Is the Legal Profession Ripe for Disruption?

What will the commercial profession look like a decade from now?

Expensive, time consuming, labour intensive and inefficient processes are open for disruption.

Let’s look at an example, Ace Limited employs its own internal legal function, one for each business silo, pouring over a multitude of inbound contracts, clause by clause, arguing, compromising, redrafting, collaborating, and finally agreeing with the other party and recommending a contract to the boss for signature. Sometimes they get signed, filed somewhere and forgotten.

Then there is a breach, both parties position themselves, external council is sought, the arguments and positions solidify, ego starts to get in the way on both sides, sue them! Affidavits, summons and eventually a court date is set. More particular of claims and affidavits, more consultations and preparations, see you in Court. The decision goes against us, appeal!

Now step aside and count the cost, in distraction, legal costs, judgement, and the many years it has taken to get a resolution.

This cannot be an efficient and effective way of protecting the business interests, right from the start of exchanging draft agreements.

More damaging to the business is that somewhere all that valuable data sits locked away in paper and a filing cabinet. How many cases, if they get that far, are lost because the original contracts and supporting documentation is lost or destroyed?

Can the internal legal team go from contract gatekeeper to empowering a new level of efficiency, providing executives with valuable business information?

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  1. Standardise your agreements
  2. create a clause library of pre-approved acceptable changes
  3. capture the data from the source of the contracting process
  4. integrate it into the documents themselves
  5. automate the signature part, (yes that means they get signed)
  6. comply with delegations of authority through workflow (no one can use the excuse that they were not authorised to sign or can’t find the signed copy) and finally,
  7. file all documentation electronically

Go from reacting to inbound contracts to creating your own standard terms, especially where you have the leverage to do this (Large corporate of Public Sector organisation). Empower the business silo’s to create and sign their own agreements from locked down templates, standardise best practice across silos. Now manage the tasks and obligations in the contract so you nip any possible dispute before it becomes an issue.

10-yearsImagine that Industries have agreed to a set of standard contracts, and the processes are all automated, there is a common dispute settlement body the parties have agreed to use, would that not alleviate 90% of what the legal function does today? Do we not see evidence of this in the many contracts that we sign by simply ticking a box “accepting the terms and conditions”?

Where are you in the digital transformation of the legal function?

 

Digital Contracts

 

There are a number of definitions and examples, one of the most common is a typical software license agreement, the purchaser is asked to tick a box to accept the terms and conditions, and an electronic agreement is signed. Completed with one click in a fraction of a second.

But not all agreements are signed this way, and it’s worth looking at the old traditional way of drawing a contract and signing it, and the variations in between.

In the “old” days, either a word document or some other contract template would be located, a legal person may even draw the agreement from a clause library or library of standard agreements. These contracts could take days to compile, check and get approved.

The draft document could either be circulated for comment, or where its standard terms and conditions, printed out for signature. The parties would then need to be present somewhere to sign it, at an office, in a branch or by courier.

The parties fill in all the relevant information, (often forgetting or missing a place, initial or signature), either sign one copy, or two if another original was required, initial each page, hold in a filing cabinet, and possibly some form of scanning into a document management system. Then generally forgotten.

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Firstly, use standardised application forms and contracts, and digitise them. By this we mean hold the relevant information electronically, that way there is no additional data capture, the same information can be reused, and contracts can be automatically created.

The next step is to sign them electronically (far more robust than trying to decipher someone’s scrawl years later), and the poor CEO is saved from having to sign and initial hundreds of pages every day.

But then it’s what happens next is the real value, the organisation has all this data in an electronic format, to be stored, shared between systems, to set up reminders, tasks and obligations. Management now has insight into the contracts that are being entered into, and the underlying information for trending, risk analysis, reporting, etc. No more lost documents, untraceable authority paths, different terms and conditions. Standard agreements can be routed to the relevant business units, and with contracting happening in an instant, no more delayed booking of revenue of provision of goods.

Digital contracts are relevant across the full spectrum of types of agreements, as are differing levels of digital signatures. From simple mass produced standard agreements through to highly complex negotiated and regulated one’s, filling in pieces of paper in ink and by hand is so “old school”.

Linking of digital identities provides another layer of efficiency, no more collecting of supporting information every time an application or contract is required, the parties have all that information available at the click of a button.

digitization

Be smart, move to digital contracting.

http://www.realyst.com