Be Careful Where You Get Your Contracts Expertise
This is from a 20 June 2022 Artificial Lawyer item entitled CLM Without Expert Legal Input Is “Quite Scary”, about how the UK-based law firm Addleshaw Goddard (AG) is helping clients implement contract-lifecycle-management (CLM) systems:
The 2,000-person law firm is increasingly helping major corporates with CLM implementation projects; for example getting a corporate all set by helping with template creation and advice around legal workflows and compliance – steps that cannot be handled by just anyone, AG argues.
While creating templates may sound simple, the reality is that for a large company there may be dozens of documents, perhaps hundreds, that potentially need to be fed into the process. Interwoven with these, as [two AG representatives] underlined, are a complex mix of legal issues where you can’t just throw a consultant at the problem.
This need for expert legal input is all the more acute now because the demand for CLM tools is growing strongly—yet inhouse legal teams often are not prepared for what needs to be done for those systems to deliver value, nor do they have the time to do it.
Hence the need for external legal support in the implementation process from experienced lawyers such as [an AG partner] backed by the extensive innovation and legal tech team under [AG’s Head of Legal Innovation & Legal Technology]. They have worked with several major corporations already on such matters, including Britvic, the drinks giant.
I know nothing about Addleshaw Goddard or its clients, but I find this deeply unpromising.
This isn’t the first time I’ve encountered the notion that law firms can serve this function. Here’s what Richard Susskind and Neville Eisenberg say in this 2021 article:
There is opportunity here for law firms—if they can build vertically, supplementing their mainstream lawyers with paraprofessionals, technologists, project managers, and others, then they will be able to compete with full-service alternative providers (where they are permitted) and dominate the markets in which regulation prohibits lawyers from delivering their services from alternative vehicles.
That might sound fine in theory, but there’s awkward reality to consider, the first issue being whether, as a matter of process, law firms are equipped for this role.
If anything, law firms have even less control over their contracts process than do companies. Reasons for that include the partnership structure, which interferes with centralized initiatives. The billable hour, which also interferes with centralized initiatives. The mixed and unpredictable workload, which interferes with economies of scale. And the tendency for law firms to do higher-value work, with getting the deal done taking priority over cost-effectiveness and quality.
Here's what Alex Hamilton has to say about this in his LinkedIn post about Susskind and Eisenberg’s article:
Well, the thing is that you can’t build the law firm they are describing starting with, well, a regular law firm. Why? Because: (1) to make it work, you need to radically change how lawyers operate, the incentives that apply and how decisions are made, but (2) partnership models are perfectly designed to protect the current power structure and resist change, with the most successful under the old model holding the reins.
The next issue relates to the c
ontracts expertise that law firms in general (according to Susskind and Eisenberg) and Addleshaw Goddard in particular (according to the Artificial Lawyer article) supposedly offer.
In my own critique of the Susskind and Eisenberg article, in this July 2021 blog post, I limit myself to making two points: First, that nothing prevents people other than lawyers from being equipped to work effectively with contracts. And second, that if you combine artificial intelligence and contracts expertise, you don’t have to hire a bunch of lawyers to do the grunt work. I’ll now offer a third point: I wouldn’t look to law firms for advice on what to say in commercial contracts or how to say it.
I have some experience in this area. I’ve studied how to say clearly whatever you want to say in a contract. In that capacity, I’m author of A Manual of Style for Contract Drafting. I’ve also resea
rched contract “boilerplate”—the general provisions you see at the back of most contracts.
From this vantage point, I’ve looked at countless contracts and have concluded that the contracts world is awash in dysfunction. That applies to contracts drafted by law firms. I used to critique BigLaw M&A drafting (see for example this 2013 blog post), until I decided there was no sport in it. Recently I did three blog posts (here, here, and here) about glitches in M&A drafting that no one seems concerned about. I’ve even had a look at UK “Magic Circle” drafting (see this 2016 blog post). And I’ve written at length about how English law firms accept uncritically the shambolic English caselaw on endeavours provisions (see this November 2021 blog post and this 2019 article).
Law firms might be excellent at getting the deal done. And I know that plenty of individuals at law firms care about clear, modern contract drafting. But nothing I’ve seen suggests that law firms as institutions are equipped, in terms of process expertise and content expertise, to tell companies how best to handle their commercial contracts.
To serve that function, I’d look to a process-driven organization that combines technology competence with real contracts expertise, not bogus conventional wisdom. May the best organization win!