Definitive guide to legal document automation for in-house

Document automation means creating automated templates, using software, for legal documents (such as contracts). Once the templates are created, users of the software usually answer questionnaires. Once it has this information, the software can instantly generate the contract, and you’re done.

The purpose is to automate the repetitive process of building a document from scratch each time you need a new contract. In practice, many contracts are extremely similar, with just a few variations. So, for example, once you create an NDA template, the next time you need an NDA, you can generate it much more quickly using the questionnaire. The completed questionnaire will enable the system to dynamically create the document, selecting and inserting clauses throughout based on answers given. The software also persists all formatting, numbering and document styles as per your requirements which saves even more time.

Automating the creation of complex documents can dramatically reduce the human effort, time and costs involved in drafting. It also helps to reduce risk; once the initial template build is done, the opportunity for human error to creep into the drafting process is dramatically reduced.

Finally, successful document automation can allow colleagues to self-serve. For example, if an in-house legal department invests time into automating the templates for its sales contracts, then when a new sale is made, the sales manager can answer a few questions within the software and generate a watertight sales contract without imposing a time cost on legal. This leaves legal free to focus on the biggest risks and value-adds.

If automation is not the right solution, consider other ways to improve matter management, such as task management tools and process mapping.

During discussions about document automation platforms you may encounter some unfamiliar technical terms. Explained here are some of the most important words and phrases.

Variable types

Every variable has a type which determines what kind of data it is holding and which functions can be applied to it. Some types of variable within a document include:

• Text – A single line of text containing any alpha-numeric characters.
• Multiline text – Any number of lines of text, including alpha-numeric characters and line breaks.
• Yes/No – A variable that only contains a yes or no answer.
• Text selection – A variable that has many choices. This can be a multi-select checkbox question or a single-choice dropdown.
• File upload – A path to a document to be uploaded and re-generated.
• Whole number – A variable that contains a whole number only.
• Decimal number – A variable that can contain a whole number or decimal number.
• Date – Contains a date.
• Time – Contains a time.
• Computable – Contains a calculation or business rule. Such a variable won’t be ‘asked’ on the questionnaire, as it will be calculated from other inputs.

• Increase matter velocity for more predictable and more profitable AFAs
• Capture and codify lawyers’ expertise
• Leverage workflows to develop new business models with clients
• Win new clients with better business development

We have spoken to hundreds of in-house legal teams about their contract maturity and needs and have narrowed down the top 10 questions on their minds when it comes to improving their contracts process. There isn’t always a single straight answer, as it will depend on the situation, but the answers we have suggested here are based on the most successful solutions in our experience.

Note: we have used the terms “document automation” and “contract automation” interchangeably here. In-house legal departments

Q1: How can I make my team more efficient to free up their time for higher value, and more interesting, work?
A: Through the automation of your contract templates, self-service contract creation and efficient approval workflows.

Q2: How can I get better visibility and control of the contracts that my company is creating?
A: By using contract automation software that offers analytics dashboards and reports.

Q3: How can I improve the management of our contract obligations?
A: By using ‘guidance apps’ with your contract automation software. Please contact us for more information on what this could mean for you.

Q4: How can I make sure I am implementing a future-proof solution for my colleagues around the business?
A: By using a solution that includes contract creation, approval workflow capabilities and a development roadmap that focuses on your needs as an in-house lawyer and the business demands for innovative technology capable of integrating into your business technology ecosystem.

Q5: How can I leverage automation technology to control legal spend?
A: By automating the contracts process, the team can keep more tasks in house rather than outsourcing them to expensive law firms.

Q6: How can I use contract automation to demonstrate our value to the business?
A: Through a better understanding — using analytics — of the contracts process, how it leads to faster revenue recognition and lower risk to the business.

Q7: How can I enhance our risk mitigation and compliance through contract automation?
A: Through a tighter control over what contracts leave the company, their quality and the negotiation process. This is greatly enhanced by the right collaboration and reporting capabilities.

