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Making contracts more human: How to make paperwork painless

Richard Mabey, 2 July 2019

Contract magic

According to IACCM, 83% of people are dissatisfied with contract process. That means almost everyone has a bad time with contracts - any remotely positive experience is the exception, not the rule.

This is a disaster. For a business, signing legal contracts should mean closing deals, forging new partnerships and hiring new talent. Instead of these being the happiest moments in the life of your business, bad contract experiences mean people are instead frustrated by the arcane language, the clunky processes, and the bottleneck that legal negotiations cause.

After signing, it can get worse - identifying the right data points in piles of unstructured contract text, and then managing the associated rights and obligations can be a full-time job.

We hear this in sales and customer success meetings over and over again, and not just from lawyers - we have clients in sales, procurement, HR and dedicated contract management functions who have all felt the pain. This is without even mentioning the customers, suppliers and employees suffering on the other side of the contract.

The good news is that there are practical steps you can take to improve the experience for all parties to contracts - without ripping up your workflow and spending vast amounts of cash. Here are five steps to a contract process that everyone can live with.

1. Brevity and clarity: not optional

Legal services as an industry does a bad job with user experience, and contracts in particular are a regular offender. According to a study by Carnegie Mellon, it would take a person on average 76 days to read all of the privacy policies they have been asked to accept online. Before we even tackle the jargon, length alone is a turn-off in legal documents.

One easy win is simply to make legal documents shorter. Of course, sometimes it's impossible to avoid dense legal information, but more often than not boilerplate wording and standardised clauses add no real value and denigrate the contract experience. We tried this approach with the Juro privacy policy, which could be reduced to a one-page summary. It's been viewed 12,000 times - not bad for a document that nobody usually reads.

2. Templates should communicate clearly

Then there’s the content of the contracts themselves. Historically, contracts are written by and for lawyers, with little consideration of the Real People that they're about. We believe that contracts should be useful and engaging instruments that express business relationships. In short, contracts are communications. To make contracts really effective, for both parties, you need to understand clearly the person on the other side - and then tailor the content accordingly.

For example, unless you are being hired into a legal role, the chances are that you'll have no legal experience at all. This is especially the case for a potential candidate seeing an employment contract for the first time. What you need to know is fairly simple: what are your obligations under this document, and what rights do you have? Random references to legislation you are never going to read don’t really help you to achieve this understanding. Here’s how we do this with the offer letters at Juro - again, setting the tone for the start of a relationship that we hope will last for years.

3. Action feedback to make your templates better

When lawyers land in a business, often one of the first things they do is to set up contract templates. This helps to standardise process and avoid, in at least some cases, taking the other side’s paper. But these templates are more often than not created by external counsel from their own standard clauses - often very favourable to the client. This means they aren't highly tailored and don't always respond to the specific business needs of internal clients.


"Increasingly our users are turning to data to help them make decisions about their templates: for example, using Juro's analytics dashboard to work out which clauses are most often and most heavily negotiated"

If you want to have tailored templates, and avoid endlessly arguing the same points in win-lose negotiations, you need to iterate on your templates over time. But how? Increasingly our clients are turning to data to help them make decisions about their templates: for example, using Juro's analytics dashboard to work out which clauses are most often and most heavily negotiated. This improves template quality and can even increase closing times - music to the ears of internal clients. Although certain clauses, like liability caps in MSAs, are vital and can't be struck out, a surprising number can be at least adjusted. You can even start this process manually by tracking clause negotiations in an Excel, and then use tools like Juro to help scale that process.

4. Make workflows collaborative

The back and forth between legal and business teams is a huge source of friction. Legal have been fighting accusations that they're the main bottleneck since time began (or at least since business did). But when we look at the contract data in Juro, we can see definitively that this isn't the case. Often contracts sit for days or weeks with the other side, and legal aren't holding up deals from closing. Making this data transparent and available to internal clients is a great way to defuse the tension and build better working relationships.

Another great way to create harmony between teams is to ensure that contract workflows fit into the modern tech stack. Don't make business teams leave their core systems of record if they don't want to. Integrate contract templates with CRM systems like Salesforce - here's how we do this at Juro. If all internal communications are managed through Slack, why should legal communications be any different? Create a #contracts channel and let users manage contracts where they manage everything else.

"Legal have been fighting accusations that they're the main bottleneck since time began - but when we look at the contract data in Juro, we can see definitively that this isn't the case"

Dedicated legal tech tools are the answer for increasing numbers of businesses - see our curated list of the top tools, category by category, here. But the critical challenge is to make sure that your solution works for teams outside of legal. Otherwise, you risk failed adoption. As Dean Nash, GC and CLO of Monzo says: “Too much of the legacy software that powers huge chunks of the industry still falls down when it comes to being user-friendly.” Make sure you screen for user experience.

5. Make contract data work for you

One of the biggest barriers for the wholesale digitisation of contracts is that the data they contain (party names, clauses, renewal dates, and so on) is typically delivered in an unstructured format. This leaves you with piles of text that you can’t do much with. For contract managers, this creates a massive pain point, with huge amounts of manual work involved to turn unstructured data into useful, structured data. Teams use tools like Excel or Airtable to do this, or some contract management software can handle it too. Done poorly, this work is risky, hugely manual and it can make the experience of managing contracts post-signature a real headache.

To overcome the data challenge, there are a few options. You can use tools like Kira or Luminance to trawl your backlog of PDFs and pick out the data points. Tools like Juro include a machine-readable editor to help you avoid this legacy problem existing in the first place (find out what's actually possible with machine learning and contracts in this whitepaper). If you don’t have the budget for new tooling, you can look at contract workflow data (by tracking numbers like how many contracts you reviewed in a given month) and report your findings upwards in the business. Either way, making the effort to actually use your data can enable you to take the first steps from managing contracts in your business from a manual, risky, untransparent process, to creating an automated, transparent and even delightful process that works for everyone.

 

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Topics: Contract magic

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