The business of law is changing like never before. Even as the recession eases, corporate clients continue to pressure their law firms to cut costs, increase efficiency, and move to fixed fees and alternative fee arrangements (AFAs). According to the “2015 Report on the State of the Legal Market” issued by Georgetown Law and Peer Monitor, productivity growth continues to be a major issue, as does the ongoing decline in realization rates. Law firms are also grappling with partners and associates jumping from firm to firm, taking knowledge and clients with them. Document automation can help address all of these problems.
Moving Beyond the Old Ways
Traditionally, document creation and assembly were simultaneously the bane and the bread and butter of generations of associates. Creating new contracts and other documents for every matter involved painstaking efforts that were prone to introducing errors and took a great deal of time. Yet there were few alternatives and few incentives to change. Many older document automation tools were cumbersome, difficult to use, and with the billable hour firmly in place, there was no reason to automate the process or introduce new efficiencies.
Times have changed. Corporate legal departments are now under increasing pressure to cut costs, and they are passing those pressures on to outside counsel. As such, clients are demanding that law firms introduce and utilize new technology to increase efficiency and offer innovative legal services such as fixed-fee client extranets with self-service documents.
Document automation can help firms meet many of these new requirements, allowing them to reduce their reliance on the billable hour and pass on significant savings and efficiencies to their clients, all while maintaining or even increasing firm profitability.
So What Is Document Automation?
In short, document automation is robotic document drafting ‒ think TurboTax meets legal documents.
Document automation software abstracts users from the underlying legal language of a document template and instead presents them with a questionnaire that collects relevant data and guides them through the document creation process. Based on the input provided by the users, the appropriate data and elements of the master template are then automatically inserted into the final document, which is generated by the system and then returned to them.
Using document automation, law firms can reduce the errors, costs and overall inefficiencies associated with traditional drafting methods. Documents can be created in minutes instead of days.
Here is an example of an automated non-disclosure agreement.
Who Automates the Documents?
Ideally, it is best if attorneys themselves automate the documents. The most effective systems should eliminate the need to use IT specialists to automate legal templates by allowing attorneys to automate their own forms directly within Microsoft Word. This negates the risks inherent to handing off the work to non-subject matter experts and allows for easy template maintenance. Using document automation software that allows lawyers to not only automate, but also maintain, their own document templates is the only sustainable solution for a project that aspires to be anything more than a mail merge.
The Business Case
Law firms are finding it harder and harder to maintain profitability as they lower fees and increase unrecoverable hours to remain competitive. Document automation reduces unrecoverable hours and other costs associated with document drafting and can help firms win new clients, retain key clients and not only restore, but also increase partner profits by making possible the compelling combination of better service at a lower cost. For example, before document automation, you might recover six hours for a document that took you ten hours to draft, whereas with document automation and an AFA, you can bill the equivalent of four hours for a document that now takes a fraction of that time to prepare. This massive increase in efficiency allows you to increase your recovery rate and volume while maintaining, or even decreasing your overhead.
Document automation also dramatically enhances knowledge management and retention. Currently, as attorneys jump from firm to firm, their expertise often goes with them. With document automation, much of that expertise is codified and maintained in automated templates, which are then retained by the firm once the original template author leaves. This significantly reduces knowledge drain when attorneys move on.
Starting a Document Automation Initiative
Law firms looking to make the move to document automation should take several factors into consideration. The primary issue is, of course, choosing the right technology partner. Remember that attorneys and staff will not embrace cumbersome technology that is complicated or requires extensive training to author and update automated templates. So shop around and seek recommendations from colleagues when deciding on a vendor.
A move to document automation can represent uncharted territory for many law firms. The very idea of document automation contradicts many long-standing views about hourly billing and the business of law. However, law firms that embrace the right systems, tools and technologies will enjoy tremendous benefits resulting from their new competitive advantage over firms that refuse to embrace the future.