What Is Contract Generation?
Contract generation, while perhaps not an industry-standard term, refers broadly to the process by which contracts are translated from a "contract-template-plus-screen" system (whether manual or electronic) into a "contract-template-plus-data-input" condition. In other words, contract generation is a technique that allows users to start with a delimited set of contract template options, combine them in an appropriate way, and then produce a final, real-world contract document.
There are many ways to think about contract generation. You may think of it as a basic document assembly tool, comparable to Microsoft Word’s mail merge process. It’s more than that, however: it’s not just a question of dragging-and-dropping a few elements around, it’s also about the meaning of those elements. An attorney can (and likely will) shape the final product by the way she describes it , but the contract does actually mean something substantive. Contract generation takes data and builds it into a document, in a way that bears a meaningful relation to a legal transaction to be undertaken.
Unless the whole of the business world consists of entrepreneurs bent on writing their own contract documents, contract generation is an important tool in the modern business environment. It dramatically speeds up the contract creation process by using a pre-approved set of templates, and it prevents the kinds of inadvertent, non-legal changes to the text that can occur when a contract is passed around for review. Further, by hiding most of the complexity behind a wizard-guided interface, it opens up contract negotiation to a wider variety of workers.
Advantages of Automated Contract Generation
One of the most significant benefits that contract automation tools can provide is the ability to generate contracts quickly. After a standard contract is initially drafted, those contracts can be reused as a contract template for future contracts. This greatly reduces the time spent on drafting contracts and allows the documents to begin reflecting the terms that the company typically uses in their standard contracts. The process of revising contracts for each contract resulted in wasted time and sometimes forgets habitual clauses or uses an incorrect template. The revision process can also involve multiple parties, such as legal, finance and others, creating a slow process.
The other benefit in that the documents are usually standardized, as the templates are updated periodically. If a contract can be further improved, an issue can be resolved in all future agreements and allow for a standard that all parties are aware of. The ability to be standardized improves compliance as well, as everyone is following the same guide, regardless if the contract is generated by a contract generation system or happens in a different manner. Since everyone has access to the same words, they may use the same, or similar language. Therefore, in the event that there is a dispute, there is a solid and standardized foundation to work from. For instance, a remedy section will have the same meaning in every contract, instead of being defined differently in every contract.
A case to highlight the improvements contract creation services provides is that of Qualcomm, Inc., which saw a 80% in contract generation time and were allowed to redeploy personnel in other parts of the business. Additionally, it has been shown that while law firms spend upwards of 50% of their time on contract generation, companies spend up to 90% of their time on contract generation. A shorter contract generation period means that the company can rely on the other parties rather than spend money on a firm to generate the contract for them.
Essential Features In Contract Generation Software
When considering contract generation software, it’s essential to look for features that will best suit your organization’s needs. Many are fairly standard and essential across the board; others can be incredibly helpful for businesses in specific situations. One key feature is template customization. Does the software allow you to create and save templates for the most frequently used documents and get them back the way that works best for your business? Template customization can save a considerable amount of time, as users can adjust font size and color, as well as font attributes (meaning making text bold or italicized). In some cases, your templates might require addendums, and the resulting document should contain the same font and formatting as your customized template. Another option to look for in contract generation software is integration capabilities. If you’re using multiple software suites within your business, it can be an annoying and time-consuming task to have to toggle between them to generate a single document. However, if you choose contract generation software with integration capabilities, you can generate and complete a document all in one platform. Integration capabilities reduce the number of steps it takes to create a document. Additionally, user-friendly interface and efficient search tools are critical. If a platform isn’t user-friendly, not many people will want to use it—and any time a document needs to be generated or updated, you’ll likely have to spend extra time educating the users on how to do it. Similar to integration capabilities, efficient search tools like "find" commands can help you discover the language used in a tightly worded contract and pull that out to easily reinsert it into other documentation as needed. Any software you choose should also have options for notifications. Many legal agreements require renewal after a specific period, or trigger other follow-up actions based on dates within the agreement. Rather than relying on a manager or administrator to keep track of these dates and take the required actions, look for software that has built-in notification capability. This can help ensure that the proper follow-up action actually occurs, even if the contract is solely stored in the contract generation software.
How Contract Generation Improves Legal Precision
One of the most important benefits a subscription-based contract generation platform provides is the ability to create legally accurate documents in a way that simple, portable templates cannot. Accuracy when it comes to law is of course a vital component of any business. If we think of documents as an organization’s fingerprints — a digital record of everything from how they’re run to what products they sell — it seems pretty clear that an error in those records could cause serious damage.
One area where error is especially likely to occur is at the interface between software and legalese. Though lawyers usually possess some familiarity with at least one or two coding languages, they still don’t operate on the same terms as coders. This distance between language and language has meant that sometimes, the way lawyers express something doesn’t translate to the way a computer would express it.
