Meaningful Document Process Improvement: Automated Creation with Full Customization

November 25, 2014

Automated Document Generation or Customization?

 

Corporate loan documents are complex, and they obviously have to be accurate, so as not to run afoul of the scores of regulations governing the industry. Automating the production of required documentation can certainly improve both the quality of the documentation produced as well as the efficiency of the document process itself.

 

But systems that automate document production have a critical drawback – no substantive ability to customize “boilerplate” documentation to an organization’s exact requirements. There’s a choice to make: moderately-customizable, “boilerplate” documents with efficient production - or documents customized to your specifications that must be created using ad-hoc, manual methods. It’s difficult to have both.

 

The Benefits of Document Customization

 

Before we examine why substantive customization doesn’t often co-exist with automated production, let’s consider why customization is so important. Customizations reflect the business methods and best practices of an organization, and being able to tailor documentation to more closely represent the organization’s way of doing business is a significant competitive advantage.

 

Boilerplate documentation is generally technically complete and accurate, but progressive organizations need more flexibility. They’ll likely want to add additional customized documents to accompany the new corporate loans they write– such as a Client Services Agreements, transaction specifications or checklists, or customized cover letters. And they may want to customize the language of the individual documents - beyond what is possible using boilerplate document software – to reflect their internal business policies and best practices.

 

The Benefits of Automated Document Creation

 

Automating the creation of loan documents is essentially creating documentation using methods that are more faster and efficient than manual word processing. Efficiencies can be gained in a number of ways, however, the most transformational elements are:

  • pre-screened language - clauses that can be chosen for inclusion into documents, eliminating legal language errors
     

  • unified data gathering - creating an efficient, unified method for gathering the business transaction data necessary for document creation
     

  • business rules – using business rules to control the inclusion of clauses into finished documents

Automating the production of documentation using the methods described above can yield substantial benefits. The use of pre-screened language clauses can obviously improve language accuracy, and it will yield some improvement in the speed with which contracts can be produced. However the largest efficiencies can be gained through unified data gathering and business rules, using a business process management approach to document creation - using rules to determine when to include pre-screened clauses rather than having individuals do it.

 

This rules-based approach allows functional business staff to assist legal staff in creating documentation, which greatly increases the speed of creation and document throughput - the number of documents that can be produced in a given timeframe. It also further improves document language accuracy. Perhaps more importantly it improves the documentation’s “fit” to each given transaction’s requirements – ensuring that the documents created reflect the transaction for which they were made. This approach can also improve the accuracy of the document package, i.e. which documents are included in the package, as well as the compliance of the overall document creation process.

 

Can Contract Management Systems Provide Customization with Automated Production?

 

Yes, but with limitations. Contract Management (often referred to as Contract Lifecycle Management software) does provide significant advantages - both in customization versus “boilerplate” document software and in automated production versus manual creation methods.

 

Contract Management software does a relatively good job in bringing customization to the document process. Document language can be customized by using pre-screened clauses that reflect an organization’s custom document language. The document package can also be customized to include any ancillary documents that the organization wants in its loan package. However, the ability to customize language is generally limited to clauses of text – with no ability to customize to the level of individual words, document styles or other elements that an organization could modify to achieve a desired look-and-feel to their documentation.

 

Contract Management systems can also provide advantages in another area of automated production – they can certain elements of document data with an organization’s other business systems. For example, these systems can provide automated triggers and alerts regarding important milestone dates or trigger actions based on threshold numbers within documents. This allows staff outside of the document creation teams to manage business events based on contractual terms within the organization’s documents.

 

Perhaps the most significant limitation of Contract Management Systems, however, is in the area of automated production. These systems do provide the advantages inherent in the pre-screened clauses approach – increases in speed of document creation and significant improvements in document language accuracy. However the basic approach of these systems does not provide for automating which pre-screen clauses are included in finished documents. Contract Management Systems rely on individuals, who generally have to be legal or contracts experts, to make decisions about which clauses to include and under what circumstances to include them. This approach closes these systems off from the most powerful advantages of automated production, such as: increasing document capacity by allowing functional business staff to help, or ensuring that created documents fit the given transaction’s business requirements.

 

Can Document Assembly Software Provide Automation with Customization?

 

Document Assembly software is a set of technologies for automating the creation of complex legal documents. It has been prevalent in law firms and corporate legal departments for many years. These systems essentially use of two elements to create required documents: templates, which contain business logic and legal language; and interview questionnaires, which capture transaction data. When the transaction data from interviews is process against a template containing logic and language, an accurate document that reflects the transaction’s intent is produced.

 

A Document Assembly approach is essential for substantive customization. Templates can contain complex logic for the inclusion of clauses - and even individual words - for specific business cases. Templates can also contain highly customized styles and images that allow an organization to tailor the look-and-feel of its documentation. Additionally, the interviews used to gather transaction data can be highly customized using complex logic to control the flow of questions to reflect an organization’s business practices.

 

When it comes to automating the production of documents, Document Assembly software offers the advantages inherent in the data gathering and business rules approach to automation. The software is designed to automate the decisions about which clauses to include and under what circumstances to include them. And this ensures that created documents fit the given transaction’s business requirements. And it can also increase document creation capacity to a certain extent.

 

Document Assembly’s limitations have generally been a byproduct of how it has implemented to date. Typically these systems are used within the confines of an organization’s Legal Department. While this certainly allows for an increase in contract drafting speed and improvements in language accuracy, it does not take advantage of many of the more powerful aspects of automated production. Document Assembly has traditionally been deployed as a stand-alone, premises-based solution on the desktops of legal staff. This deployment does little to enable collaboration in data gathering, and it does not allow functional business staff to help in the creation process. It also does not provide much in the way of auditing or gathering information about the document creation process itself. It also does not enable the data collected to be used for reporting or elsewhere in the organization.

 

The deployment of Document Assembly system is beginning to change, however, as operations teams that oversee document production processes have begun to integrate document assembly tools into various types of business process management systems.

 

The Best of Both Worlds - Blending Two Technologies

 

In the quest for automated production of loan documentation that is highly customized, the ideal tool would be a combination of Document Assembly and Contract Management. Document Assembly is the ideal authoring tool with which to automate the construction of complex and customized documents. And Contract Management systems are well suited for providing control over the document production process (approvals, routing, automated triggers, etc.) and for enabling the usage of the data.

 

When Document Assembly and Contract Management are combined, each tool becomes intrinsically more powerful. The Interviews and Templates approach of Document Assembly is far more compelling when blended with a system that can control who has access to these elements, track their usage, version the resulting documents, and allow access to the data collected.

 

Likewise a Contract Management system becomes far more capable when the authoring tool uses a data gathering and business rules approach to creating content, because the data collected gives the Contract Management system far more granular information on which to base alerts, reporting and management of the approvals and routing process. Perhaps most importantly, the Document Management approach allows a Contract Management system to ensure that the creation process results in documentation that fits the transaction for which it was created.

 

Conclusions

 

At Document Agility, we have spent years researching the best aspects of the various contract creation and management tools. This perspective has allowed us to create a solution that uses the industry-leading HotDocs document assembly platform as the authoring tool for a full-featured contract management system.

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