These days, my job involves helping clients simplify, improve and digitise their standard contracts. In other words, I help them develop better contract templates to use as the starting point for common transactions. (You can read more about what I do – and why I do it – here.)
Naturally then, I spend a lot of time creating and thinking about contract templates.
But that’s not what I’ve done for most of my career. Until a few years ago, I was what lots of people would describe as a transactional lawyer. That meant I spent most of my time preparing and reviewing contracts for specific deals, as well as negotiating those contracts and advising on related issues or disputes. Generally, this involved using a template contract created by someone else, or hacking something together from previous deals as best I could. But one way or another, the transactional work was always reliant on a template of sorts.
Nowadays, the more I focus on creating templates for others, the more I’ve come to realise how different it can be to my approach as a transactional lawyer.
So, what are the differences? And why are they worth thinking about? I’m going to consider this in two parts. In this post, I’ll start by focussing on impact. Then, in Part 2, I’ll share some thoughts about how we can (and should) approach template drafting differently to transactional drafting.
Impact
By impact, I have a few things in mind, but they all flow from the basic fact that, when you’re drafting a template, you’re creating something that’s intended to be used again and again, whereas transactional drafting is generally focussed on one deal. This means that the work of creating and improving templates can have a much wider impact than transactional drafting in various ways. The following table captures some of these, but I’m sure there are more:
| Template Drafting | Transactional Drafting | |
| Deals Impacted | Lots of Deals | One Deal |
| People Impacted | Lots of Deal Teams | One Deal Team |
| Processes Impacted | Lots of Processes | A Part of the Process |
| Impact on Technology | Enabler of Technology | End User of Technology (maybe) |
| Deal Value | 000s x Deal Value | 1 x Deal Value |
Let me expand on each briefly, starting with people.
People
During any deal, the contract documents may be read and negotiated by various people. Even so, the number will generally be limited to the individuals involved in that transaction. And even then, it’s often only the lawyers that will take much notice.
Contrast this with templates. Once in use, it’s likely that most contract templates will, at some point, be used by every person in your business involved in getting the relevant deals done. But far beyond that, they will also be used by the deal teams on the other side of those deals, whether that’s customers, suppliers or others. Over the lifetime of a template, that’s a lot of people whose day jobs will be made easier or harder by having to work with it.
Not only that, once a contract template has been simplified and optimised for different users, that in itself will often expand the pie of people who are enabled to use and understand it.
Process
When doing a deal, the parties may edit the contract along the way (although many contracts are agreed on ‘standard’ terms without any changes). Their drafting may affect the process of getting that deal done – especially if it generates a lot of negotiation – but it’s unlikely to have much of a wider impact on other deals or business processes.
This is very different for contract templates, which can impact lots of the surrounding processes that make up the typical contract lifecycle (for better or worse). For example, a template can affect:
- how easy it is to generate a starting point for each contract (and who does that job);
- how much the contract will need to be adapted for each deal (and how easy that is to do);
- how likely it is that the contract will be negotiated;
- how easy it is to read and understand the contract (and summarise it for approvals); and
- how easy it is to capture key information from the contract (either by humans or machines).
Of course, if a template can impact all these activities (and more), ideally templates should be drafted (and designed[i]) to support them. To achieve that, it helps to factor these things in as part of the drafting process (more on this in Part 2).
Technology
These days, when people are thinking about how to optimise or streamline a process, they’ll typically be thinking about how to use technology to achieve it; something that’s definitely true for many contract processes. Indeed, you don’t have to look far to find a myriad of products that will claim to transform most of the tasks listed above, and more besides.
But here’s the thing (born from experience): making the most of contract technology often relies on getting your contract templates ready and optimised for technology first (along with aligning other resources, like policies and guidance). Not only is this an important step for realising the benefits of technology, it also makes it much easier to implement the technology once it’s done.
As a result, good template drafting has an increasingly important role to play in enabling the use of technology and optimising contract processes. But, on the whole, this just isn’t a factor for transactional drafting. Once you’re at the point of doing a transaction, the deal team will be the end users of technology and templates, and their contract drafting just needs to focus on getting that deal done.
