LegalBusinessWorld Posts

Contract Design Canvas: How to plan and deliver a contract design project without losing your way (or mind)

January 30, 2020

Verity White introduces the Contract Design Canvas, a tool to develop a clear plan for your contract re-design project.

 

The law has a rich tradition of writing, meaning, and interpretation. And it is time to add to that tradition with re-designed, user-focussed, visual based contracting elements. 

 

If you aren’t happy with the contracts at your organisation, change them! 

You need tenacity, a clear purpose and a well-defined plan to carry you and your project team through the difficult and often circular process of contract design. 

 

I am excited to introduce you to the Contract Design Canvas I created for an easy to follow process to guide your contract design journey – keeping those contract design projects on track! 

 

 

The Contract Design ‘Buffet’

When I am lucky enough to stay at a hotel, one of my favourite parts is the buffet breakfast in the morning. All those options laid out for you, each looking tastier than the last. If you are like me, sometimes you overdo it. 

 

When you begin the contract design journey, think about contract design like a breakfast buffet of many different and not always complimentary choices. Each different element of contract design serves a different purpose. And there are lots of elements to choose from. 

 

 

The way I've structured this Contract Design Buffet diagram is to give a general representation of the ease and expense. I suggest starting simple and working your way through the Contract Design Buffet. The basic elements of contract design can have a large impact at a low cost. There are lots of ways to go about contract design… don’t let anyone make you feel small because you choose to try your own kind of design work. 

 

 

 

PHILOSOPHICAL MINDSET 

What is the purpose of your contract?

Not all contracts have the same purpose. Why does your contract wake up in the morning? If you need a contract to quickly capture small, low-risk transactions, then a large, cumbersome agreement is not going to achieve that purpose.  

 

The purpose of a contract is such an intriguing question, the clever team at IACCM did a global study on this question with their membership base. [1] 

 

What is the purpose of a contract? 
 

  1. A record of rights, responsibilities and obligation

  2. Providing protection and remedies in the event of a dispute A framework for a mutually successful business outcome 

  3. A tool for risk apportionment

  4. Support for a business relationship

  5. Governance and performance management

  6. A tool for risk management

  7. An effective communication tool for those with a need to know

  8. Providing operation guidance

  9. An instrument for generating financial benefit

  10. Demonstrating brand and corporate values

If the key purpose of a specific contract is to allocate and manage risk, it’s a bit troubling to find out this contract isn’t fulfilling that purpose. 

 

If your contracts aren’t performing to their intended purpose, that is a red flag for re-design. A clear signal it’s time to re-design your contracts so they do live up to their mission in life. And that can lead you to the purpose of your re-design project.

 

 

 

What is the purpose of your contract re-design project? 

This is where we start to examine the intended purpose of the contract with our reasons for re-design. When we link these two critical purposes, you have the makings of a robust re-design project.

 

How do you pick a project purpose? 
The best contract design project purposes link back to what your business wants to achieve. This means developing an understanding the strategy of your firm or the business unit you support. You will need to talk to the key users of your contract and try to think from different angles.

One way to focus your efforts is to think about how you want to report back to your manager or team or clients or CEO. If you were standing up at the end of this contract redesign project in front of the key contract users, what are the outcomes you will talk about? What kind of impacts will matter to your organisation?

 

 

Example Purposes for Contract Redesign Projects 

  • Reduce legal handling time to 1 hour for each agreement

  • Ensure our agreements are compliant with [new law or regulation]

  • Cut ‘re-work’ between sales and contract management by 50% (currently 4 re-works required per contract on average) 

  • Create a contract with content and aesthetics in line with our brand voice and tone

 

SCIENTIFIC MINDSET
The idea of a Scientist conjures up images of people in white lab coats with exotic potions and machines. For our Contract Design mission, we need to do some careful planning and testing too. This is where we need to get scientific about our contract design plan and decide on how we want to test the results of our contract design work. 

 

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“In most areas of business, usability and user-experience are considered important dimensions of quality. Not so in contract drafting.”

 

Helena Haapio [2] 

 

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Poolside testing for contract design 

These are ‘poolside’ methods because you can do them by the side of the pool with just your contract, the internet, and your laptop (extra points if you have a cocktail). Poolside Testing is by no means where you should stop. It is merely a flag which can help tell you which way the readability wind is blowing. These basic statistics can’t tell you whether users understand and act on the content.  You will need to move away from the pool at some point (or invite users to visit you at the pool)

 

This is just a low-effort, inexpensive way to communicate changes in the document over time, using skills and tools you already have. 

