In the past, I have written about the path to standardize documents, but I haven’t written about why that should be a goal in the legal industry. It’s obvious isn’t it?
While I think the immediate effects of standardization, both positive and negative, are easily recognizable, it’s worth playing out the mental exercise of longer term effects as well. Those are often less clear. In this article, I run through a few of the effects we might see when we move towards standard legal documents; both good and bad.
As with any prediction about the future, these are my humble thoughts based on our current efforts, small scale experiments, and similar changes in other industries.
Summary: To Standardize Documents
When we standardize legal documents, what we’ll see are both short term and long term effects. In the immediate future, we’ll likely see the following:
- Good
- Cheaper documents and greater access to justice
- Less reading without less protection
- Bad
- Greater volume of legal documents because of their accessibility
If the legal profession embraces standard documents, we might see slightly further in the future, these effects:
- Good
- Less sharp dealing because of generally acceptable practices and forms
- Ability to build more complex ideas, documents, and structures
- Better tools and resources for both lawyers and laypeople
- Bad
- Lower willingness to explore creative solutions
Short Term Effects
Access to Justice
The most immediate effect in standardizing documents is the ability to draft documents cheaply. Spelling this out, it is easier to incorporate a standard document into your text than drafting than from scratch. Downstream, there will be less to re-read and negotiate because there is more familiarity with standard documents than brand new ones.
LegalZoom and RocketLawyer have shown that there are billion-dollar markets in providing templated documents to the “underserved middle“. For those who cannot access legal services, I would argue that the availability of standard documents, even if not tailored perfectly, is preferable to no document at all.
Less Reading
Adhering to industry standards allows communication to flow easily. For example, anyone who’s arranged for shipping will have dealt with phrases like FOB (free on board) or CIF (cost, insurance, and freight). Both of these abbreviations are shorthand for a more complicated arrangement that no longer needs to be repeated in the contract itself. The three letter abbreviation is enough to encapsulate the arrangement. If you were curious, certainly Wikipedia has its own entry, but you can look at the ICC’s Incoterms for the actual rules.
If you consider other standards like the American Arbitration Association Rules, lawyers don’t reread the rules every time they see a reference to AAA Rules in a contract. What we’ve seen in many industries is that standardization allows you to simplify and shorten your legal documents without diminishing the legal rights and obligations.
More Documents
On the other hand, the perfect solution is not to standardize documents. By making contracts cheaper, inevitably, we will see more of them in the wild. A similar effect occurred when the legal industry embraced document assembly tools. These are tools that automatically put documents together based on a few fields; for example filling out company’s internal templates. What we continue to see is a year or year rise of the number of legal documents, and that, ironically, lowers access to justice.
In their heyday, document assembly tools hit the profession unevenly. Well resourced legal teams took advantage of the lower costs, but were increasing the number of legal documents out in the wild, disproportionately affecting poorly resourced legal teams, and lowering access to justice. Only large legal teams could afford a document assembly tool, and they began systematically sending out simple documents like NDAs to flood smaller legal teams. Depending on our approach, standardization could require expensive tools or come with entrance fees, and create the same unintended consequences for the profession.
Long Term Effects
Less Sharp Dealing
When standards are established, they may come with some biases, but ultimately, they are forced to take a position close to the middle ground. For example, I’ve been following BonTerms, and they’ve made the explicit decision to draft fair terms to drive adoption.
I believe strongly that legal documents are not magical incantations for lawyers only. Nevertheless, even a very astute reader will not know what is common practice. Providing a middle ground starting point for negotiations will anchor transactions within reason and limit the most egregious of sharp practices.
More Complex Ideas
If there is a common foundation, you can abstract away that foundation and build on top of it. I’ve been asked many times to shorten a legal document to make it simpler and quicker for the other party to accept. The tradeoff is that you remove some provisions that must exist for a reason. In the case where we have standards, we can increasingly create more unwritten, unspoken rules that don’t need to clog up the document. You get more space to express complex ideas.
There are tons of examples of utterly pointless provisions. How many times have you read a definition for a “Business Day” or that “includes” means “including without limitations”. Those should absolutely be standardized and removed from documents so that more space is given to real provisions that contain business logic.
Better Tools and Resources
This is one area I am most hopeful about. At the lower tiers, our current toolset as lawyers are basically pen and paper and Microsoft Word. A lot of resources in legal tech are being wasted because lawyers cannot stick to a standard, not just in language, but also in format and presentation. AI has the difficult job of looking through image scans, Word documents, Adobe PDFs, then decoding the same phrases written in tens of thousands of different ways, before doing the actual work. If we standardize documents, the consistency will eliminate a lot of that work.
More importantly, I believe standards create long term resources for lawyers and laypersons. To illustrate, let’s think about a person who needs help understanding their employment contract. HR departments will shirk that duty, as will friends and family, who will suggest getting a lawyer instead. That’s because contracts are complicated, and can turn on a single sentence or phrase. If we started from a base contract, we can provide standard advice, general descriptions, all automated and at scale. Law firms blog and provide detailed analyses on statutes and regulations all the time because the language stays the same. Employment contracts are dealt with vaguely because the situation is different all the time.
Less Creativity
Another consequence we should be wary of are the constraints to creativity. When two parties stare at a blank page, they may very well find the elusive win-win solution in a negotiation. Standard terms narrow the field and focus your attention on what has been previously decided.
Final Thoughts on Standard Documents
Most attorneys recognize that the status quo isn’t going to hold for much longer. Today, the average cost of a basic contract to a business is $6,900. That makes it completely unfeasible for many types of goods and services, and it should be no surprise that the unmet legal needs of businesses keep ticking up year after year.
While the legal tech community continues to explore AI as a means of automatically drafting and reviewing contracts, we’ve overlooked low-tech, simple solutions. Standardization has been around since legal documents existed, and today, certain industries have been extremely successful in adopting standards. I hope that one day soon, we can scale that ambition larger and create forms and templates that can be used across industries and jurisdictions. reference.legal is one platform that can help, but there are others as well.