Effective communication is essential for establishing successful relationships, and yet communicating clearly to the intended audience is one of the most neglected parts of contract drafting. We believe a contract map will help you overcome the pain of dealing with incomprehensible contract legalese and overly complex documents and processes. Most contracts are difficult to read, comprehend, and use for many stakeholders who rely on them to perform their jobs. A contract map will help you accelerate upfront the contract development process. For best results, you will want to focus on a user-centered design approach to improve communication and avoid future misunderstandings and costly disputes.
The contract map is a tool that uses visual maps to identify and highlight information in a layered view that focuses on the users and audience of each element or clause. Aligning users with the respective content breaks the document development process into adaptable phases early on and invites various user groups to participate in the process. Beyond that, presenting the information in a logical flow, from macro- to micro- view presents the document through a user-friendly lens and gives it an easy-to-navigate format.
Let’s face it. Contracts continue to become more and more complex. More organizations today are doing business and interaction internationally, creating what we call massive globalization. Often both products and services are combined in one transaction, making transactions immensely complex. Moreover, managing today’s contracts has increased the number of contract terms to deal with. This too adds more complexity to contracts and associated processes. That is why simplifying your contract documents to make them readable, comprehensible, and usable to all stakeholders requires innovation and a new mindset of designing contracts.
Contracts are multi-user documents - who is your audience?
Contracts contain a magnitude of information that users from various disciplines rely on to perform their jobs; however, contract drafting has primarily resided with the legal discipline. The legally-centric contract drafting practices have perpetuated the traditional black-white text-only document format. Concentrating on the users of the information shifts contract drafting to a design process that focuses first on who the intended audience is for the specific information.
A contract serves two main purposes: to serve as a road map throughout execution and as a legal artifact should something go wrong. In a user-centered process, the business deal specifics are documented first1 to assure transaction details are tailored to the specific deal; this then provides the information essential to tailor the legal terms.
Compared to a legally centric approach that focuses on safeguarding clauses, the initial focus is on defining the parties’ obligations clearly and documenting how the parties will work together to avoid future disputes. Using a Proactive Law2 approach that centers around a forward-thinking mindset -- such as applying legal knowledge before things go wrong -- sets a solid foundation for a successful business relationship and helps assure contracts deliver the expected economic profitability.
Contract design focuses on users
Applying design thinking in contract development focuses on user experience. Similar to legal design, contract design integrates information design principles to assure the reading audience can find the information they need, understand it, and take the intended action.
It’s important to ensure that professionals executing the contract obligations can read and understand what the contract says. This is critical for successful contract performance. A new mindset to improve contract design is evolving quickly, and traditional black-white, text-only contracts are increasingly being accompanied with visual representations. World CC, for example, offers many resources and pattern libraries showing how design thinking can be applied in contracts.3 These replicable design patterns provide a foundation for those not trained in information design to present contract language and information about contracts in a more user-friendly format. Furthermore, integrating design thinking with contract technology introduces a replicable, automated approach that allows you to create well-designed contract documents you can use as effective operational tools throughout the entire contract lifecycle.
Technology and contract lifecycle management
Technology enables collaboration and can help you effectively communicate throughout a contract’s lifecycle. This lifecycle mirrors contract management tasks starting from the time a need is identified until the contract officially closes out. Evaluating the companies’ contract management process and understanding the lifecycle helps define the specific disciplines and the users that should be a part of the process. Contracts live in a dynamic state and technology can turn the traditional static contract document, which is one-dimensional, into a flexible multi-dimensional tool.
Today technology is evolving rapidly to support business operations and yield efficiencies. Using contract automation and machine learning is essential for contracts to be readable for both humans and computers, and here’s where two technical terms become relevant:
- human-readable refers to improving the user interface and user experience to ensure the users and stakeholders can read, comprehend, and use the information.
- computer-readable refers to codable contract inputs that allow the computer to first collect the contract data and then learn users’ behavior, and ultimately train the computer to automatically generate optimal contracts.
Automated building blocks of contracts
Contracts are a set of individual yet related building blocks that when combined produce a contract document that provides the framework of a multi-user contract development process. The process must be flexible, dynamic, and user-friendly.
A new concept toward developing automated or machine learning contracts is to define contract building blocks by specifically considering each term or clause in the contract as an individual element of the contract. This deal-specific information is documented one building block at a time while simultaneously interrelated terms are related to each other. To help carry this out, you can use a relational concept map4 to speed up and simplify the process.
With the aid of technology, users will collaborate when the contract is negotiated and developed. Configuration control, editing access, automated workflows, and pre-established review cycles allow multiple users to work on one document simultaneously. However, to shift to a multi-disciplinary contract document development process, the contract data needs to be presented in a user-friendly manner. Text-only documents need to be replaced with a user-centered interface where users can identify and find information easily, document information in their own language, and see the macro view (big picture view plus all major details) of all contract information.
A relational contract map, Figure 1, is a visual overview of the elements that comprise a specific type of agreement. This example map outlines four user-based groupings as a first layer and contract content by headings as a second layer. This illustration provides four user-based categories; business, technical, legal, and administrative -- each aligned with the building blocks of an IT contract. The alignment is not always one-for-one; rather, it depends on who in the company has responsibility for which contract content.
Figure 1. Relational Contract Map
Image by Milva Finnegan©
Technology provides flexibility to view and develop contracts from macro- to micro-view; this is the starting point for layering contract information and aligning user types. The goal is to develop a high-level macro-view of the contract content in a user-friendly structure to help various users navigate and find the information they seek.