 

What to measure and why

Readability statistics are easy to set up in Microsoft Word. The below is an example if you have your settings on correctly. [3] 

 

Here are the key areas I like to track and why I track them.

 

 

 

 

ACADEMIC MINDSET
Academics are impressive creatures. Able to focus in on a narrow subject for a long time. Read through seemingly endless source material. What I love most about academics is their curiosity and tenacity. 

 

Fluency in contracts

A key area of academic research for all contract designers to understand is the concept of processing fluency. Processing fluency is the ‘subjective experience of ease with which people process information’. [7] When we try to harness different types of fluency for our contract design, we are trying to increase the ease of processing and understanding contractual information. 

 

 

Here are just a few of the headline outcomes from some intriguing research into processing fluency:
 

  • If it’s hard to read, it’s hard to do. [8]

  • Repetition helps make songs hits. [9]

  • Easy = True … easy to read statements seem more truthful. [10]

  • You sound smarter if you use plain language. [11]

  • People work better together with clear & simple information. [12]

  • Responding to a regulator? Make your response readable! [13]

 

Lose the legalese
People don’t like legalese. [14] This is hopefully old news to most lawyers. 

 

40% of clients stopped reading legal advice or information out of frustration.

 

What stopped me in my tracks was a study showing 40% of clients stopped reading legal advice or information out of frustration. Is a lawyer actually giving legal advice if they write it in a way that clients can’t understand?

 

Prediction: Clear legal writing will become an ethical issue.
I see clear legal writing as an ethical issue. Lawyers in Australia have clear ethical guidelines which are governed on a state by state basis but largely similar across the country. Across the globe, lawyers from all jurisdictions tend to have set of ethical obligations to the court and to their clients. We have a clear obligation to act in a client’s best interests. [17] I believe these best interests include providing advice in a format and in such a way that the advice is understandable, and this is echoed in the Legal Profession Uniform Law Australian Solicitors’ Conduct Rules 2015 at Rule 7.1, where advice must be ‘clear and timely’ to help clients ‘understand relevant legal issues.’ [18] 

 

Time for you to get academic

What basic academic research or reading do you need to do for your project? What is ‘best practice’ in the area you are trying to develop?

 

 

PHYSICAL MINDSET
Our Contract Design Canvas is looking great and it’s time to get onto the tools to do the design work… just like each of our other mindsets, there are straightforward ways to kick-start our physical approach to redesign. 

 

Use tables to simplify contracts 

An easy way to start redesigning your contract is to use tables! Get into the habit of putting definitions into tables. This makes definitions easy to scan,easy to sort alphabetically, and easy to update by inserting new rows. This kind of formatting is useful for metatagging in future if you have a definition

that might change as you move to automate your documents. 

 

 

 

Give your agreement a facelift….
Your contract front page is a great place to start a quick facelift. Here is a basic example of a contract front page facelift.

 

 

The new front page was created with contract users in mind. We wanted it to look and feel different than before. We also it to offer greater functionality – highlighting where resources are as well as setting the tone for the agreement. We wanted to make it clear when the document was signed – so we put it on the front page.

 

Focus on making sure the document is clear and lines up neatly. Put information that is useful for users on the front.  Welcome people into your agreement. For some teams, putting company values up front might feel right. For others, a document map might be most useful. Think about what will work best for your contract purpose. 

 

The ‘Canary in the Mine’ of contract design
I love notice clauses! Is that weird? Notice clauses are the ‘canaries in the mine’ of contract design. [19]

 

  • Fax or Facsimile
    In Australia, it is very rare to use fax machines in most businesses. This is no longer an acceptable way to receive and send notices under an agreement. If your contract is still referencing this 90s tool, time for a modern update!

  • Email
    If your contract doesn’t mention notices by email (or worse, claims this form of communication is not valid form of notice) this is another sign the rest of the contract might need an overhaul to modernise terms. 
     

The back end of a contract filled with boilerplate clauses is generally pretty boring. Adding some visual interest with careful design helps to break up text, helping with processing fluency. 

 

Tried and tested methods: Design Pattern Library 

The amazing team of Helena Haapio and Stefania Passera have worked with IACCM to create a contract design pattern library.

 

The design patterns library makes it easy to pick a few key elements from the Contract Design Buffet and nibble away contentedly. When you project requires more people than just you (which, let’s face it, is every single project), design patterns can also help to explain abstract ideas you might have for re-design in a concrete way.

 

Now go start your contract design project!

To help you prepare for your contract redesign project, you can follow along with the purpose-built Contract Design Canvas [download the canvas here] to help flesh out and execute on a Contract Design plan. I can’t wait to see what you create! 

