The Ultimate Guide to Clause Libraries
A step-by-step guide
A step-by-step guide
Clause libraries recently (re-)entered the spotlight as the latest shiny feature to add to any piece of legal drafting software. But you don’t need to purchase expensive drafting software to create a useful library.
In this chapter, we take a look at the different types of clause libraries that are out there, including the ones you can build right now with technology you have lying around.
The first, and most basic, approach to store your drafting knowledge is gathering everything in one big document. This has the advantage that all your knowledge is centralised in the same place and is easily searchable. The downside: this document will probably become chaotic, slow and unwieldy once the file becomes too large.
Optionally add comments to individual users to guide them in choosing the right clauses.
Make your document available to team members by storing it in a shared location, such as a central folder in Office 365, a Sharepoint intranet site, Dropbox, and so on.
This story may sound familiar to you: many organisations rely on that one senior lawyer who keeps a history of clauses in a single document file.
That person becomes the go-to person for everyone in the firm looking for a clause. The lawyer in question somehow finds their way around "their" file - often hundreds of pages, organically grown and in complete disarray.
Unfortunately, this solution is not scalable, as it is almost impossible for others to find anything in this file. Another unfortunate drawback of this approach is that when this person leaves the firm, the knowledge leaves as well.
Cheap – This approach likely requires zero financial investment since it utilizes a tool your organisation should already have access to.
Messy – As your library grows, it will likely be difficult to keep the structure intact. Also, every document ultimately, inevitably succumbs to styling corruption.
Easy – You don’t have to learn how to use a new tool.
Limited – While this library may help you find clauses easier, it does nothing to ensure consistency of style, terminology, grammar, language, etc. when you actually use a clause in practice.
Quick – You can get started right now. Just open up an empty document and start building!
IP protection – If the intellectual property of the organisation is contained within a single document, it runs the risk of having departing colleagues easily take that knowledge with them.
Another approach to building your clause library is to keep your drafting knowledge in a set of separate small documents and structuring them using hierarchical folders. Here, we trade in the above "quick-and-easy" approach for something a little more structured and scalable.
Collaboration – This approach is much more suited to sharing knowledge with colleagues due to the standardised structure. Furthermore, this approach allows organisations to set up the necessary access rights (e.g.: as an Employment lawyer, you
Limited – This approach already comes a long way in helping everyone in the organisation (not just the curator of the library) to find the relevant content, but it still falls short on assisting (more junior) lawyers – suppose a lawyer encounters a folder containing 40 non-compete clauses. How does the organisation ensure they use the right one? Ideally, metadata are assigned to the clause to show the different legal nuances at a glance (see below).
Structure – The shared drive-powered library is ideal for setting up a standardised structure which also makes it easier for other users to come in and deposit knowledge into the library.
Setup – It takes more time to set up a shared drive-powered library than a document-powered library.
Location search – An additional dimension of searching for relevant content is created – not only keywords but also location inside the library. This makes it even easier to find the relevant content.
Slow – This approach can be a bit more slow to navigate. The folders in the drive are ideally filled with individual document files (which take a longer time to create and open), and if your folder structure becomes large, you will find yourself doing a lot of clicking to get to where you need to be.
A third low-tech approach is to use a spreadsheet to store your clauses. This approach combines easy searchability with additional functionalities to create structure and guidance for end users. Clauses can be stored in different rows throughout different sheets, and can have all manner of additional information attached to them in related columns.
Create a single spreadsheet file, optionally subdivided into different worksheets for different domains or different types of documents.
Create a set of columns where you store the desired information on individual clauses. Popular examples include:
Legal attributes (e.g.: length on a scale from 1-5, aggressive or balanced, identification of a favoured party, company standard or fallback,...)
Augmented intelligence – The multi-column approach allows you to transform clauses into more than static bits of text, by augmenting them with additional information. Highly useful if you want to create contract playbooks or focus on helping users make the right choices when drafting.
Size – Collecting all of your material in one spreadsheet will inevitably at some point overburden the application of your choice as your library grows. This can lead to crashes and lags.
Structured & scalable – This approach combines both the easy searchability of the document-powered library with the structure and scalability advantages of the drive-powered library.
