Bringing Kaizen to the Contract Process

[Comments have finally been enabled on this blog, so you’re welcome to chime in.]

I noted with interest this article in the New Yorker by James Surowiecki. It’s about how a focus on incremental gains, in sports and elsewhere, has led to a “performance revolution.”

It begins by describing how a “technological and analytical arms race is producing the best athletes in history,” but it goes on to describe similarly dramatic improvements in performance in other fields—in chess, in classical music. It then notes that not only in sports, but also in business, “organizations, in a systematic way, set about making employees more effective and productive.”

Now here’s the particularly interesting bit:

The ethos that underlies all these performance revolutions is captured by the Japanese term kaizen, or continuous improvement. In a kaizen world, skill is not a static, fixed quality but the subject of ceaseless labor. This idea is more applicable to some fields of endeavor than to others—it’s easier to talk about improved performance in sports or manufacturing, where people’s performance is quantifiable, than in writing or the fine arts—but the notion of continuous improvement has wide relevance, leading to dramatic advances in fields as disparate as airline safety and small-unit performance in the military. Which raises a question: what are the fields that could have become significantly better over the past forty years and haven’t?

Surowiecki mentions customer service, medicine, and teacher training as fields that have lagged. Which field could he also have mentioned? You guessed it—law. And in particular, contract drafting. That’s something that I discuss in my article with Tim Allen of Business Integrity, The Illusion of Quality in Contract Drafting (PDF here).

That article also notes three steps you’d have to take if you want to turn contract drafting into a kaizen process. You’d have to adopt a style guide for contract language; train your personnel in drafting and reviewing contracts consistent with the style guide; and overhaul your templates so they’re consistent with the style guide.

But I don’t need to make those points again. Instead, Surowiecki’s article reminded me of a different point—that if you want contract drafting to be truly a kaizen process, you have to use document assembly.

Surowiecki notes that kaizen is “about catching mistakes when (or just before) they happened, rather than repairing defects after the fact.” With document assembly, you avoid mistakes—whether they relate to what you say in a contract or how you say it—by refining the template. Eliminating a mistake from the template results in that mistake being absent from all output documents subsequently created using the template.

The alternative is to eliminate mistakes from contracts created using the traditional copy-and-paste process. The most obvious way to accomplish that is to circulate a draft for internal review by lawyers. Instead, or in addition, you could opt for a more technical sort of scrutiny. For example, on my recent visit to London I learned that one of the big English firms has a squad of editors who review, from the standpoint of consistency and English usage, draft contracts prepared by the firm’s lawyers.

But because reviewing draft contracts catches mistakes post-production rather than pre-production, it’s equivalent to addressing (to use a Surowiecki example) production problems in televisions by making service calls instead of fixing the shortcomings in the production process that caused the problems. That obviously requires more work and more time. (Also, reviewing draft contracts without the benefit of a rigorous style guide would require relying on conventional wisdom that is, to a greater or lesser extent, likely dubious.)

So to bring true kaizen to contract drafting, you’d need to implement a style guide, provide training, and overhaul and automate your templates. There are any number of reasons for not doing that, some good, some not so good: You don’t have the deal volume to justify automation. Or your organization is so big and decentralized that reaching consensus on that sort of initiative would be like herding cats. Or your lawyers don’t want to surrender autonomy, even if it’s just the autonomy to do a mediocre job. But if you can overcome inertia, the work required is straightforward.

By the way, I like to think that for the past fifteen years I’ve been running a small kaizen project of my own, with significant help from my readers: if MSCD doesn’t reflect continuous improvement, I don’t know what does.

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Contract-Automation Clearinghouse is where I put my posts on contract automation and related topics. My regular blog is at Adams on Contract Drafting.