A dynamic concept map used currently to layer data is the Creative Commons “Three-Layer” map public copyright licenses.5 The three-layer map contains the legal code that is both human-readable and machine-readable, Figure 2. The Creative Commons “Three Layer” Map is a good example for making contracts both human-readable and computer-readable because the agreement terms and structure are standardized.
Automating the building blocks approach
Integrating the concept of a relational map into a contract software program allows for building a contract-specific outline, also known as a contract map. Figure 3 is an example of a contract map developed by Agreemap Ltd6 that uses dynamic building blocks as a framework to allow for flexibility in mapping contract information, layering information, summarizing data, and producing contracts with visuals.
Figure 3. Contract Map Example
Image by Nitsa Einan©
The design of the input screen guides the user to insert the price and quantity into boxes on the screen. The system automatically calculates the price by birdhouse type and price total. The dynamic entry screen is user-friendly and provides essential information instantaneously. Furthermore, visually presenting contract content in a layered view breaks the contract content into smaller manageable parts.
A flexible tool enables editing the transaction details at any time. The tool is intended to support the creation and negotiation phases of the contract plus the execution phase. In addition, having the data available to the users in real-time, supports informed decisions and better risk management.
Visualization as part of contract design
Visualization is an integral part of any information design activity when striving to effectively communicate information clearly to a specific audience. Visualization ranges from just simple lines to detailed pictorials. Many different types of graphic design approaches are used to communicate contract information via visual means, for example, graphs, swimlanes, tables, flow charts, etc.
Also, combining multiple contract clauses that are interdependent in one visual help reduce the cognitive load for the audience and eliminates having to search for information in various parts of a document. To illustrate, Figure 4, is a timeline of interdependent contract clauses related to the delivery, term, termination, and remedies for late delivery to help readers connect the interdependencies across multiple clauses in seconds. Visualizing interconnected terms can be easily accomplished by coding replicable models in a contract technology tool.
Figure 4. Visualization of interdependent clauses
Image by Nitsa Einan©
In summary, the goal of a Business-to-Business (B2B) exchange relationship is for companies to achieve successful performance and the economic benefits they expect. In addition, maintaining a positive relationship has become equally important. To support these goals, integrating a user-centered contract design approach strives to produce contracts that function as effective communication tools throughout contract performance and serve their legal purpose as well.
Three key focus areas for designing a user-friendly contract are to structure the information in a logical flow and align this flow with disciplines or user groups in a layered view. Further leveraging visualization via information design principles simplifies complex information and shows interrelated clauses simultaneously.
We no longer need to return to the pain of allowing our contracts to be unreadable and unusable. We believe a contract map is useful to all stakeholders and users regardless of function or background, and it is the solution for creating contracts that promote communication and collaboration. An automated contract mapping tool will enable you to design contracts tailored to the intended audience. Layering contract information from a macro- to a micro- view is a user-friendly way to invite various users and user groups to collaborate throughout the contract lifecycle. Improved communication translates into efficiencies both during contract development and execution.
- Finnegan, M., User-centered design: A key to contract simplification. Finnegan, Milva. Acta Wasensia (May 2021).
- The Proactive Law movement began in Finland with a 1998 conference paper by Helena Haapio entitled “Quality Improvement through Proactive Contracting: Contracts are too important to be left to lawyers!”. The Proactive Law movement continues to grow in Europe and today the Nordic School of Proactive Law continues as a forum for both practitioners and researchers to further the methods and legal theories of Proactive law.
- To learn more, go to: https://contract-design.worldcc.com/
- Finnegan, M. (n. 1)
- To learn more about Creative Commons licenses, go to: https://creativecommons.org/licenses/.
- Agreemap Ltd. is an Israeli based startup company, to learn more go to: https://agreemap.com/
ABOUT THE AUTHORS
Milva Finnegan is completing her doctorate degree in Economics (D.Sc. Econ, May 2021) at the University of Vaasa in Finland. Her research focuses on merging contract law and contract design to produce simplified and usable contracts all users can understand. Her dissertation is in the field of business law, on the research topic of user-centered contract design and contract simplification. Milva has been a practitioner in the field for 20+ years, she currently runs a contract consulting company, Karhu, LLC, located in St. Louis, Missouri, USA. Her company helps clients with; implementing contract management best practices and processes, integrating electronic Contract Lifecycle Management (CLM) systems and provides training and teaching workshops on how to re-design and simplify contracts documents. Prior to starting her own company Milva worked at The Boeing Company over 12 years in both contracts and finance disciplines on various multi-million-dollar plus government and commercial programs. Follow her on LinkedIn: https://www.linkedin.com/in/milva-finnegan-89065376/
Nitsa Einan is CEO & Co-founder of Agreemap , an Israeli based startup which introduces a new framework and technology to produce next generation contracts, based on contract mapping, that is both human readable and computer recognizable. Nitsa has served as VP and General Counsel of multiple public and private companies, among them two of the largest Israel’ conglomerates. In addition, Nitsa served as VP Business Development of autonomous driving startup and as VP Business Development and Head of Entrepreneurship of an education technology accelerator. Nitsa holds LLB and MBA (cum laude, dean’s list) from Tel Aviv University. Follow her on LinkedIn: https://www.linkedin.com/in/nitsaeinan/.
Content reflects views and opinions of the author and do not necessarily reflect the views and opinions of World Commerce & Contracting.