Q8: How can I leverage my team’s expertise throughout the business, for example with the sales team?
A: The legal team’s use of contract automation software empowers teams to conduct their business more quickly and efficiently. Sales teams can confidently go from draft to signature while on the move, knowing that they are working with pre-approved (and legally reviewed) templates. A sales person does not have to wait to have someone from legal initiate the first draft. He/she can self-serve, ensuring all the data needed is captured in the sales agreement. The legal team’s risk is mitigated because the sales organisation is working with the latest version of the agreement in question and approvals can still be implemented where non-standard drafts are being initiated.

Q9: How can contract automation help with revenue leakage?
A: Manual data capture is often the starting point for any revenue leakage concerns. Document automation minimises this through the automation of as many data capture elements as possible. Whether it’s the automatic retrieval of supplier information from your contact management system for input into an agreement, or the calculation of the final payment amount on the delivery of a service obligation, document automation software functionality and integration touchpoints minimise the impact that human error can have on this concern.

Q10: How can I better understand my company’s maturity when it comes to commercial contracts?
A: You can benchmark yourself against other legal teams by using in-house contracts maturity benchmarking tools.

AXA PPP Healthcare is one of the largest private medical insurance providers in the UK, serving around 2 million customers internationally. The company adopted document automation to generate commercial contracts for its large corporate clients, but it soon looked to expand document automation to other areas where inefficiency created costs and risk. AXA’s membership policy documents, of which there were often more than 80 different versions, were produced through an inefficient manual process. Its publishing workflow was time consuming, with huge scope for human error and inconsistency, creating a negative feedback loop with errors in documents requiring reprints that caused the cost to balloon even more.

AXA deployed its document automation tool to reinvent the process. It could use the template process to ‘hard- code’ its brand identity into documents; then when a new membership policy document was needed, stakeholders could quickly generate one in the house style. More importantly, when a policy change occurred, through automation, AXA could roll the change out across scores of documents instantly, without needing an external agency to enact published changes at cost, as with the previous process. Keeping this workflow in-house and digitised through document automation allowed AXA to control the process much more tightly and minimise the risk of errors. The project won an award internally. AXA’s Stuart Wilkes, head of technical services, said: “in terms of both production costs and staff time we have already seen a significant return on our investment”.

For in-house legal departments, the pressure to deliver more for less since the global financial crisis is a key driver to adopting technology. Katie Power, Head of Category Development Organisation at FTSE100 company Reckitt Benckiser, had the mandate to improve legal efficiency: document automation was a logical step. “I wanted consistency and simplicity,” says Power. She scoped the requirements carefully, looking to build on previous initiatives, but she also focused on those areas where the business had experienced problems with legal. For a solution to work, it needed to be so easy to use, and obviously beneficial, that take-up within the business would be immediate. Power chose a pilot group of documents, with common contracts like NDAs, joint development agreements and digital service agreements. She used an external firm to perfect the documents, making sure they reflected current practice, and the company’s house style. To implement the document automation, she and her team worked directly with users as they generated documents, to explain functionality and gather feedback to refine the process. Before long, Reckitt Benckiser had bought into the practice and moved to a self-serve environment, with the business empowered to generate documents themselves. This has resulted in business users being confident to work on the basis of contracts where previously perhaps they had been less confident; this brings certainty to business dealings, and reduces risk considerably. “We know that the business is using the new, up-to- date standard documents, so we have certainty about the terms on which we are contracting, as well as a clear audit trail, which is not dependent on an individual remembering to file a paper agreement,” says Power.

Here’s everything you need to consider when choosing a document automation solution for your legal department.  There are two primaries audiences to bear in mind. First, consider your lawyers and adoption, and secondly, consider use outside of the legal team by business users.

Researching the available products with these features will enable you to choose the right solution for your organisation.

Next, build your business case:

• Scope the low-hanging fruit that you’d automate first, and calculate the time savings that would bring ROI for document automation.
• Make sure you clarify how you’ll resource the project — whether that’s inhouse, an outsourced provider, or a combination of the two.
• Sense-check your plan with peers at other organisations. What did they choose? How was the roll out and would they make the same choice again?

