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Digitalization in the legal department—between new KPIs and conservative ‘why’ counterarguments

This blog post was written by Vitaliy Nevinchanyi, Head of Legal at Arricano, a Ukrainian real estate company. Here’s the original article

Change always creates opposition even in the most innovative and tech-savvy companies. “Wishing to live in the era of change” sounds more like a threat than a wish. It also creates various discussions on the legitimacy and expediency of new transformations. Embracing change, no matter how effective it is, is always accompanied by obstacles. Especially when it comes to conservative sectors. Legal, for instance.

The expected result was to receive a pitch-perfect document—fast, on time, and make it understandable to others.

As Head of Legal at Arricano, I had performance KPIs that matched my personal goals to improve the effectiveness of the business processes, contract lifecycle management, and internal communications between departments. The expected result was to receive a pitch-perfect document—fast, on time, and  understandable to others. At the same time I had to counteract the two ‘why’s’—why do we need to change anything and why do you need additional finances. Especially during the pandemic, when cost-saving is a strong priority. As a result,an investment into innovation contributed to increased savings, and the team was convinced in the effectiveness of the project. 

This investment was a successful collaboration with AXDRAFT, a Ukrainian documentation automation software company. I’ll explain the details of the program in a specific example.

Briefs, duplications of processes, intensity, and risk of error

Being a landlord of a chain of centers in Kyiv and surrounding regions, Arricano works with hundreds of tenant partners and thus has to create a substantial amount of  documents. Rent agreements, for example.

After successful negotiations with a potential tenant on the main commercial clauses (terms, fee, property size, etc.), our rent department generates a brief task for the legal team to draft a rent agreement (onwards—’brief’).

Previously, the work of our lawyers mainly consisted of mechanical work—they had to move all the information from the brief into the agreement. Even though that’s not the most intellectual work, it is very resource intensive. Just imagine how many times a lawyer has to enter the name of the counterparty: title page, preamble, requisites of parties at the end of agreement, under every annex, in an acceptance certificate, etc. Aside from resource intensity don’t forget about the ‘human factor’. While processing hundreds of agreements, it is easy to make a typo, or miss a small but important detail.

What changed

Beginning this year, we implemented  new legal document automation software that allowed us to completely automate drafting for rental agreements which reduced the work intensity for our lawyers . The rent manager still prepares the brief, but now all the data is automatically pulled into the predefined clauses of the agreement. For example, by clicking on the ‘shopping center’, the program will automatically pull up and enter all the data related to the landlord and the specific shopping center, from landlots to details about the power of attorney for signees. The same goes for counterparties—after entering the tenant’s registration number, the program checks the data in government database and automatically pulls up the name, location, and other information about the signee into the corresponding clauses in the agreement and the annexes.

Thus, by filling out the brief, the rent manager gets a proofread contract with all the annexes, ready to be signed. Fast, on time, and mistake-free. 

Prior to launching documentation automation software

Of course, this was preceded by a substantial work on the rent agreement templates, namely: 

  • Auditing and updating the quality assurance of our contracts, taking into account the recent legal practices, personal and corporate experience from departments of rent, finance, operations, and marketing;
  • Structuring of the agreement into two parts: «constant» (the agreement itself) and «variable» (a separate annex with all the important clauses);
  • Optimization (reducing contract volume) of the agreement thanks to removing duplicates, ‘dead clauses’, repetition of law standards, and others. As a result, it became easier to comprehend the contract and reduced its volume almost in half.

By the way, the ‘rent agreement’ term was used more than 200 times. Just by removing the word ‘rent’, the document became eco-friendly and it has saved a substantial amount of time spent on reading the contract by both parties, without losing any context.

After effects

Today, the preparation of rent agreements with all the annexes takes about 10 minutes and does not involve legal.

This, in turn, frees up resources that can be invested into practicing law instead of copy pasting.

We continue to add high-quality templates of other documents from other departments into our documentation automation software. Digitalization of business processes is not always an easy step,  but implementing innovations that will boost a team’s efficiency and unlock the corporate intellect to focus on new goals and changes, is crucial.

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