For many lawyers, the first step in drafting the next contract is finding an old contract to reuse. Easy, right? Start with something you know hit the mark and tweak it to fit the current agreement and prevailing market standards. The challenge is that you still must analyze it to decide what to adjust.
This can be especially tricky for newer lawyers who are still learning the nuances of contract terms. It can be challenging as well for seasoned attorneys who are stretching into new and unfamiliar practice areas. In all cases, lawyers can find themselves in a time crunch and might miss the need to customize boilerplate or add a waiver clause for good measure.
Creating a new contract is an exercise in demonstrating and developing lawyerly expertise and wisdom. It is never a copy-and-paste task. It is always a thoughtful exploration of the dynamics between parties, of the best way for everyone to get what they want, and of the best ways to protect your client from risk and liability. Transactional attorneys are starting to take advantage of technology that lets them spend more time on analysis and counsel while still ensuring they deliver a thoroughly tailored contract draft.
Dynamics to consider in the pre-draft phase
Before you grab a contract from the document repository and hit “save as,” you’ll want to think through the specifics of the matter. That can include the relationship between the parties; each party’s relative negotiating leverage; the size and scope of the transaction, including territory and whether the arrangement is exclusive or non-exclusive; and so much more.
These dynamics will all affect the specific language of the contract. And their nuance might not be immediately obvious as you consider adjustments. The amount of time you put in at this point will affect the amount of time you have for drafting and analysis of other elements of the contract.
Allocating risk in contracts – do I need a waiver clause?
After you examine all these dynamics, you may not have time for other steps and considerations. That can leave your client exposed to unanticipated risk and liability. For instance, transactional attorneys under time pressure are likely to spend their time and effort drafting and negotiating the obviously powerful and complex risk allocation provisions, such as indemnification and limitations of liability provisions. But they may then focus less on “boilerplate” provisions near the end, such as cumulative remedies provisions.
Or that waiver provision. Have you considered what happens if a party in the contract doesn’t enforce these carefully crafted terms? Have they forfeited the right to enforce the provisions in the future? Which provisions? For how long? An effective waiver clause anticipates these questions and protects your client from unintended consequences.
Pre-draft preparation with AI
The waiver clause, like so many boilerplate clauses, is easily forgotten in the rush of drafting. This can result in contracting parties facing more liability than they thought they bargained for.
And if you do include a waiver clause, are you sure it aligns with the preferences of the executive team? Does it cause any internal inconsistencies within the contract that could make enforcement tricky down the line? Does it match up to current market standards?
Wouldn’t it be great if you didn’t have to keep track of all this complexity yourself? Especially as you work to produce a document with finesse, one that doesn’t read like it was cobbled together from bits and parts of other contracts. One that is utterly bespoke to the deal in front of you.
Many attorneys are starting to use tools powered by artificial intelligence (AI) to support their contract drafting process. We’re not talking about asking a free AI tool to “write me a contract for the sale of an asset.” Instead, these attorneys are working within Microsoft Word and getting prompts to think about certain clauses they might need, based on the context provided in the document. If relevant, they get reminded to think about waiver clauses!
They are getting good language based on SEC filings and market standards. They are saving time on even the most complex elements of the contract. This is time they can reallocate to providing business counsel or reviewing the contract for internal consistency and to be sure it reflects the relationship between the parties.
Take nothing for granted
There is a lot to be said for reusing old work product. But seasoned lawyers also know there’s no such thing as boilerplate. That is, nothing can be taken for granted. Every word of every contract needs your review to be sure it’s appropriate to the matter at hand.
For instance, you don’t know if you need a waiver clause – or what it should say- without careful consideration of all the dynamics. You can save yourself time for this careful consideration and analysis and still ensure relevant clauses throughout your documents. Look for technology that streamlines and supports your thinking.
The new Practical Law Clause Finder from Thomson Reuters is integrated within Microsoft Word, allowing you to find current market and gold standard language from Practical Law, SEC agreements, and your internal documents. With Clause Finder, you can access the best terms for your agreement and streamline your drafting – without ever leaving your document.
Learn more about how Clause Finder can help your business.