Once you’re satisfied, request a pilot period with your chosen provider. Choose a discrete area with a high volume of similar documents, like real estate, and gather feedback from lawyers. If it goes well you can proceed to launch.

It’s worth branding your solution with one name so that post-launch, lawyers all call it the same thing, rather than confusing each other talking about ‘document assembly’ and ‘contract automation’ when in fact it’s the same thing.

It’s no secret that legal teams are under increased pressure from their businesses to deliver more with less. These pressures are driving in-house counsel to think differently about how they deliver services to the organisation, the way their departments are run, and about the technology they can leverage to help them drive efficiency. 

Turning to technology, automation is considered a staple part of the toolkit to help legal departments drive overall efficiency via increased standardisation, improved risk management, reduced cost, time saved, and faster turnaround.

In order to purchase an automation tool, it is likely that you will need to quantify exactly how the tool will add value to the business and there are many ways to do so.

Return on Investment (ROI) is a popular metric used to support investment in automation technology as it is versatile and relatively simple.  Measuring ROI will also help compare the cost savings between various solutions when you’re selecting them. Tangible ROI is the more traditional way in which to measure return. It deals with very specific information that is easy to measure for example, how much money will be spent and how much money will be saved over a period of time.

The very basic traditional ROI formula is as follows:  ROI = (Gain from Investment - Cost of Investment) / Cost of Investment

The less tangible benefits of automation can also be very powerful justifications for investment. For example, increased accuracy, more free time, and reduced risk can be at least as beneficial to the business as the more tangible ROI measures, even though they are qualitative and more difficult to measure.

To help get you started, we have provided some examples of both tangible ROI as well as examples of some less tangible benefits.

The first step: What is the current cost of manual processes to your business?

To understand how automation can positively impact your drafting process, you first need to understand what the current picture looks like. 

For each document type you are looking to automate, you should create a benchmark.  The numbers you need to measure are the frequency of use of a document and the time taken to draft a document.

Other useful data includes:

• The average hourly cost per lawyer
• Length of documents you are considering for automation
• Typical length of time to complete a contract
• Number of contracts handled annually
• Time taken by the legal department to respond to different business queries.
• Annual external legal spend with law firms
• Average hourly rate charged by law firms
• How many documents are your lawyers getting involved with?
• Are the right documents been used?
• Has human error resulted in costs to the business? E.g.  omission of a certain clause or condition, or inconsistent language use leading to onerous obligations or an adverse position 
• Employee satisfaction rates.

Don’t worry if don’t have exact measures for all the above. You can always use estimates to start.  

Once your content is automated, take these measurements again. How has the drafting time decreased? How does this improve efficiency? What else has changed?

Calculating tangible ROI

Time and cost savings by individual document

Users of Thomson Reuters Contract Express report up to 82% time savings in generating drafts of legal documents with automation. This type of ‘time taken’ measurement is the most common way organisations using document automation quantify the results of automating a precedent. (Note: Different solutions will enable different time savings.)

As discussed ROI can be established by close monitoring of monthly statistics for each individual precedent. To calculate the ROI for each automated precedent, the document’s manual drafting time is recorded. The automated drafting time is then subtracted from the manual drafting time to give the raw time saving. Monthly usage statistics for each precedent show how many of each precedent have been generated. Multiplying the raw time saving by the number of times a document was produced, and then by the average fee-earner’s hourly rate gives the basic saving provided by document automation.

Reduction of external legal spend

Automation means that some work that was traditionally outsourced to external firms can be brought in-house thus reducing external legal spend. For example, an in-house legal team outsources all NDA work to an external law firm at a cost of £50,000 p.a. on a fixed fee basis.  The in-house legal team estimates savings of 75% if the NDA was automated and the work carried out in-house instead.  To calculate potential cost-savings you need to know how much you currently pay to law firms for external work.   Additionally, a decrease in overall time spent drafting documents frees up resources so that certain work that is outsourced to external legal providers simply due to lack of resources could now be brought in-house.

