Definitive guide to legal document automation for law firms

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.

Some solutions enable users to create a suite of related documents based on the same data input. For example, a real estate lawyer could generate a lease, a rent deposit deed and a licence for property alterations without having to repeat the data entry.

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

Finally, law firm clients can be provided with direct access to automation services as a key element of the service offered by the law firm. This can add significant value to the overall customer offering, and allows firms to partner even more closely with their client.

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.

*Respondents to the survey questions were able to select multiple answers meaning the total response percentages exceeds 100%.

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

Clifford Chance was one of the magic circle’s earliest adopters of document automation, implementing automated templates in 2001. As one of the UK’s biggest firms, its document volume was huge, but reliant on a system of manual templates that created inefficiency and risk. Templates were slow to build, and the number of variations and versions was difficult to maintain. The struggle to keep both the templates — and potentially hundreds of lawyers’ use of them — consistent raised the possibility of unacceptable risk in the contract workflow.

The firm implemented an automation solution to reduce risk and bring efficiency to the process. Lawyers ‘teach’ the solution an agreed template, from which a robust contract can be generated by answering a questionnaire. The template allows enough flexibility for variations, but ensures the principles and foundations of the document don’t change due to manual human error. Gail Swaffield, Knowledge Management Specialist at Clifford Chance, explains the difference: “our lawyers need to answer just a single set of questions to get their new variation of the document. As well as the obvious time savings for them, there is more richness and value to the templates rather than managing multiple versions”.

A key benefit for a firm of Clifford Chance’s size is version control. The number of templates in a given area could be reduced from 6 or 7 down to 1, reducing the burden and risk of errors when updating templates. The risk when generating contracts from the template is also reduced — there’s less scope for errors when contracts come from one source instead of several. Now, in 2018, document automation is standard for Clifford Chance and key to its delivery of an exceptional service level. “The key value is efficiency,” says Swaffield. “Our lawyers can get to a first draft quicker, and both they and our document specialists are free to focus on more interesting and more valuable work.”

Pinsent Masons is renowned as one of the most technologically advanced law firms in the UK, winning several awards for innovation and embracing new solutions as a way to distinguish their client service levels. That ethos is driven by clients, says David Halliwell, Director of Knowledge and Innovation Delivery at Pinsent Masons. “We’re under pressure from our clients to change the way we’re doing legal services today,” he explains. Clients’ businesses are increasingly digital in nature, and they expect the external providers they use to reflect this transition. Document automation is a key part of delivering that value.

Pinsent Masons faced a common issue with the implementation of document automation: initial resistance from lawyers. “They couldn’t understand that their work, which they’d seen as beautifully crafted, was just a process,” explains Halliwell. Educating lawyers about this point is crucial: instead of side-lining lawyers, in practice, document automation removes low-value, high-volume document creation from their inbox. Firstly, this frees up time for them to take on more high-value, strategic, value-added work. Secondly, Pinsent Masons found that lawyers started to find innovative ways to use the automation technology itself; for example, creating ‘self-serve’ solutions for clients, so they could generate common contracts themselves, without needing to instruct counsel each time. “Once we shifted people into a different mind-set, they’ve taken that and run with it in so many different ways,” says Halliwell.

Radiant Law is a relatively new firm that embraces technology, both for its clients and for its own lawyers, as a key enabler in delivering award-winning service levels to clients. Document automation has been a key piece of the puzzle since the firm launched in 2011, with many of its hires coming from firms that were early adopters of automation solutions.

The firm uses document automation both for internal document assembly, as well as client-facing self-serve. A client needs to draft large volumes of commercial contracts; Radiant uses automation solutions to build templates for them, optimising the language and structure through the firm’s technical expertise. Clients are then empowered to generate commercial contracts, which meet Radiant’s high standards, on demand.

Alex Hamilton, CEO of Radiant Law, explains how document automation helps Radiant to add value for a top-tier client: “the sales team are able to generate compliant contracts on a self-service basis and don’t need to involve lawyers in every transaction — and importantly, the legal team know that sales can only generate agreements which are compliant with corporate policy.” Radiant is able to facilitate robust legal documents for its client, but also stay out of its way, and empower it to serve itself, seeing the law firm as a genuine business partner.

“The role of document automation in helping us do that is very important,” says Hamilton.

“Our core focus is helping our clients get better contracts in place faster and that means getting rid of unnecessary steps, speeding up the process and making sure that they feel fully in control of what’s going on. All of these are assisted by automation and workflow products so clients can actually see what’s happening on their matters. One of our clients once described the impact as freeing up 30% of their lawyers with the same budget to actually do more strategic deals.”

