34 Pages Posted: 5 Aug 2013 Last revised: 15 May 2014
Date Written: July 29, 2013
The combination of cost-cutting pressures and technology advances are triggering a major transformation of the core practices of business law. Developments in automated contract drafting and management have spurred the entry of low-cost competition, beginning with the production of standardized documents but moving up-market with increasing customization capability. As transaction lawyers and law firms counter this threat by lowering fees, much less attention has been paid to the strategy of delivering a better product. This neglect is due largely to structural impediments to quality-improving innovation: for example, the practice of billing and compensation on a cost-basis and the absence of a method for valuing premium transactional services. If lawyers seek only to compete on price, then the survival of transactional legal practice as a distinct profession will hinge on the flimsy regulation of unauthorized legal practice, and will ultimately fail. After describing this challenge to the profession, the last part of the Article outlines one path to developing and marketing premium products: exploiting the modularity of contracts to enhance collaboration within the profession (as well as with non-law participants) and encouraging “open-source” peer production of novel contract provisions.
Keywords: contract innovation, legal profession, law firms, automated document production
JEL Classification: K12, K20, K40, L22, L84
Suggested Citation: Suggested Citation
Triantis, George G., Improving Contract Quality: Modularity, Technology, and Innovation in Contract Design (July 29, 2013). Stanford Journal of Law, Business, and Finance, Vol. 18, No. 2, 2013; Stanford Public Law Working Paper No. 2306209; Stanford Law and Economics Olin Working Paper No. 450. Available at SSRN: https://ssrn.com/abstract=2306209