Better contracts, Episode 5: breaking bad (the one with the habits)
What you’ll get out of this episode
Through a behavioural psychology lens, I explore some bad habits we have developed over decades of legal practice - in particular contracts - and how they lead to unproductive ways of working. These habits are not just bad for productivity. They are bad for business - and our wellbeing - in deeper ways. I will share my thoughts on how we - as individuals, teams and businesses - can go about forming better habits.
The backstory
I occasionally tune into Behavioural Grooves, a behavioural psychology podcast. The hosts have great chemistry and smart guests. I always think about how the insights translate into legal practice.
In a recent episode with guest Wendy Wood, they grooved about habits, how they are formed and why it’s so difficult to break them. I learnt that habits are response mechanisms formed through repetition over a period of time. They involve strongly embedded trigger-response-reward sequences. The trigger is a piece of information that predicts a reward and tells your brain to initiate a behaviour; then the response is the habit you’ve formed to get the reward. And the reward feels good. That’s why it’s so hard to break old habits. Wendy Wood made the point that it’s much more productive to try to form new habits instead.
I’ll explain in this article how this relates to habits in legal work. Our bad habits don’t just affect productivity, they also affect how we build business relationships and create (or destroy) trust. I will start exploring the idea of building new habits rather than trying to break old ones.
Bad habits
My go-to example of how the trigger-response-reward mechanism works, and leads to unproductive behaviours, is email. Let’s say you get an email that requires you to do something that you don’t want to or have little time for. The easiest thing - and the thing we do so often - is to copy the message to more people and pass on or spread the responsibility. So there is your trigger (an annoying email you don’t want to deal with), your response (you immediately socialise it with a broader range of people), and your immediate gratification (it’s off your desk and someone else’s problem now). We all do it, and it creates churn and clogs up people’s inboxes - often without moving the issue any closer to resolution.
What would a more productive behaviour look like? Maybe try to find a (partial) answer first, or frame the problem in terms of simple questions, or pick up the phone, or get a meeting. There are plenty more examples of bad habits in how we use and abuse email.
Now let’s turn to contracts. Many of the bad habits I discuss are well known by those who think about this area. Yet I still see this all the time in my work. They are still very prevalent habits that I believe are holding us back - as individuals, as teams, and as a profession. They hold back our business customers because they’ve learnt from us. And they increase stress, reduce positive interactions with people and keep us from being creative and inspired - so they are bad for our wellbeing too.
Habit 1: frankensteining
This means creating contracts by pulling together bits of precedents (from the web, your own document set, previous client examples), to form one unnatural whole. This is how everyone does it.
Now, re-using previous examples is fast and effective if done right. But starting from that process as a matter of course is a bad habit. The “reward” is a sense of progress and the comfortable feeling that you know what you’re doing. It also panders to our lazy gene: sitting at your desk and copy-pasting is easier than going off and talking to the business and trying to think creatively.
But frankensteining, as an ingrained behaviour, perpetuates poor unclear drafting (Ken Adams writes brilliantly and often about this, so I don’t need to), increases complexity (you’re more likely to add than reduce) and results in documents that are not truly fit for purpose. It also reinforces Bad Habit 3 - a focus on detailed risk management rather than big picture business outcomes. It is a big reason for the pervasive dysfunctions in contracts.
Habit 2: redlining
Redlining (and exchanging redlines by email) is still the go-to workflow for aligning on documents internally across functions and negotiating them with counterparties.
Redlining is a fossil from the analogue age. It encourages an excessive focus on the minutiae. It builds contracts which are optimised for risk rather than outcomes. It is uncollaborative, adversarial, and destroys rather than builds trust.
In negotiations, redlining encourages the stating of a position and protecting one’s corner - it does not encourage forward thinking about outcomes and how to get to them quicker. It does not force clarity - you’re just putting your position down and expecting the other side to figure out what you’re getting at and work through layers of previous mark-ups. I guess the reward is a bit like the email example: it’s off your desk and someone else’s problem. Of course it then comes back to you, repeating this unproductive cycle.
I am not saying that redlines are not useful. But using redlines as a primary way of working through issues is a poor habit.
Habit 3: least important first
This one has many facets. The vast majority of contracts and the lawyers who are building and negotiating them are still overly focussed on risk and remote contingencies, to the detriment of business outcomes and deal velocity. IACCM studies show that the relationship between the most important terms vs the most negotiated terms is completely misaligned - none of the top 5 issues by importance are in the list of most negotiated terms.