Kerman & Co has around 50 fee-earners spread across its London and Dublin offices, serving a client base that includes many small and mid-sized publicly-  listed companies. In such a highly competitive area of the market, speed of turnaround and cost-effectiveness are key differentiators: “we wanted to provide a more efficient and responsive service to our clients,” says Martin O’Donoghue, Partner at Kerman & Co. This led the firm to explore document automation.

The firm started by automating basic engagement letters, to prove the  concept to the firm’s corporate group. This gradually expanded to include share purchase agreements, confidentiality agreements, and a range of other day-to- day documents that represent a significant portion of the volume of a firm of Kerman’s size. Using clause management with document automation, the firm’s lawyers can drop clauses in and out to generate bespoke variations, without straying from the foundations of the templates that the partners approved.

The firm made simple estimates of time spent drafting manually, versus the automated process, and mapped the numbers against partners’ billable rates, generating dramatic savings that are shared through a report with the wider team. Document automation has proved so successful and intuitive that the firm even sends questionnaires directly to clients to fill in themselves, cutting costs on both sides and achieving precious efficiency gains. “Document automation allows us to quicken the pace at which we produce documents while maintaining quality and mitigating risk,” says O’Donoghue. “We can produce draft documents quicker, improve the quality and consistency of our service as a whole and, in the process, reduce costs.”

Here’s everything you need to consider when choosing a document automation solution. First, consider internal use and adoption, and secondly, external use by your clients.

Researching the available products with these features will enable you to choose the right solution for your firm’s needs, and those of your client.

Next, build your business case.

• Scope the low-hanging fruit that you’d automate first
• Calculate the time savings that would bring ROI for document automation.
• Make sure you clarify how you’ll resource the project — whether that’s in-house, an outsourced provider, or a combination of the two.
• Sense-check your plan with peers at other law firms. 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 law firms are under pressure from their clients to deliver more creative and cost-effective billing solutions. These pressures are driving law firms to think differently about their services, the way their firms are run and the solutions they can leverage to give them the edge over their competition.

Turning to technology, automation is considered a staple part of the law firm toolkit to drive down the cost of delivery for legal services, increase margin, create consistency, and improve risk management for the firm. Those that have ventured down the path of implementing document automation report that implementing the software positively affects profitability and productivity in the firm. Which begs the question, how are firms truly quantifying this in order to justify the investment in these technologies?

To help demystify, we’ve broken down the main approaches into 3 key steps to demonstrate an ROI from your automation solution.

Users 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 firms using document automation quantify the results of automating a particular precedent. How they achieve this is all about measurement. Delivering an indicative ROI lies in the power of your reporting.

For each document type you look to automate, you should be creating a benchmark. How long does it take your lawyers to draft these documents manually from the existing MS Word precedents? How often are these document types being drafted each month? Once your content is automated, take these measurements again. How has the drafting time decreased? How does this improve the margins on this particular type of transaction?

Quantifying time savings in practice
For law firms, ROI can be established through close monitoring of monthly statistics for each practice area, and 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.

A lesser considered by-product of precedent automation is consolidation of existing templates. Many firms consider their precedent bank to be a key competitive differentiator, so of course great investment is made in ensuring that these are maintained. Many precedents are variants on a single document type with variations to handle specific circumstances or even clients’ own preferred wordings and terms. Each of these variants have to 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.

Two frequently referenced benefits that automation brings to a firm are improved quality of output, and an improved client experience. From an ROI perspective, these are qualitative and more difficult to assign a number to, but are absolute critical factors for a firm’s commercial success.

Managing your brand
From a branding perspective, consistency in terms of quality of service impacts the client’s overall perception of the firm’ brand. As such standardisation of documents is a key initiative for many firms. If firms believe that their own precedent bank offers significant competitive advantage, it makes sense to standardise this across the board and ensure that everyone is delivering the same high-quality service. Automation is a key facilitator to ensuring that this happens. Inherent with that is risk management. Through the use of automation, the risk of errors and subsequent time and resource costs are significantly reduced.

Manage your client relationships
Enhancing client relationships and delivering the best client experience is without a doubt the top driver for any law firm. Considering drafting efficiencies, if a fee earner can respond to a client request within hours — generating a document that might take the best part of a day without automation — there’s no doubt the client will be impressed with that level of service delivery.

There is also a case to say that by introducing efficiencies in drafting, fee earner time is freed up to provide additional value add services to the client. In certain transaction types it may also enable the department to be able to handle an increased number of transactions and therefore increase revenue, or indeed add new revenue streams that would previously have been deemed too unprofitable.

On the more innovative side of legal service delivery, clients could be provided with access to automation services directly which will add value to the overall service offered by the law firm.

