What exactly is legal document automation, and how does it serve legal teams looking for more efficiency?

Drafting documents has fallen further down on the priority list amid growing demands and tightening resources. According to the LegalTech Hub analysis, legal document automation has “started to transition from an innovative way to draft documents by only a few law firms and in-house teams to the business-as-usual way lawyers prepare the first draft of a document.”

Meanwhile, the 2024 General Counsel report found that legal department leaders are increasingly looking to automation tools (such as document automation) to support their needs. 75% of respondents said that they were considering automation and advanced technology to manage their workload capacity and increase retention.

But what exactly is document automation, and how does it serve legal teams looking for more efficiency – especially in a time when teams are asked to do more with less? Let’s dive in.

Back to the Beginning: What is Legal Document Automation?

Document automation is a method for producing documents quickly, accurately, and at scale. When teams leverage document automation, it means that the key user will answer an “interview,” or a series of intake questions. Depending on how these responses are keyed in, the document automation system will prepare a document or a suite of legal documents based on the answers.

In order to prepare a document, the system takes into account two key automation features:

1. Automated variables: Automated variables are placeholders within a document template that are dynamically populated based on the user’s responses during the intake process. These variables can include details like names, dates, contract amounts, or other specific data points that vary from one document to another.
2. Automated clauses: Automated clauses are predefined blocks of text that can be inserted or adjusted in a document based on the user’s responses or specific conditions. These clauses often represent legal terms, conditions, or contractual language that may vary depending on factors such as jurisdiction, transaction type, or client preferences.

By filling out an interview form, lawyers, teams, or end-users can produce high-quality legal documents simply by answering questions on the front-end that drive back-end logic.

What Is an Example of Legal Document Automation in Action?

Document automation helps teams streamline intake and optimize document assembly so that contracts can automatically populate with the right information and the right clauses, every time.

Many documents can be automated – and high-volume documents, or documents that involve complexity are often good use cases with high ROI. One example of a document ready for contract automation would be the preparation of a commercial lease. Traditionally, this would involve drafting each document separately — and each additional document would increase the total amount of time needed and the opportunities for mistakes across documents.

However, with document automation, the lawyer can spend less time drafting and be even more certain that the documents are consistent and accurate. Instead of manually drafting, the lawyer would begin by completing a dynamic questionnaire. This questionnaire asks questions relevant to commercial leases, but depending on the kinds of documents needed, the questionnaire could ask any questions. Depending on how a question is answered will determine which other questions the lawyer sees: for example, once they identify that they are interested in leasing a property in a certain district, questions specific to that district will appear, and questions relevant to other districts will be hidden.

As the lawyer answers these questions, the document automation system uses both automated variables and automated clauses to customize the lease agreement, tailoring the document to include language specific to the office property and lease terms as well as the appropriate clauses.

But the automation doesn’t stop there. The system also pulls in relevant data from the integrations available to the document automation solution, such as the client’s CRM and the property management database, and uses these databases to fill in information such as the property address, landlord’s information, and previous lease terms, ensuring that all details are accurate and up-to-date.

From this single questionnaire, the system generates not only the commercial lease agreement but also the tenant improvement agreement, guaranty agreement, and security deposit agreement — all customized to reflect the specifics provided during the interview process.

According to LegalTech Hub, the time savings can be significant:

What Are Some of the Benefits of Legal Document Automation?

Legal teams are turning to legal document automation for different reasons – from cutting down on drafting time to optimizing their client experiences. Here are a few of the key benefits for your team:

• Enhanced Efficiency: Legal document automation significantly reduces the time required to draft documents. Standard templates and automated workflows streamline the intake process and automatically prepare documents conditionally depending on how questions were answered – giving your team more time to focus on higher level work.
• Improved Consistency and Accuracy: Automation minimizes the risk of human error by automating data entry and removing unnecessary touch points. After data is keyed in during the interview stage, the document automation system will automatically populate all of the relevant data (and clauses) across the documents. By integrating with other internal databases, a document automation system will also pull data across platforms and into the drafted document – again, limiting opportunities for error while taking work off of your lawyer’s plate.
• Lowered Operational Costs: It’s pretty simple: by reducing the time spent on manual document creation and review, legal teams lower operational costs. And by improving accuracy and consistency across documents, teams leave themselves less liable to costly errors. As your team refines and improves document templates over time, these cost savings can increase: your team may learn that certain questions could be eliminated, or that other questions merit technical changes.
• Elevated Client Experience: Document automation isn’t just beneficial for your team – it also improves the experience for your clients. With document automation, teams can build automated client-facing forms to offer a more streamlined and user-friendly experience.

Legal document automation is not going anywhere – it is both becoming the business standard and changing the way that legal teams work. By automating document creation, teams can ensure consistency, accuracy, and efficiency across all their work, offering new ways for your team to save time and elevate their document work. By adopting these tools, you’ll not only keep up with industry trends but also position your team for long-term success.

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