Time and cost savings: document consolidation and maintenance

Many precedents are variants on a single document type with variations to handle specific circumstances.  Each of these variants must be individually maintained and updated as any changes are introduced. For the purposes of automation, these documents will typically be consolidated into one document containing all the possible variants. This significantly reduces the overall time spent having to maintain document templates.

For example, there may be up to 16 variant documents of a commercial lease. Through automation this is consolidated into one master document template. When legislation changes and citations need to be updated within documents, the document owner now only needs to update one single document, representing a significant decrease in costs for maintaining documents.

As part of the automation process, a record should be kept of any document consolidation. A benchmark figure for each document set should be fixed as an estimate for the time currently spent maintaining the individual documents.

Going forward, future maintenance on the single or reduced precedent suite can then give an indication of the efficiencies and cost savings delivered.

Other benefits

Time to respond to business requests

Considering drafting efficiencies, if the legal team can respond to a request within hours — generating a document that might take the best part of a day without automation — there’s no doubt the business will be more satisfied with that level of service delivery. Automation can enable the department to handle an increased number of transactions, and a faster turnaround time.

Improved service to the business

There is also a case to say that by introducing efficiencies in drafting, the legal department is freed up to provide improved service to the business.

Speeding up the sales cycle

On the more innovative side of in-house legal service delivery, business users can be provided with access to automation services directly to enable them to self-serve.

By giving business users direct access to the automation software, legally compliant contracts can be generated in a fraction of the time they would normally require. This significantly reduces the amount of time spent in the contracting process, speeding up the overall sales cycle.  It also means that business users are more likely to encourage customers to accept standard terms.

Short sales cycles and closing deals quickly ensure a healthy new business pipeline and brings increased revenue. Delays in the contract creation process slows down the sales cycle and can be costly to the company.  Shortened sales cycles reduce the risk of lost opportunity caused by delayed contracts.

Reduce risk of errors in contract

Manging risk is a top concern for all businesses. The risk of human error in manual drafting can be extremely costly to businesses. As such standardisation of documents is a key initiative for many legal teams. Through the use of automation, the risk of errors and subsequent time and resource costs are significantly reduced.

It helps ensure everyone is delivering the same high-quality service as:

• Only allowable options are presented to the user
• User only interacts with the questionnaire – Only lawyers have access to the Word Document
• Templates means that updates are more easily applied and distributed to users.

If you've decided that you need document automation, then you've made an important step towards faster, more efficient client service. But your decision alone is unlikely to be enough. There are other key stakeholders in the company who'll be affected by, and have an interest in, your decision to implement a new solution. Here are their main concerns, and how to address them. 

1. Right-sourcing/risk mitigation: Make sure they understand the wider resource impact of implementing document automation. Provide the hard numbers around time and cost savings that will result from automating legal work and bringing it in house. Explain additional applications, such as sales and HR self-serving contracts.
2. The right supplier: Ensure that procurement understands the value of your chosen solution over the others, particularly if they vary in price. Breaking product features down simply, and explaining security, integrations, ease of use and scalability are key to making procurement comfortable that you’ve chosen the right tool.
3. Predictable costs: Procurement hate surprises, particularly expensive ones. Make sure suppliers have explained their pricing policy with clarity — including training and implementation — and any costs that would be incurred by adding extra users, features or integrations further down the track.
4. Request for Proposal (RFP): Nothing makes procurement more comfortable than a rigorous RFP process. Asking suppliers to engage in this for document automation is a good way to communicate product features and value to procurement in a language they understand.

1. Cost reduction and ROI: The CIO wants to be able to show ROI and demonstrate cost efficiencies at their level. Make sure they see quantified cost impacts that they can report — particularly if they extend beyond just the legal department (for example, into sales or HR).
2. Employee engagement: Deployed correctly, new technology can revitalise employees, liberating them from mundane work so they can focus on high-value tasks. Make sure the solution is communicated in this way, so in-house lawyers don’t feel they’re being automated out of a job.
3. Technical details: Your CIO will have numerous questions around security, data management, integrations, compatibility, upgrades and maintenance: make sure you’re ready to answer these questions if you hope to sell the CIO on the solution. Red flags against any of these will raise too much risk for a CIO to sign off on new technology.