 

Notes

[1] International Association of Contract & Commercial Management (IACCM), ‘The Purpose of a Contract ‘(2017)  

[2] Helena Haapio, ‘Designing Readable Contracts: Goodbye to Legal Writing—Welcome to Information Design and Visualization,” (2013), IRIS 2013 at p. 447.  

[3] For setting up MS Word settings, check out  Microsoft, Get your document's readability and level statistics, https://support.office.com/en-us/article/get-your-document-s-readability-and-level-statistics-85b4969e-e80a-4777-8dd3-f7fc3c8b3fd2, accessed 13 Oct 2019. Or you could also try the Hemingway App, http://www.hemingwayapp.com/, accessed 13 Oct 2019. 

[4] And years of reasearch shows this: Ann Wylie, ‘Short sentences boost readability’, https://www.wyliecomm.com/2018/08/short-sentences-boost-readability/, accessed 13 Oct 2019. 

[5] Daniel Oppenheimer, Consequences of Erudite Vernacular Utilized Irrespective of Necessity: Problems with Using Long Words Needlessly’ (2005).

[6] William Dubay, (2004) The Principles of Readability. CA. 92627949. 631-3309, http://www.impact-information.com/impactinfo/readability02.pdf, accessed 13 Oct 2019. 

[7] Alter, A. L., & Oppenheimer, D. M. (2009). Uniting the Tribes of Fluency to Form a Metacognitive Nation. Personality and Social Psychology Review, 13(3), 219–235. https://doi.org/10.1177/1088868309341564

[8] Hyunjin Song & Norbert Schwarz, 'If it's hard to read, it's hard to do: Processing fluency affects effort prediction and motivation' (2008) 

[9] Nunes, Joseph and Ordanini, Andrea and Valsesia, Francesca, The Power of Repetition - Repetitive Lyrics in a Song Increase Processing Fluency and Drives Market Success (December 10, 2014). Available at SSRN: https://ssrn.com/abstract=2938838 or http://dx.doi.org/10.2139/ssrn.2938838

[10] Christian Unkelbach, ‘Reversing the Truth Effect: Learning the Interpretation of Processing Fluency in Judgments of Truth’ (2007)

[11] Daniel Oppenheimer, Consequences of Erudite Vernacular Utilized Irrespective of Necessity: Problems with Using Long Words Needlessly’ (2005). 

[12] NA Merola ‘We like people who are easy to read: The influence of processing fluency in impression formation (2014) 

[13] Cassell, Cory A. and Cunningham, Lauren M. and Lisic, Ling Lei, The readability of company responses to SEC comment letters and SEC 10-K filing review outcomes (February 2019). Review of Accounting Studies (Forthcoming). Available at SSRN: https://ssrn.com/abstract=2595661 or http://dx.doi.org/10.2139/ssrn.2595661

[14] Christopher R. Trudeau, ‘The Public Speaks: An Empirical Study of Legal Communication’’ (2012).

[15] Christopher R. Trudeau, ‘The Public Speaks: An Empirical Study of Legal Communication’’ (2012).

[16] Christopher R. Trudeau, ‘The Public Speaks: An Empirical Study of Legal Communication’’ (2012).   

[17] Legal Profession Uniform Law Australian Solicitors’ Conduct Rules 2015, Rule 4.1.1, https://www.legislation.nsw.gov.au/regulations/2015-244.pdf.

[18] Legal Profession Uniform Law Australian Solicitors’ Conduct Rules 2015, Rule 7.1, https://www.legislation.nsw.gov.au/regulations/2015-244.pdf. 

[19] Kat Eschner, ‘The Story of the Real Canary in the Coal Mine’, 30 Dec 2016, https://www.smithsonianmag.com/smart-news/story-real-canary-coal-mine-180961570/, accessed 13 Oct 2019. 

About the Author

Verity is a Legal Counsel and Automation Coach at Telstra, Australia’s largest telecommunications and technology company. With 30,000 employees around the world and 150 lawyers in the legal team, Telstra is a vibrant, customer-focused company. As a part of the Enterprise Customer Contracting legal team, Verity helps support the company's largest customers. In 2019, she was named an In House Leader by Australasian Lawyer and a Rising Star by The Legal 500. Her work simplifying contracts was a Finalist in the Legal category of the 2019 Clear Communication Awards. Verity has a keen interest in the way legal information is designed and helping simplify legal issues to strengthen positive relationships with customers, clients, and the community. She is Secretary of Melbourne hospitality social enterprise STREAT dedicated to helping young people who really need a hand.When she's not working, Verity is cycling (slowly) or writing on her blog Checklist Legal. 

 

 

 

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