Legal department, meet document automation

The risk reduction and efficiency gained through the use of document automation can be substantial

Legal departments today are continuously working to reduce risk and become better partners with the business side of their organizations. As they search for efficient and cost-effective ways to achieve these goals, many legal departments are turning to document automation to improve their contracting process.

In-house counsel who understand how document automation works and the benefits it brings are well-positioned to develop a strong business case for introducing it to their organization. The first article in this three-part series offers an overview of the basics of document automation and will be followed up by more in-depth discussions about how document automation can be used to improve operations in corporate legal departments.

Moving from bespoke drafting to automated templates

At many companies, the contracting process can be painful for everyone involved. When the process is done manually, the legal department must draft, review, update, negotiate and route each document themselves. This approach is onerous, prone to errors and often turns the legal department into a sales bottleneck. The use of document automation software can significantly reduce these problems while simultaneously improving compliance, increasing efficiency and reducing risk. So, how does it work?

Document automation software abstracts users from the underlying legal language of a document template and instead presents them with a questionnaire that collects data and guides them through the document creation process. A questionnaire might ask, for example, who the counterparty is, what the effective date is, what the governing law is, etc.

Ideally, these questionnaires are designed for and presented directly to business users. These questionnaires can also be coupled with integrated approval processes that enhance contract creation by introducing additional levels of control over which documents may immediately be released for signature versus those that might require internal review. The system does this by analyzing questionnaire data against a predetermined set of rules created by the legal staff. With an approval-driven process like this, the flexibility and range of documents offered for self-service can be greatly expanded without fear of the release of noncompliant documents.

A proper document automation system generates fit for purpose documents in a matter of minutes compared to perhaps a couple of days using traditional drafting methods.



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What to know about document automation

While new software and processes can be a hard sell at many companies, commercial document automation software offers clear advantages. These advantages include:

Saving time: With an automated, standardized approach, legal departments can close deals faster. This is particularly true when it comes to standard contracts, which the businesspeople can generate and use without involving legal.

Buy vs. build: Recognizing the benefit of automated drafting, IT departments have often taken it upon themselves to create custom solutions to this end. Solutions built from scratch by IT are often inflexible, overly complex and a time-sink for what is often a limited resource. It’s almost always better to buy commercial document automation software than to attempt to build your own.

Improving knowledge management and document accessibility: In a manual drafting process, documents rarely wind up in a central repository. Various versions are scattered across the intranet, the document management system and individuals’ computers. As such, these documents cannot be consistently located and catalogued, making it impossible to maintain standard precedents and leverage document metadata. With automated templates that are constantly honed and updated by domain experts, the information embodied in the templates remains accessible to everyone in the organization. This is true even when individual attorneys transfer to a different department or leave the organization. Documents generated from the automated system are automatically exported to a central repository solving document accessibility issues.

Reducing legal spend by in-sourcing: Automated contract drafting frees up in-house counsel to focus on higher-value work, reducing the need to engage outside counsel. In-sourcing of this nature saves money, increases job satisfaction and develops in-house expertise.

The bottom line

Legal departments can strengthen their partnership with the business side of their organizations by streamlining functions like contract creation. This helps to make sales and other business functions operate more effectively. The risk reduction and efficiency gained through the use of document automation can be substantial and are typically shared across an organization to everyone’s benefit.

Contributing Author

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Geoffrey Goldberg

Geoffrey Goldberg brings a very unique blend of legal and technological experience to Business Integrity where he currently maintains a  role as VP, General Counsel...

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