IACCM most negotiated terms 2020
It’s not just negotiations. Contract narrative tends to follow the logic of the supplier - the lawyer - rather than the customer: (a) start with definitions and obscure points of interpretation; (b) show the other side who’s boss by risk posturing early on; (c) spread information around the document any old how and patch it all up with a matrix of cross-references; and (d) leave all the really important business content to the end when the reader has lost the will to live. It’s closely related to the first habit.
I suspect the reward mechanism is the dopamine of the comfort zone, the space where lawyers have a unique skillset: grooving on intricate connections, risk management and imaginary dispute scenarios. Like we are taught to do throughout our education and working lives.
Habit 4: same old tools
To a large extent, poor habits are created or perpetuated by the tools we use. Most people (and not just lawyers) still default to Word+email as their tools of choice. In contracting workflows, the Word+email combination encourages an adversarial to-and-fro process and discourages real-time collaborative work. Those who have experienced the easy collaborative power of Google will appreciate what I’m talking about (no, Sharepoint is not quite the same).
Lawyers are Word super-users. But the same was said about Blackberries and I doubt many lawyers would swap back their smartphones. Contract automation platforms aside, there is a candy-filled wonderland of free or low-cost tools out there that create amazing possibilities far beyond what Word, Powerpoint and Slack/MSTeams can give you:
Spreadsheets. Yes, spreadsheets. The entire world outside of Legal still runs on them and the possibilities to build tools and interactions are more amazing than you think.
Products such as Airtable or Coda which in essence are next-generation spreadsheets, with a more app-like UX, intuitive automation features and growing lists of integrations.
Interactive whiteboard tools like Miro and Canvas, which are awesome for both individual work, small group collaboration and multi-player experiences. Here’s an example from my own work.
Should lawyers code? Not generally. Should we all be using tools like the ones I’ve listed? Yes, every day.
Habit 5 - legals as the last mile
This is a habit that our clients and business colleagues suffer from. As lawyers we are constantly frustrated by clients who agree the commercials and then hand over to the lawyers, too late, without real prior alignment with the other side on the contractual terms. The result are the familiar delays, finger-pointing, stress and reduced trust. Why is it so difficult to get clients to involve lawyers earlier, and to talk about the contractual relationship as a wholesome part of the commercial relationship? Because it’s a habit, and it’s a result of the many other bad habits lawyers have displayed over the decades.
How do you break that habit? If contracts are there to structure and record relationships, then they should be part of the conversation from the beginning. But how do you get the commercial people to start talking about this from the beginning? Two things need to happen:
(a) they need to have the right communication tools to have those conversations;
(b) they need to love the contract so they feel happy to integrate it into the commercial process.
To achieve this, you need to break habits 1-4, and start building the good habits to replace them.
Breaking bad
Breaking habits is hard. Introducing new, better habits is a better strategy. I will be deep diving on this in the next episode: better habits for lawyers, and for those who work with lawyers.
For now, a few suggestions to get us started:
Habit 1 - don’t frankenstein, start by creating something meaningful. Draw up an agreement map before you start drafting or pulling out precedents, and use that to create a skeleton. In drawing up the map, focus on the purpose of the relationship or the topline business objectives, and structure it around that.
Habit 2 - don’t negotiate through redlines. Pull out the top issues, summarise them and agree the principles - on the phone/videcon and ideally using a realtime document collaboration tool. Don’t “walk through” the document. Walk-throughs and redlines should be left to the lawyers right at the end when all the important content is agreed.
Habit 3 - prioritise the most important. Take one of your key templates and reorder the sections to make it more commercially focussed. Check out this blog post and this one for more ideas.
Habit 4 - use (simple) new tools. Introduce a new tool into one part of your process right now. Use it every day.
Habit 5 - create a summary of the key terms of your most important contract template. It should look nice and clear on a single slide. Talk to your commercial people about what should go in there, and about embedding it in their early stage discussions - to manage expectations upfront and give early visibility of possible deal-breakers.
Final thoughts
Take inspiration from the title of this article. One meaning of “to break bad” is to go wild, defy authority. We need a bit (and a lot) of that here: unshackle ourselves from old habits and false professionalism, and defy the years of convention that have formed them. It will make us better at law and better at business.
To see how I turn the ideas from my Better Contracts series into practice, check out.
Majoto - everything I know and believe about contracts, wrapped up in tech.
R/evolution - a gallery of design/tech experiments and case studies.