Apr 25, 2022

The Benefits of Legal Design in Contracts

We’ve all done it.

At work, you have had to sign a standard NDA or, in your personal life, a User Agreement pops up in the new app you’re using. You could take hours to wade through blocks of legalese in 8-point font. Instead, you click ‘Agree’ and move on with your day, vaguely hoping you didn’t just sign away any particularly important rights.

Traditionally, the burden of understanding contracts has fallen on readers. A contract just has to hit the minimum standards of readability and reasonability. After that, it’s on the readers to parse out its meaning and flag any problems.

But a new movement among legal drafters is proactively revolutionizing the way design is used in contracts. Rather than put the full burden on the reader, legal design experts find ways to make information clearer and easier to digest. They use design to create greater transparency around legal obligations and increase understanding of risks — building trust automatically. Negotiations are sped up and both parties feel better about reaching agreement.

Here are 5 big benefits of better contract design:

1. Delight your clients

Legal departments have an image problem. Too often, they’re seen as obstacles and bottlenecks. A reputation for holding up deals can isolate legal leaders from the rest of the executive team. At its worst, this stereotype can make others slow to consult the legal department or inform them of important developments, as they instead try to solve problems on their own.

The most powerful legal teams of the future will be those who are helpful, proactive, and collaborative. Better contract design is one step in this process—showing clients that when contracts are clear and engaging, they create mutual understanding and can move operations forward instead of holding them back.

2. Create long-term trust

Poorly-designed contracts are full of twisting clauses and obscure jargon. They lack signposts or overview summaries to guide readers. Add in the small print and huge block paragraphs, and you’ve got a contract that few can meaningfully read or understand. Contracts like this are mostly useful as a last resort. They’re weapons to punish someone for misbehaving or to sneak out of being punished yourself.

Legal design instead treats contracts as tools to communicate useful information. Contracts exist to help each side understand their responsibilities and make better plans moving forward. They help establish the right mindset and culture and meaningfully guide behavior.

Contracts that foster trust and transparency can lead to more return customers, more continuing partnerships, and more committed employees.

3. Help each party understand their duties

Mistakes or vague and confusing language in a contract can bulldoze a deal for even the biggest and most experienced companies—like when JP Morgan almost ruined a $1.5 billion loan for General Motors due to an incomplete contract form. The consequences of badly drafted contracts can be devastating for both parties involved.

That’s where legal design comes in. By improving the design, those drafting contracts can increase clarity in their language. This prevents expensive mistakes while offering a leg up to the well-intentioned parties who intend to comply with their contractual duties.

The central requirement for a contract is clarity. The enemy is ambiguity. Often, contract drafters fight ambiguity by adding in more words. This is the road to legalese phrases such as, “including but in no way limited to” or “notwithstanding anything to the contrary herein,” and pages and pages of definitions. But at times this legalese only introduces more ambiguity and confusion.

Ambiguity can lead to costly conflict between parties, but it isn’t only a problem in a legal dispute. If the signers don’t fully understand what they’re signing, or if their duties are hidden away in dense paragraphs, they’re far more likely to miss an obligation.

Legal designers understand that shared understanding goes beyond adding in words. They use design principles to:

  • Create a simpler, more intuitive contract structure
  • Use shorter sentences and plain language
  • Deploy white space to make a contract more readable
  • Use headings, summaries and other signposts to walk readers through the process.

4. Build a stronger culture

Every day, new employees across the world are told they are valued members of the workplace ‘family.’ Then they’re directed to sign an alienating, complicated employment contract that leaves them feeling confused and vulnerable.

The message this sends is that all the nice words about company culture are just a mask, and they shouldn’t feel trust or loyalty toward the people who hired them.

Readable and clear contracts send a different message. By incorporating your organization’s values and voice into all your contracts, you can better support the overarching goals of the organization.

5. Take advantage of new technologies

As the world barrels forward, many contracts are stuck in the past. They look the same as they did 50 years ago. Even when they exist digitally, they’re an on-screen copy of the paper form.

From drafting, through redlining, to the final signing, every step of the contract lifecycle can be improved by technology. The same is true of legal design. You can effortlessly incorporate well-designed headers, colors, fonts, and use of white space to create a better reading experience.

Looking for new design technology and solutions to help you create better contracts? The following tools, exclusively from Outlaw, can help you level up.

Build your legal design library with Custom Themes

Legal departments handle an array of diverse contracts. Rather than flattening all your contracts  into the same unappealing format and language, you can give each kind a unique design that best fits your goals.

Perhaps you’d like a lighter, friendlier format for employee contracts, and a more serious presentation for vendor contracts. With Outlaw, you can create Custom Themes for different kinds of documents, which will be automatically applied when the contract is generated.

Customize any aspect of the document’s format (fonts, colors, paragraph styles, headers, etc.), and save that as a template for future contracts. Generate contracts from templates at a high volume—and keep them both free of error and immaculately designed.

Take control of your contract design with Custom Themes, contact your Account Manager today.

Get to agreement faster with Overviews

One of the most powerful tools for legal design is Outlaw’s Overviews. Overviews are supplementary information that help highlight important details and guide readers through the contract.

Written in plain English, Overviews allow you to set the right tone and orient the reader, helping all parties reach mutual understanding more easily. You can also use Overviews to hyperlink relevant sections together.

Signing a contract can be a confusing and intimidating experience. Overviews acts as a friendly guide, helping readers absorb the information and feel more empowered throughout the process.

Legal design tools are crucial for the future of contracts. To join the legal design revolution today, schedule a live demo with Outlaw.

Written by stevemyrick

More about Outlaw

Voted G2’s #1 Momentum Leader for contract management, Outlaw provides pioneering end-to-end contracting solutions for the fastest growing companies such as Intrado, BeyondPricing, and Democracy International. From dynamic template-based generation through in-app negotiation, lifecycle management and reporting, Outlaw automates and customizes contract workflows helping companies reach agreement faster. Outlaw has been recognized as a legal technology leader in 2020 by the National Law Journal.

In 2021, Outlaw joined Filevine’s legal tech platform to radically improve the future of legal work. Together, Filevine and Outlaw become the first and only end-to-end solution to dynamically link documents, contracts, and databases with their surrounding business processes, resulting in easier workflow customizations, instant automations, and better collaboration.

More information can be found at getoutlaw.com and filevine.com.

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