you feel protected. When people run into legal issues, it can be scary. Lawyers lead us by the hand through some of the most difficult moments in our lives, and they’re experts. Conforming to the lawyer’s way of working — even if it’s using word processors and manual systems — can make people feel safe. So if you have to go down to the office and sign something by hand, at least you get that reassurance from an expert. Studies show that in the eyes of customers, lawyers score low for warmth but extremely highly for competence, and that level of competence is hugely comforting for people in legal distress.
In light of all this, it’s understandable that contracts are stuck in the past, and stuck in Word. Technology aiming to improve contract process has, for the most part, accepted this fact, and focused on better ways to manage Word documents. This makes sense, but Word documents are ultimately static files: if contracts want to join the ranks of other processes transformed for the better by data, then they need to break out of .doc and .pdf.
Otherwise, the only thing that can stop 80% of people hating the contract process is lawyers. And, speaking as a former lawyer, the one thing I wouldn’t count on lawyers to do is change things fast.