Document Automation 101

17
Dec
2014

Geoffrey Goldberg

For corporate legal departments, among the highest priorities today are improving efficiencies, reducing risks, cutting costs and being better partners with the businesspeople. While there are many different paths to achieve some of these goals, document automation is one of the few ways that in-house counsel can hit them all simultaneously. 

However, before launching into document automation, corporate legal departments need to understand what document automation is and how it works, as well as the benefits that come with automated document drafting and approval.

The Basics of Document Automation 

Traditionally, document drafting has been a painstaking, error-ridden process for legal departments. It also turns the department into a bottleneck when in-house counsel needs to review every single contract and sales agreement. This causes tension between in-house counsel, who must update each piece of paper, and businesspeople, who are focused on getting deals done and contracts signed.

Creating each document individually can also lead to stress and uncertainty for in-house counsel. Each time a deal surfaces or a businessperson approaches the legal department with a new contract, lawyers must find the file from the last, similar deal. Then, they must either carefully comb through the document to update it or conduct a “find and replace” search for particular dates and names, while hoping the rest of the agreement still makes sense.

Document automation software can change all of that and allow in-house attorneys to create within minutes documents that can otherwise take days. A smart document automation system can embody legal theory and customize documents for each purpose and matter. 

The system works by abstracting the user from the underlying document template, instead asking a series of questions about the deal itself. For example, who are the parties, how long is the agreement to last, etc. Think of programs such as TurboTax—the software asks questions, users select the appropriate option and that leads to the next relevant question. With the right system, certain answers can guide users to alternate provisions or even additional documents. In effect, this creates something like an expert system for the deal. 

The best systems find a way around using IT specialists to deconstruct and automate legal templates by allowing lawyers to automate their own forms right in Microsoft Word. This process eliminates the risks involved in handing off the work to non-subject matter experts and minimizes the impedance mismatch between attorney and technology.

The Business Case

As legal departments know too well, the need to cut costs and increase efficiencies continues to grow, even as the economy slowly emerges from the long recession. The C-suite is increasingly looking for cost savings and predictability from all departments and business units, including legal. These trends have made the drive toward initiatives such as document automation more critical. 

An automated, standardized approach also reduces the time it takes to close deals. This is particularly important as the end of the quarter approaches. With an automated approach, business users can proceed without involving the legal department as long as they use the system to generate standard contracts that are preapproved.

It can also improve relationships between the businesspeople and attorneys. Businesspeople no longer need to see the legal department as “the sales prevention department”. And when the businesspeople see in-house attorneys as allies, they may be more likely to alert them to potential problems, which minimizes risk and improves compliance.

Within legal departments, document automation also allows for better knowledge management and retention. In the past, when in-house attorneys left the company or were transferred to a different department, those skills and expertise were generally lost. Now, such expertise can be preserved and codified within templates.

Document automation also serves an educational function for less experienced attorneys by allowing them to gain new insights as they interact with automated templates.

When legal departments no longer need to spend their days on commoditized documents, attorneys are free to focus on strategic, nonstandard legal issues that provide higher value to the business.

Rolling Out Document Automation

For corporate legal departments that have never used document automation before, it is best to proceed thoughtfully and carefully. While there are many benefits, there are also many stakeholders involved and many aspects to consider.

• Executive leadership - The business case should be prepared, so that company leadership understands the advantages and will get behind the initiative and support the investment. 
• IT - The IT department is another critical group that should be consulted. Since this department generally must juggle multiple types of hardware and software, the best tool from its perspective will be simple and intuitive for lawyers to use, without any of the complexities that have traditionally hampered document automation. The software should also leave a relatively small footprint on servers or cloud-based storage.
• Records management and compliance - Since document automation will serve a key role with records management and compliance, these departments should understand what is being planned and be given the opportunity to provide their input. 
• Users - Often, the biggest hurdle to adoption of the system is in gaining the users’ trust. That trust will come gradually, but thorough testing, training and a highly recommended vendor partner will go a long way toward allaying concerns and encouraging adoption.

Beyond First Steps of Contract Creation 

While document automation offers numerous advantages in the initial creation of contracts, there are ways to leverage the technology to further streamline the overall contracting process. Industry-leading document automation products also integrate electronic signature (“eSignature”) tools to offer a completely digital contract automation solution, without any need to “print, sign and scan” documents.  

While document automation provides many benefits, it will never replace in-house counsel’s knowledge and skill. However, the right tools and processes will allow attorneys to become better business partners and focus on challenging, interesting work, not rote drafting.