Deal Value
Lawyers – like lots of professionals – like to boast about the value of the deals they’ve worked on, which is understandable. But generally speaking, when you’re drafting a contract for a one-off transaction, your drafting decisions will only affect that deal. So, if you’re someone who likes to use deal value as some kind of proxy for the importance of your work, it will be limited to a simple equation of ‘1 x deal value’ for each transaction.
When you’re developing a template on the other hand, the cumulative value of the deals it could impact can quickly become huge – especially for large businesses or public sector organisations, where their standard contracts may well be used thousands of times.
So what?
At a personal level, some of this can feel a little daunting at times. In my transactional days, I’d rarely have reason to look back at my drafting once a contract was signed; and even if I did, and I wanted to cringe, it was unlikely to matter too much as long as it did the job for that deal. Nowadays, if I look at a template I’ve worked on that I’m itching to improve, I’m left wondering how many contracts it’s been used for and where it might still be being used in the wild. A thought that can drive you a little loopy if you let it.
But, aside from that slightly self-indulgent thought, one of the main reasons for writing this – and for starting with impact – is to highlight the value of investing in templates generally; and to emphasise that this often involves approaching the task differently to everyday transactional drafting.
From my experience, before some lawyers will engage with the idea that templates are worthy of a different approach (or that there could be such a thing), it helps to reframe the discussion about impact first, because it’s not something that’s given much thought. I think there’s a few reasons for this, which probably reinforce each other.
One is that almost all lawyers learn how to draft contracts on the job whilst doing transactions. So, in effect, what they learn is transactional drafting. This means that, even when they do get involved in updating a template or some standard contract terms, they’ll generally take the same approach that they’re used to.
The second is that working on templates has, I think it’s fair to say, been seen as less prestigious and less exciting (surely not?!) than transactional work. I get this. There can definitely be a thrill in doing a deal, especially if it’s high stakes (even though most contracts aren’t). On top of that, transactional work is generally a ‘front office’ activity that is client facing and, if you work in a law firm, earns fees. By contrast, working on templates has traditionally been seen as more of a back office task that is carried out by relatively invisible ‘cost centres’.
This can present some challenges for those that do my sort of work; not least because lots of clients are lawyers with all the same transactional training and biases, both in terms of what they perceive good contract drafting to be, and what it involves.
Transactions are generally immediate and deadline driven, which, if nothing else, can help get budgets flowing. Templates, on the other hand, sit in that funny place of being both a ‘must have’ (every contract needs one) and a ‘nice to have’ (I guess we’ll make do). That can result in some weird outcomes. For example, I’ve seen clients expect to pay very little to overhaul and optimise the templates they use for every deal, whilst simultaneously paying a multiple of that to get just one deal done by the end of the quarter. I suppose it was ever thus in the battle between the urgent and the important.
I do understand the pressure and realities of all that, honest. It’s just that it can be compounded further if, sometimes, even those who do value the benefits of optimising contract templates, undervalue the task of getting there in practice because, at some level, it feels like just another transactional drafting job. And to be clear, this can be just as true of those offering to do the job as it is of those asking for it to be done. After all, it’s just another mark-up, right?
Except it’s not. Or at least, it probably shouldn’t be if you want to be more ambitious about achieving some of the wider impacts described above, because, as I keep saying, that generally requires a different mindset and approach. And it’s to that, that I will turn in Part 2…
PostScript: I wanted to add quick note for anyone that doesn’t end up reading Part 2. None of this is intended to suggest that template drafting is somehow better than transactional drafting; only that there are differences and it helps to acknowledge these and decide what ‘mode’ you’re in whenever you get your drafting pen out. Having said that, I do hope you come back for Part 2 to hear more…
[i] In this post I’m using the word drafting as a shorthand to contrast between template drafting and transactional drafting, but, as I’ll come to in Part 2, in many ways, one of the key differences is that template drafting is about much more than just the written contract language and can involve taking a broader design-led approach (whether that’s user design or information design) .