Why a “Disorderly” Approach is the Best Way to Review Contracts

Why a “Disorderly” Approach is the Best Way to Review Contracts

Chances are that this is the first sentence you’ve read in this article. That only makes sense. Starting from the top and making one’s way to the bottom is the conventional path readers make through articles, emails, novels and many other written forms of content. But for lawyers, that’s not the best way to review contracts.

A “disorderly” approach to contract review is actually more effective. Think of newspapers or magazines, where many readers start with an article or section of interest, then wend their way through the rest of the publication. Or take reference works, whose entries are consulted as needed. And don’t forget websites, where pages interlink in complex webs.

The Long and Winding Contract

In both organization and function, contracts resemble modular reference works more than linear narratives. Their structural variability shows as much. Some contracts lead off with a “definitions” section; others close with one. Miscellaneous or “boilerplate” terms typically occupy a contract’s rear quarters, but their exact placement within that area differs widely across forms.

Attorneys also tend to use executed contracts like reference works, skipping to provisions relevant to their immediate needs.

Contract Organization Can Be Arbitrary

However contractual sections are numbered, their placement within the document often reflects convention — adherence to a long-standing template, copying from a prior agreement — or simply the drafter’s arbitrary choices. Sure, one discerns some order: clauses core to the transaction upfront, boilerplate toward the back. But a contract is rarely a meticulously set mosaic.

So why treat it like it is? Instead start by taking a bird’s-eye view of the contract’s landscape; then plot a course that makes sense.

Review Similar Terms Together, Wherever They Sit

One approach is to review substantively similar provisions together, wherever they may sit in the doc. For instance, one might work through financial terms as a group — like payment, pricing, taxes — or tackle indemnities, limits of liability, and insurance together. Or, to the follow the suggestion of contract guru Kenneth Adams in a recent blog post, sort the pile of “miscellaneous” clauses into topics like dispute resolution and contract administration.

By batching together related terms, the reviewer better sees how those terms interact.

Divide and Conquer

In most organizations, complex agreements need input from multiple stakeholders. Apart from legal edits, the contract may require feedback from personnel in finance, tax, IT, privacy, and other departments. Coordinating all those parties’ reviews can create delays.

One way to streamline this process is to identify the relevant departments’ sections at the outset. Rather than work through the entire document before tagging others in, the attorney can ship those sections off for review, then turn to the rest of the agreement.

Approach it Like a Game

Another advantage to playing hopscotch through a contract is that, like hopscotch, it can be fun. Well, less unfun at least.

And that’s not nothing. A big block of contractual clauses can cause procrastination and reviewing fatigue. But chipping away at the same contract bit by bit — starting with shorter and less contentious clauses, for instance, then graduating to thornier ones — can make the task more manageable.

Beginning with “boilerplate” terms also counters a common tendency to, intentionally or not, scrutinize those provisions less.

Make a Map

One objection to taking the roundabout route through contracts is that it’s easier to lose one’s way. Especially if one reviews the contract in multiple sittings, it might seem hard to recall which clauses have been reviewed and which haven’t.

A simple checklist solves that problem. Before reading through the contract, the attorney should list the numbered provisions in a document or spreadsheet; then, as they review each provision, tick it off.

It’s a small extra step, but it also has the advantage of making the reviewer page through the contract before digging into it.

And who doesn’t love the satisfaction of checking off items as done?

Conclusion

Most lawyers are constitutionally drawn to the straight and narrow path. But that approach isn’t the best way to review contracts. The detours are worth it. By taking the sideroads, you’ll see things you’d otherwise miss.

To learn more how lawyer-trained AI can accelerate contract review, download a recording of a recent Today’s General Counsel webinar with LegalOn Technologies here.