In the current competitive marketplace, driving cost efficiencies is a key initiative for firms. Document automation can deliver cost savings through efficient drafting and reduced ongoing document maintenance, which can be easily evidenced through robust reporting and measurement. Automation also helps to drive cost savings in risk and brand management. But its value proposition extends beyond a simple cost saving. Leveraged to its full extent, it can provide new commercial opportunities with new and existing clients, and can drive delivery of exactly the kind of creative and innovative legal solutions that clients seek.

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 firm 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. Business growth and profitability: Make clear to your finance director the return on investment (ROI) they can expect from the solution. You can use an ROI calculator to quantify both the time and cost savings, and demonstrate how these metrics impact the firm’s bottom line.
2. Efficiency: Document automation ultimately  lets junior lawyers and PSLs generate documents based on the templates created by senior lawyers. Fast, best-in- class documents that don’t compromise on quality, but aren’t constrained by resources, are a huge efficiency gain.
3. Managing risk: Thorough, transparent planning and proper scope should allay the fears here, but it’s also worth considering factors like how much training is required, how long will implementation take, what are the security standards of the tool, and will there be a pilot scheme prior to full adoption? Consider each of these carefully to ease your finance director’s concerns.
4. Staying competitive: Find out which other firms use document automation, and what for: do they enable PSLs to handle low-value work? Do they create self-serve portals for their clients? Do they target their efficiency savings at a particular team, or a particular client sector? Work out where document automation would be a competitive advantage and make the case to your finance director.

1. The right tech at the right time:  Make sure you have a solution that integrates with everything else you currently use. Find out how much upgrades and maintenance cost. If any of these raise red flags, you might have the wrong solution.
2. Can you deliver on time and on budget? Check that you have the bandwidth in IT for a change project of this size. Starting with a small use case and a pilot, rather than taking the risk of committing to a huge implementation, will make buy in easier for your IT director.
3. Security and data privacy: Make sure your IT director is part of conversations with your supplier early on to address any concerns about security and privacy. This saves time being wasted pursuing a solution that’s ultimately non-compliant.

1. Client satisfaction: Any managing partner will focus heavily on how a new way of working affects the client experience. It’s important to position automation as a benefit to clients too, in terms of the turnaround time and quality of work they receive, rather than as an efficiency that they ultimately perceive as a cost-cutting exercise that doesn’t benefit them.
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 lawyers don’t feel they’re being automated out of a job.
3. Company reputation: Beyond competitive advantage, a managing partner will consider how new technology affects their perception in the market. Will document automation increase the firm’s profile as an innovative, cutting-edge provider? This can be a powerful message to bring a key stakeholder on side.

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 have all been witness to it before. A new initiative, programme or way of working. Paraded around for months on end.  Promises of revolution, dynamism and efficiency. A big launch announcement. With all the fanfare. 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 it being fully adopted and utilised by the business. Many automation solutions have failed to be fully utilised across the contract lifecycle due to either poor communication or implementation.

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 project, multiple roles may be fulfilled by one person.

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

Author(s) – The central interface with individual business 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 – (Knowledge Lawyers/PSL) For the current document/practice area, individuals able to provide legal expertise (document, process and reporting) and output review. Prepares document briefs and liaises with the Authors.

Practice Area Partner – 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.

These roles will be on the supplier side.

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.

As previously mentioned, the implementation schedule and stages can vary, depending on the Solutions Supplier, size of the firm or organisation and complexity of the document process being automated. The below implementation journey is a general guide only, but will help you to better understand the steps that need to be taken.

Changing how a law firm 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.

Law firms need to focus on all these aspects to make a success of a transition to document automation.  Mischcon de Reya made sure they had buy in at the top level, and then trained specialists in the information services team to work with professional support lawyers in automating the templates. Kate Higgins, Legal Director at Mischon de Reya, instituted a change programme that involved fee earners in early testing to make sure that key stakeholders had sight of the end goal at an individual level. She also advised focusing on easy wins to start with, to show the benefits to those yet to adopt, and worked on a one-to-one basis with those less willing; but ultimately her advice was to “jump in and keep the faith”.

Similarly, Pinsent Masons was one of the first UK firms to implement document automation. Sarah Wilson, a manager in legal knowledge engineering at the firm, found that “best way of introducing change is to let the fee earners see the product in action (live demos rather than slides) and to ensure that there is involvement from the lawyers in developing and tweaking the product. Ensuring that there is buy in at a very senior level is also very important so that a clear message can be delivered as to the objectives of the firm and how the new tool will meet those objectives.” She also encouraged the use of commercial language — talking about the new solution in terms of time saved and gross margin — to make sure that users see the commercial value of the change.

Change management is understood to be a critical success factor in any software implementation. Many firms and 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 firm or 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.

Core activities that are key to ensuring delivery

• 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.