About Document Assembly

Anatoly Soyfer

Marketing Associate, Business Integrity

What is Document Assembly?

Document assembly products are used to create sophisticated document templates. To generate a document from the template the user fills out a dynamic questionnaire which guides them through providing all of the necessary information.

The magic with products like ContractExpress is the ability to insert various clauses or paragraphs into the document, based on how a question is answered. This type of business logic means that the person filling out the questionnaire is not required to have intimate legal knowledge and just needs to know what the document will be used for. For example by answering if the document will be used in New York or California a different series of clauses will be inserted appropriate to that jurisdiction without the user having to know their meaning or relevance.

Document assembly products typically interface with word processing programs like Microsoft Word to create templates. Different programs use different methods to mark up the template and create business logic. ContractExpress from Business Integrity Inc. uses an intuitive approach that requires no programming knowledge and employs a markup style that lawyers already use to generate variables and fields.  For an example of this intuitive approach please refer to videos at http://www.youtube.com/ContractExpress.

Who is Document Assembly for?

Document assembly is effective for any Law Firm or corporation that produces a large amount of documents that are variations on a common theme. For example Sales contracts, NDA’s (non-disclosure agreements) or fixed-fee documents such as wills. 

In such scenarios, a large percentage of the cost associated with the matter or contract is attributed to producing the document. By automating this process the Law Firm or Corporation not only reduces its costs but also frees up time to pursue new clients and reduces human error.

What Impact Will Document Assembly have on the corporation and its Legal Department?

Whether document assembly can help depends on whether a significant percentage of a law department’s time is spent crafting business contracts on its paper (rather the counterparty’s paper). If it does then document assembly, especially when made available to its business users as safe self-service contract creation, makes a major difference to a law department’s efficiency and effectiveness.

Document Assembly and self-service in particular, frees up in-house resources to focus on negotiation and other high value non-standard work, and so can reduce costs by reducing the amount of work they have to overflow to outside law firms.

What Impact Will Document Assembly have on my Law Firm?

Take a simple example. A law firm is doing a number of matters per year for a client. Let’s say 100. The matters are clearly all different, but at a high level they are all variations of a common theme. On average, each matter is currently billed to the client at $5,000. The gross margin is 50% and the law firm attributes $1,250 of the $2,500 costs of a matter to associates creating client documents using traditional techniques and to partners checking them.

Document assembly does not entirely eliminate this cost because an associate is still required to gather and enter the terms of the transaction into a document assembly system. However, practice has shown that using document assembly, the associates’ time producing client documents can easily be reduced by a factor of ten. And since the partner previously signed-off the automated template at the heart of the document assembly system, that partner no longer has to check each document.  So, using document assembly the cost of a matter to the law firm has been reduced by $1,000.

Not only does document assembly reduce the cost of a matter, but it also reduces the risk of entering into a fixed fee engagement. Without document assembly, the incremental cost of a matter was $2,500, now it’s only $1,500. So if additional matters unexpectedly materialize the impact on the profitability of the engagement is only 60% of what it would otherwise have been.  Additionally, the burden placed on partners to manage associates handling these matters is substantially reduced.

So does the law firm pass on the cost saving to the client?  It clearly depends on circumstances. But let’s say that the client is delighted to accept not only a fixed annual fee but also a reduction in fees of 10% compared to the previous year. With the new arrangement, the client’s fees have gone down by $50,000 to $450,000 per year and service has improved. Consequently client retention has improved. Perhaps the client is even telling its peers about the proactive attitude of the law firm.

The partners are pleased about the positive response of their client, but what of their profit-per-partner?  Since by using document assembly the law firm’s costs have decreased by $100,000 per year, the partners’ profits have increased by $50,000 per year.

What trends do you see across the market over the next several years?

The promise of document assembly has always been improved efficiency, reduced elapse times, and better consistency and compliance. However, this has run counter to the law firms’ billable hour business model.  Document assembly is actually a win-win for law firms and their clients, but it’s needed a shock in the market to make people take notice. The 2009 recession appears to have been that shock. I doubt we’ll see the market reverting to the previous billable hour excesses as we come out of the recession. Efficiency improvement is too deeply ingrained in the psyche of corporate America. We’ll see CFOs requiring their GCs to be more efficient internally, and to enter into alternative billing engagements with their external law firms. The genie is out of the bottle. Now that bodies such as ACC and Legal OnRamp are giving GCs the confidence to stand up en masse to law firms to demand more efficient legal services, we will see law firms being forced to adopt document assembly. 

What impact do you expect from cloud services like ContractExpress.com?

Cloud based document assembly services makes it easier for smaller law firms, and individual practices of larger firms, to get going with online document assembly projects, with or without the involvement of IT.  Cloud based document assembly also makes it easier for firms of any size to offer client facing services without the complexity of setting up an extranet.

Previously, a law firm needed to provision servers to run document assembly, needed IT’s support for that provisioning, and probably needed IT’s involvement because document assembly involved licensed software paid out of IT’s always limited software budget.  Previously, it wasn’t feasible to provide online document assembly for less than $50,000+ per year. Possible for larger firms, but out of the reach of smaller firms and smaller practices.

Cloud based document assembly makes it possible to get started in literally five minutes, with no upfront financial or IT commitment, and for less than $600 per quarter per user after the initial free trial period. The ease of use of ContractExpress Author running in Word continues to drive down the barrier to entry for document assembly projects. It still requires the lawyers initiating document assembly projects to understand their business model as to how they will make a return from the investment of their time, but technology is no longer the limiting factor.

Cloud based document assembly transforms the feasibility of online document assembly projects. Coupled with the business drivers discussed above, I think we will see an explosion of new document based client services as larger firms respond to pressure from clients for improved services, and smaller ambitious firms and solo lawyers see this as an opportunity to gain market share and grow at the expense of larger slower moving firms.

The history of industrialized society has shown that once a new technique becomes technically, commercially, and operationally feasible then competitive forces will see it adopted as a standard way of doing business. The only question is who will be the winners and who will be the losers during the transition from the old way to the new way.