Bill: I revisited this piece because I’ve been thinking about your discussion with Ken [Adams] about whether the benefit of contract standards lies in increasing quality vs. increasing transaction efficiency/lowering costs. Commoditizing contract drafting should drive down costs significantly, whether your aim is lowering costs or increasing efficiency.
But why does the cost of basic legal documents need to be zero, even for startups?
Bill’s been a long-time companion in the blogosphere and he’s a proponent of change in the legal services industry, as am I. He’s also a fan of technological innovation, as am I.
Here’s what prompted me to revisit Bill’s conversation with Ken Adams. In Bill’s back-and-forth with Ken about the value of open-sourcing legal documents, Bill made this statement: “I don’t see a strong case for reforming contract drafting style.” That surprised me because I’d seen quality and efficiency as the twin benefits of standardization, and I hadn’t really thought of pursuing standardization for efficiency without being concerned about whether quality should be improved. Certainly, you can have standardization without quality (I’m sure a lot of people would argue that LegalZoom achieves this quite well), but in the context of corporate legal practice — which is all I’ve ever known — quality is always essential, whether standardized or not.
Bill’s position on standardization in the context of standard legal documents as I understand it is this: What most startups need in legal documents is largely the same from company to company. Customization (i.e., bespoke drafting) is an unnecessary expense, as well as an unnecessary complexity, which in turn leads to more unnecessary expense down the line. I believe Bill would also argue that standardization commoditizes contracts, which drives the value to zero. Thus, they should be free.
What do you think? Is standardization a worthy pursuit, and if so, for purposes of increased quality or increased efficiency? And finally, is free really the right price for legal documents?