Automated contract generation closes this distance, improving accuracy by allowing for parameterization and functional decomposition. Parameterization involves the ability to specify with high granularity the values of fields in a document or set of documents. In the context of a contract template, these are usually provisions that require responses. These responses don’t always need numerical values, however. Sometimes they require a simple yes or no, or a longer explanatory response such as the termination clause in an independent contractor agreement. Parameterization also means that you can automatically link one set of questions to another. This, in turn, allows for the creation of a conditional sense of logic within the document , eliminating the semantic errors that arise when certain fields are left empty.
Functional decomposition is the ability to quickly separate a complex process into simpler elements and steps. At its most basic, it’s as simple as turning verbs into nouns. But it allows for up-down document integration specifically when it comes to extracting, auto-inserting and tracking information.
The combinatory logic of parameterization and functional decomposition means that templates are much more likely to generate correct responses than simple static formats. The process of creating a legally accurate document can be automated: simply input the relevant values into a database of templates, and they’ll emerge in the new department. Because the process is so fine-grained, it’s much harder to introduce errors. It’s also much easier to catch them before they happen, since all conditions for correctness are accounted for before-hand.
While it might seem like a small thing, accuracy when it comes to legal documents gives law firms and other businesses a decisive competitive advantage. The lists of clients who have joined Suitably are growing, month by month. We’ve helped diverse organizations ranging from innovative employers to corporate giants, from government intelligence agencies to San Francisco startups. In every case, we’ve managed to drastically reduce the number of errors and miscommunications that occur in their letterhead, contracts, and other written communications. Check out the testimonials if you want to hear what they have to say about their experiences.
If you’d like to experience these benefits first hand, we offer a free demo and quote-making tool.
Selecting the Best Contract Generation Software
When selecting a tool to generate contracts, it’s important to consider your unique needs and how best to meet those needs. Pricing, extensibility, customer support, and scalability are all important criteria to consider when selecting a contract generation tool.
Pricing
The standard contract generation tool is "free", but then you quickly realize that it will "only" work with Microsoft Word. This is fine for many small law firms and small businesses, but for larger firms and businesses that need a contract drafting or automation solution for their entire organization, this is not practical. Most contract generation solutions will charge fees on a per document basis (Minimums may apply. Includes most Axiom Alternative Legal Services documents.) on an annual basis which can lead to significant costs. For example, for a typical law firm with 50 legal document templates with yearly revenue of $10K per template, that firm will pay $500,000.00 annually to license a contract generation tool. When licensing contract generation tools, also look for fees associated with onboarding and training support. Many vendors do not provide onboarding or training support "for free" (they expect/rely on the software provider to do this). Many contract generation solutions will charge fees on a per document basis (Minimums may apply. Includes most Axiom Alternative Legal Services documents.) on an annual basis which can lead to significant costs. For example, for a typical law firm with 50 legal document templates with yearly revenue of $10K per template, that firm will pay $500,000.00 annually to license a contract generation tool. Some tools, like Axiom Cloud, are accessing fees per seat (with a minimum number of seats). This means that anyone in your organization that needs access to the contract generation tool will need their own seat. This can be problematic for larger organizations as seats can be quite expensive. For example, for a company with 500 employees, the cost of 500 seats would be $1,500,000+ annually. Contract Generation tools also charge fees for integrations with your other systems. Many contract generation vendors do not provide onboarding, knowledge base, training and other support "for free" (they expect/rely on the software provider to do this). Many tools, including Axiom Cloud, will charge fees per document transferred from one data store to another. This can add up quickly if your organization transfers large amounts of data from one data store to another (by design or by necessity) Many contract generation vendors do not offer full service support and rely on the software provider to do this. Expect a 24 hour response time from support requests ([email protected]). Leading document automation providers will have different levels of service/support as part of their offerings. Many vendors do not offer onboarding/knowledge base/training support "for free".
Future Developments In Contract Generation Tech
As businesses and users seek more streamlined, secure, and individualized solutions, we anticipate significant future developments in contract generation technology that will likely shape the industry. One potential area of growth is the incorporation of artificial intelligence (AI) into contract generation. As AI continues to advance, companies may leverage it to further customize templates and personalize output for unique user needs. Though AI’s influence on the law is still contested, its role in contract generation is expected to deepen, including the ability to predict when contracts will be signed and for what price, based on variables customers can add to their queries.
Another area of growth is blockchain application . Early adopters of contract construction technology have already integrated blockchain in order to safeguard data (and intellectual property) and verify identities. It is likely that this trend will accelerate, and more industries, including health care, manufacturing, financial services, and real estate, will begin using the technology.
Through the use of templates coupled with intelligent search capabilities and other tools, businesses are unlocking the power of smart contracts and self-executing agreements to simplify internal and external processes. Many businesses have found that by standardizing processes, on-boarding new clients, structuring contract terms, or even defining end-of-year budgets can become quick and easy. Once essential to the legal industry, contract construction technology is now poised to have an impact on all team members at a business.