Well known legal department consultant, Rees Morrison, reminds us of the four key challenges contract management poses for in-house lawyers:
Morrison notes the role of document assembly in addressing the drafting issue. Interestingly however, all four issues can actually benefit from a document assembly solution.
Most legal departments try to improve contract drafting by using MS Word templates. However, these create problems for all parts of an organization:
In contrast, document assembly enables drafting to be pushed out to the business as a self-service model, while ensuring the generated agreements are legally compliant. The business users are guided through an intuitive web interview. The lawyers retain control by pre-determining what content is included. Further, PDF output ensures that the business user can't modify the document post-production.
For legal departments with contract review policies in place, document assembly systems can enforce those policies by embedding them into the system as rules.
When there is non-compliance with a rule (e.g. in answer to an insurance question, a user might respond that the counter-party has insufficient insurance), the system automatically routes the contract to the legal department for review.
Document assembly can improve negotiation in two ways:
Typically, there is both a functional- and system-separation at the point of contract execution. Pre-execution work (drafting, review and negotiation) is controlled by Legal, while post-execution tasks (obligation management) are usually handled by a contracts department or business unit.
For companies that have implemented a contract management system, the right document assembly system can provide huge advantages via integration. They are able to:
Currently, a few innovative legal departments are realizing the full potential of document assembly. For various reasons, most organizations have not yet analyzed contracting the same ways they have other business processes. However, when they do, they will discover that the contracting process is highly inefficient, and that the potential cost savings from automation are just too great to ignore.