There are many reasons why you might use contracts in your business.
I recently covered these in my recent article about building trust with contracts, so I will not repeat myself here.
What we will look at here is the concept of legal design and how to use it to make your contracts better. The principal idea I want you to keep in mind throughout this article – and which I will touch on in more detail later – is that contracts aren't just for lawyers.
What is legal design?
Legal design is still relatively new in the grand scheme of things. Yet, it has already proven to be a gamechanger for many businesses – and any people who use contracts – worldwide.
The simplest definition of legal design is that it is the process of applying design-thinking to complex legal information. Therefore, the purpose of legal design is to make the law and the information written in the contracts far more understandable and accessible to anybody. If you send a contract to someone who has to send it to their lawyer for real-world translation, then you are doing it wrong.
Legal design is built on the following three pillars:
- The users of the contract need to understand what it means.
- All contracts must be actionable and provide value. Of course, in some cases, once a contract is signed, you will never look at it again. But where is the value for either party if you invested months in negotiating what it says?
- The user experience of reading, understanding, and ultimately signing a contract. How satisfying or frustrating is the user journey from accessing a contract to reading it and signing it?
These pillars can apply to how you create your contracts and the content of the contracts themselves.
What are the potential drawbacks of legal design?
There are not really any drawbacks of using legal design, but you can potentially run into problems if you try and use legal design but do not execute it correctly.
For example, everything included within a contract still needs to be legally valid and sound. As such, it is not a good idea to design your contracts yourself and just assume they will stand up in court. Bad attempts at utilising legal design have led to some scepticism and uncertainty around legal design, but this is a case of a few bad examples rubbing off on the perception of the wider discipline.
In some parts of the world, doubt is cast over the use of elements like images in contracts. In countries like the US, “legal design” contracts that are too simple and little more than a collection of icons on a page are widely available, which can make the concept of legal design even more confusing and actually prevents the more widespread adoption of legal design.
Avoid these issues affecting your legal design and deliver better user experiences by using software to design and create all your contracts!
What are the reasons for the old school ways of building contracts?
Remember that thought I asked you to keep in your mind earlier?
That pretty much nails the answer.
Aside from that, many businesses adopted a mantra of once contracts were signed, there was nothing more to do. They went in the filing cabinet (sticking with the old school theme) and were only consulted if there was a problem or at the end of a deal. It was also the case that many contracts were replicated, whatever the circumstances. Contracts lacked nuance, were unspecific, and did not deliver value to any of the parties involved in a relationship.
Today, how we use contracts has changed, and for the better. Contracts can help you layout terms of service, performance expectations, and many more things without drowning in legalese.
And they are better for it, too!
How can you rethink how you layout your contracts?
You can pretty much tear up everything you think you know about contracts. As long as you include all the relevant information, the layout of your contracts can take on any form you want. I have seen contracts that look more like landing pages for brands like Mailchimp or Dropbox than critical legal documents.
It is easy to get caught up in your first impression of such a contract, which might be that it is not a contract and does not have a great deal of credibility. However, when you think about it closer, what does it matter how a contract looks? A contract should be the basis for a working relationship. If that means it looks different from what some might consider a traditional contract, then so be it.
A simple approach to rethinking your contracts might be to break down the sections of your contracts and provide two lists of bullet points in each. One that details your responsibilities, and another that details the other party's obligations. It really can be as simple as that!
Why rethink how you layout your contracts?
In simple terms, it is because your contracts need to focus more on execution and the people who will rely on them. Remember, they are not just for lawyers!
By using legal design to adopt better layouts for your contracts, you will:
- Become more client-friendly, as you will not fill your contracts with legal jargon that people do not understand, which will help build trust.
- Have engaging contracts that people read. How do you feel when asked to read a contract and it is over ten full pages, top to bottom, with narrow margins?
- Save costs on lawyers as you can execute your contracts yourself and not need to consult about points of contention.
- Manage your relationships better with contracts that are clear and leave nothing open to question.
- Communicate better with people at all levels of a business. Your contract will not just go to a legal department; it could be read by dozens of people across a company!
- Seal the deal quicker because revisions will be minimal. You will have built trust. You will not need to renegotiate or answer questions about over-complicated terms you have used.
When you use legal design to layout your contracts, nobody loses – except perhaps lawyers who enjoy charging for legalese translation services!
How to layout a contract
First, it is imperative to realise using legal design does not mean just "making your contracts look pretty." There must be a point to it. You need to make your contracts accessible and easy to understand. Do not just cut and paste contracts into something that look like a PowerPoint presentation back from when people saw PowerPoint as innovative.
Second, using legal design does not mean we are re-inventing the wheel. You do not need to get too smart with what is in your contracts!
How can you layout your contracts?
- First, settle on a design and layout. This might mean you create a colourful, branded document or utilise white space to effectively highlight the key points and ensure the reader can focus on the content.
- Include a short introductory summary of the contract, including what it covers, the parties involved, and any specific terms of reference.
- Format your content to clarify what elements are relevant to your role in the contract and what parts are the other party's responsibility.
- Do not be afraid to use graphics to re-affirm or visualise specific points. For example, if the contract cites an escalation process for problems, consider showing this as a flow chart or pyramid.
Finally, while legal design is a vital element in helping you create bespoke contracts every time, you should consider using templates to speed up your content creation process. If you use a contracts platform like Contractbook, you can still create bespoke contracts by pulling together rich data relevant to your agreement and presenting it within your design.
Once you are happy with your legal design, you do not need to invest any time in ongoing maintenance or changes. You can get on with running and growing your business and providing a fantastic experience to your clients! Make that fantastic experience start with outstanding contracts built on incredible legal design!
Using legal design to help you create better contracts
If you are not already using legal design to help you create better, higher-value contracts, now is the time to start.
Choose your Contractbook plan here to begin embracing legal design and using better contracts at all levels of your business.