1. Efficiency: Some colleagues may simply be unaware of how much legal resource is used up by manual contract processes. Communicate this clearly so they understand the need, and why finite spend (to which their department might have been entitled) should be diverted to document automation solutions.
2. Managed risk: Colleagues who may have held sign-off privileges for contracts might worry that with the new system, their jurisdiction is reduced and their sign-off rights are lost. Make sure that the approval workflow capabilities of the document automation solution are widely communicated, so no stakeholder feels that they’re losing control; in fact, risk will be managed even better.
3. Terminology confusion: Different stakeholders might have different terms for the same solution. Document automation, document assembly and contract generation are often used interchangeably — make sure everyone’s on the same page, with enough information to make an informed decision. Finally, consider who holds ultimate sign-off. Depending on the size of your company, this could be the CEO or CFO — do they know what document automation is, and what it’s for? Be prepared to educate colleagues at a basic level, and make sure you leave enough time to do this properly.

You’ve now identified that your law firm can benefit from legal document automation and have evaluated your automation options. The next step is to start building a business case.

To help you build your case we’ve identified some key business considerations your business case should address:

• Why the business should automate and what will the return on investment be
• That the appropriate resources required are available, or the costs are included in the business case
• The impact of change and a plan on how to manage it
• What a successful implementation looks like.

We’ve all been witness to it before. A new initiative, programme or tool. Promising to revolutionise the way we work. A big launch announcement. A week of internal promotion. And then we never hear of it again as it dies a slow death due to poor implementation.

Implementation of document automation solutions is no different. Successful implementation is essential to automation being fully adopted and utilised by the business. Many automation solutions have failed to be fully utilised across the contract lifecycle simply due to implementation issues.

Once you have selected your vendor and have been through any pre-implementation activities, you will start the implementation project. Document automation implementation is a very collaborative effort, involving a number of key stakeholders from the business as well as the solution supplier. Each supplier will often offer their own project plan. But to help you better understand the steps you need to take and who from the business has a role to play, we’ve outlined a list of general key project roles and implementation project milestones.

The following roles are recommended for the implementation project, multiple roles may be fulfilled by one person.

Central Project Team

Business Sponsor – A senior or executive member of the organisation who can provide global authority and support.

Author(s) – The central interface with individual practice area leads. Responsible for liaising with practice area groups to select, prepare and automate precedents and prepare for launch. Will also be required to engage with the Solutions Supplier for feedback during the

migration project.

Administrators – Individuals responsible for the configuration and maintenance of the system. This is not an IT role, but for elements of data draw from other systems requires interfaces to technical teams.

Senior Technical – Provides a central interface to infrastructure and integration resources. Manages feedback from the Project Manager on technical projects.

Project Manager – The key project overseer who will work with the Solutions Suppliers in delivery and report up to the Seniors and Sponsors. They will be needed to draw together the various document and stakeholder elements from the law firm for the project.

Communications Manager – Responsible for approving and confirming communications around the project are appropriate and ensuring a launch communications plan is in place. Typically combined with the project manager role.

The below roles will be held by many individuals over the course of the project as different practice areas are included in the roll out. For each target practice area, we recommend an automation steering group is formed of these core roles to ensure each practice area is enabled for automation. They may, during their area’s implementation, attend either weekly catch ups, or specific area calls.

Document Owners – Individuals able to provide legal expertise (document, process and reporting) and output review. Prepares document briefs and liaises with the Authors.

Department Head – For the current document/department an individual able to provide sign off on the final agreed template for automation and final output for release to users.

Acceptance Testers – Individuals from practice areas who will provide feedback on outputs for the Authors.

Technical Liaisons – For deployment requirements or integrations provides technical expertise and ensures local action delivery where a practice area has specific requirements.

Solutions Supplier – roles and responsibilities

These are roles/expertise that you should look out for at your chosen supplier.

This expertise is required to support a successful implementation.