Unnatural use of spreadsheets – Spreadsheet tools are not designed to work with large blocks of text. For example: individual words or placeholders cannot be highlighted, and items such as cross-referencing, numbering, styling, etc. are not supported.
Furthermore, Excel displays a maximum of 1024 characters (i.e., roughly half a contract page). This means that large clauses must be split over different cells.
Excel functionalities – A wealth of spreadsheet functionalities not native to word processors or drives present themselves here.
For example: columns allow you to sort for specific attributes, while Excel-formulas allow you to search for clauses that have specific metadata assigned to them.
IP protection – If the intellectual property of the organisation is contained withina single document, it runs the risk of having departing colleagues easily takethat knowledge with them.
Examples include: ClauseBuddy, ContentCompanion, Woodpecker
Over the past couple of years, several dedicated tools have begun popping up that are geared towards searching and using your clauses in ways where the above mentioned tools fall short.
These tools allow you to create a clause library – typically from within MS Word – which you can populate and use with just a few clicks. Different tools come with different flavours, of course, so below is a list of required features you may consider if you are looking for a dedicated clause library tool.
Any dedicated clause library tool should allow you to search on the basis of keywords.
Note, however, that solely searching on the basis of keywords may not always yield a useful result.
For example: many clauses that do not directly deal with the topic of liability will use this word in some way. Search for a liability clause using the keyword “liability” may yield a lot of noise.
A folder structure provides an additional dimension in which users can search for the right clause.
While keyword searches are primarily useful if you already know exactly what you are looking for, a carefully considered folder structure is much if you are looking for inspiration on clauses to add.
More advanced libraries allow for hierarchical ("nested”) folders, and some even allow to cross-reference between different folders. In light of the complexity of the legal topics, the importance of such features should not be underestimated.
Populating the library - Two options can be discerned: manual population vs artificial intelligence (AI) powered population.
While manual population is more time-consuming upfront for the library author, this approach allows you to build a more qualitative library, augmented with all manner of legal metadata.
AI-powered population allows you to immediately draw all clauses from a range of documents. While this approach consumes practically no time upfront for the library author, it focuses on quantity over quality and may run into serious compliance issues if personal data contained in the clauses is not scrubbed (see more in Chapter 05). In addition, AI-powered population typically yields less accurate information, and little to no legal metadata or ordering, users of the library will typically spend much more time when using the library.
Most clause library tools – DIY or dedicated – already capture some information automatically in relation to your library or clauses. For example: if you open up the “File” tab in MS Word/Excel, you will immediately find information such as the date of creation, original author, date of last modification, user who made the last modification, etc.
The added benefit of dedicated clause libraries is that they can give you additional metadata to sort and search content.
Some clause library tools augment clauses by default in such a way that they can automatically adapt themselves to the styling of a document when they are dropped into it.
Some clause library tools also offer an upgrade path from basic storage of clauses to full-on document assembly or automation later on (see below).
Tools that track the usage of particular clauses offer an easy way of figuring out the most useful clauses in the library. However, this does not paint a full picture, because they cannot track which clause makes it into the final document after discussion with the client or negotiation with the counterparty.
Some dedicated clause library tools allow you to make (parts of) your clause library available externally – this is particularly useful for legal service providers looking to innovate service delivery to their clients.
Examples include: ClauseBase, ContractExpress, Docassemble, HotDocs,…
While many clause library tools are standalone, some also function as part of a larger tool.
Document management tools allow for archiving, tracking, and following up on existing documents. These tools primarily benefit from clause libraries in that they can draw analytics on how many times a clause was used or renegotiated (allowing you to create so-called “heatmaps” of clauses).
Document automation tools focus on generating entire documents from scratch based on a flexible template. Clause library-augmented document automation tools allow you to sync clauses over multiple documents. A change made to a single clause can then ripple through all the documents it is used in, greatly easing template maintenance. They are also sometimes called document assembly tools.
Powerful document automation tools allow you to create entire clause generators, by capturing all the legal nuance a given type of clause can have in a single file. These clauses act as real chameleons – able to take on any colour to suit the environment they are placed in, from both a style and a content perspective.
To see such a chameleon clause in action, take alook at this dispute resolution clause generator.