PLC documents: outsourcing your precedent bank

The desire to maintain your own precedent bank is understandable. Being familiar with a set of documents that are tailored to your own needs and your own house style provides a sense of comfort and continuity. Whether this is a good use of your time depends on the value of having your own precedent bank outweighing the mammoth administrative task of keeping these documents up to date and relevant.

For example, just think of the work involved in updating precedents to accommodate the recent changes introduced by the Companies Act 2006. If you maintain your own precedent bank, you will have expended a considerable number of hours of intensive analysis, drafting and checking, the cost of which will be borne by your practice.

Maintenance is a real issue. Documents have to be picked through with a fine-tooth comb to ensure that everything is legally correct and up to standard. If, like many firms, you use old deal documents as your template for new ones, you also have to decide which clauses are general and can be re-used, and which ones were specific to the previous deal. This will not be easy to do because it is difficult to filter out wording that resulted from the nature of the previous transaction, or the parties to that transaction and their relative bargaining positions.

This adds up to a significant time burden. Unless the work is carried out continuously by a dedicated team, it will need to be completed before you can make a start on the new draft. You may end up under pressure to deliver the transaction documents in a shorter time frame than would be the case if your starting precedent was already "neutral" and up to date. This kind of ad-hoc maintenance is a burden for you and does not provide value for the client.

A significant number of law firms are already relying on PLC for the maintenance of a suite of standard documents. In many cases, it was not a natural or easy step for the firm to make, but by comparing their own precedents to the corresponding PLC standard document, they realised that there were more similarities than differences. In the majority of cases, the two documents were very similar in terms of content and the only real difference was in a preferred style of writing or layout.

These firms realise that a client is not concerned about the source of the document drafted for their transaction, or what it looks like, or the style in which it is constructed. What they do care about is whether the document does the job that it is meant to do and that it is delivered on time and on budget.

By relying on PLC, firms can be confident that the precedents they use to create the first draft of transaction documents are up to date and ready to use. PLC standard documents are continually maintained by our dedicated team of lawyers to reflect recent developments in law and practice. Therefore, you can concentrate on how best to structure the transaction and the drafting and negotiation of the documents.

This does not mean that a firm should not maintain any precedents. These might be for a particular type of specialised transaction or for specific clients. If a firm can relinquish the work involved in maintaining a general precedent bank to PLC, it will have more time to focus on this smaller collection of documents, and it will be able to use the PLC documents confidently as a benchmarking tool to maintain the smaller collection.

PLC also provides technological tools, which add further benefits. All our standard documents are supported with drafting notes, many of which are integrated in the text. Information on the need for a clause and how to negotiate it is presented clearly to the user at the point of need.

We also have productivity tools designed to make a lawyer’s life easier. You can annotate the standard documents and attach your own notes for other members of your firm to read. PLC FirmStyle allows you to download documents in your own house style, so that you do not need to make any changes to fonts, numbering or other style aspects to make a document based on a PLC standard document look as though it has come from your firm.

PLC's technology can also automate the first steps of the drafting process: drafting the document based on your answers to key questions about the deal. This automation tool allows you to produce a first draft more quickly than the traditional "mark-up" approach. The system asks a series of questions. The replies, together with data (such as names and addresses of parties), are transferred into a first draft, which is likely to be much closer to the document that will eventually be sent out for negotiation than a normal starting precedent.

If you wanted to draft a lease, for example, you could decide to create a lease of the whole or of part (see box “Automated drafting”). You could also answer details about the address of the property and the landlord and the tenant, with the ability to import company details straight from Companies House. This information is then passed to the draft document, with all the right clauses in the right places, meaning that you no longer have to compare two or three different versions to ensure that you have included or excluded clauses that are relevant to your deal.

You then have the ability to fine-tune the document on-screen: you can change options, include or exclude wording, substitute alternative wording or modify terms. You can see the results of your choices on the document as you make them (see box “Fine-tuning your document”).

Any changes are made across the whole document. So, if you add a party or change a defined term, the syntax and term will be changed automatically throughout the entire document. This reduces the amount of time needed for marking up and checking documents, increasing productivity and driving profitability. It also creates thinking time, allowing you to spend time on enhancing the quality of deal-specific clauses.

Information can also be saved and used across a suite of documents, allowing for the production of ancillary documents at the touch of a button. For example, details entered for a share purchase agreement will be saved in the system and will be available for all of the ancillary documents, such as board minutes or confidentiality agreements. Making subsequent changes in any one of these documents (for example, if you notice that the purchase price is incorrect in the heads of terms) will be carried across all the documents, saving hours of work.

All of this functionality is available now, for free, as part of your existing subscription, across six services (for more information on the documents currently available, see “PLC FastDraft: documents”, www.practicallaw.com/9-379-9364). We intend to expand this functionality across all of the services, with the aim of having it available for every document on the PLC website. We also intend to integrate this technology more fully into our existing services to make it easier for subscribers to access the automated documents. We are continually improving the software to make it easier to use and to make drafting even quicker. The first of these changes should be seen later in 2009.

We also have some other exciting technological developments in the pipeline, which we believe will be a major step forward in how you access and use our precedents and know-how, putting our knowledge and experience closer to your normal working process. The first version of these developments will be ready in the latter part of 2009.