Account Director – Provides supplier oversight and an escalation point for the law firm around any element of project delivery.

Customer Success Manager – Provides overarching project success and departmental criteria management. Will work with the senior team at the law firm as a point of product and account responsibility. Provides support and best practice in elements of change management and communications planning.

Services Project Manager – A senior service delivery consultant who will project manage, plan and document the automation, configuration and deployment requirements.

Automation Consultants – Team members responsible for delivering automation and any further automation services required, and configuration during the project.

Systems Engineer – Responsible for the deployment and technical guidance around the system and its integrations.

Integration Advisor – Provides initial guidance and ongoing advice to parties developing integrations with the document automation system.

The implementation schedule and stages can vary, depending on the solution provider, size of the firm or organisation and complexity of the document process being automated. With that in mind, we have included a sample Thomson Reuters Contract Express implementation time-line. We  recommend checking with your shortlisted suppliers to see what implementation guidance they provide.

Changing how an in-house team creates contracts means a huge shift in mind-set for some lawyers, and getting this right is crucial for document automation to succeed. Change like this doesn’t just happen; it needs a strategic approach and buy in from stakeholders.

Change management consultants identify four principles as essential for success:

1. Employees who see the point of the change, and agree with it, are more likely to get on board: Change starts with the individual — not management, the department or the team. If the individual doesn’t believe in the overall purpose of the change, the mismatch in their beliefs and actions will lead to conflict and inaction. Make goals explicit and measurable, reinforce them, and help people understand the role they play in achieving change.
2. Accompany the new behaviour with recognition and reward systems: You need both the carrot and the stick. The latter is no problem for law firms to implement, but the former takes work. Making explicit the change’s rewards and personal benefits for individuals — such as new skills, opportunities for advancement and participation in strategic goals — will make that change more likely to happen.
3. Prioritise the skills employees need to adapt to the change: The law firm must invest time and resources into training employees in the right skills to adapt to the change. Without the skills required to maintain the new way of working, employees will inevitably default to what they did before.
4. Role models within the organisation also need to display the new behaviour: Change champions are a must at every level: employees who ‘walk the talk’ have to act as role models for the rest of the firm, visibly tying adoption to success. If employees see colleagues at their peer level achieving relatable success with the new tool or system, they’re much more likely to adopt too.

For in-house teams adopting document automation, successful change management is often driven by the goal of adding real value to the business. Vicky Lockie, former Associate General Counsel at Pearson, has overseen various process changes involving technology. She advises that “the business is constantly changing; we need to continue to evolve to meet those changing business needs. It’s important that we don’t think that structural change is fixed”. Behind the big picture of any technology implementation are real people — managing the impact of change on each of them is crucial to its success.

Change management is understood to be a critical success factor in any software implementation. Many organisations may face challenges in implementing such a solution, particularly where business areas perceive it will result in an increased workload.

We recommend investment in a proactive plan for communicating change and managing stakeholders throughout the organisation. In addition to defining and ensuring adoption of new processes, positive messaging and support will be critical to cultural acceptance of the new solution.

• Identifying and mapping stakeholders: Assess the nature of each stakeholder’s influence and importance.
• Define internal value proposition: Map business strategy and objectives to strong, meaningful internal value proposition.
• Guiding change leaders: Identify key sponsors and compile sponsor toolkit.
• Champion programme: Best practice guidance and structures for implementing business champion programme.
• Communications delivery plan: Map best resources and available channels (case studies, emails, etc.) to a detailed delivery plan with assigned responsibility and ownership.

As you now know, legal document automation helps you automate the creation of complex legal documents, dramatically reducing the effort, time, and costs involved with drafting — improving consistency, reducing risk and allowing lawyers to focus on higher priority tasks. Legal document automation is no longer only for the exclusive few, it’s now a crucial tool for both in house and private practice, no matter their size.

With this guide, we hope that we’ve demystified document automation and provided valuable information, tools and guidance to help you along your document automation journey, from understanding the benefits and jargon through to purchasing and implementing a document automation solution.