Introducing Standard Draft
Today’s process of drafting and negotiating complex contracts is broken.
Battles are waged over words. Digital ink spills across pages of dense text. Semantics are prioritized over collaborative resolution. In this long and expensive ordeal, many feel the pain: clients lose patience, lawyers lose sleep, deals lose steam.
Despite the digital era’s simplification of countless other aspects of our lives, the contracting process remains fundamentally unchanged. We have laid a digital veneer on top of a manual process. Keyboards and computer screens have replaced pen and paper, leading not to a more efficient process but to longer contracts trapped in an old-school process.
Many have resigned to the unfortunate realities of legal departments as cost centers, lawyers as necessary evils, and the contracting process as frustration and misery.
At Standard Draft, we’re building a better way.
The status quo = unnecessary cost, time and pain
At their core, contracts are about relationships. While most relationships start with a joyous honeymoon period, contract relationships start in the mud of documentation. Here’s how it usually goes:
- A discussion (more often, debate) about which side’s contract form to use or a hailmary Google search to find a decent-ish form;
- One party prepares and sends its initial draft to the other side;
- The receiving party reviews the document from scratch – effectively a game of needle-in-the-haystack to identify issues in walls of text;
- The receiving party edits the draft, usually relying on copying and pasting language from other contracts;
- The receiving party sends the back to the original party in the form of a track-changed document or PDF comparison;
- The original party engages in the same game to identify issues in the newly edited draft;
- The original party further edits the draft and volleys it back;
- Negotiations occur via emails, calls, meetings, issues lists, and document footnotes;
- Repeat steps 3-8, over and over again, until a mutually acceptable version is agreed (all while the billable hour meter continues to run).
During this contest of contract ping-pong, relationships are strained. The collaborative spirit is chilled and sometimes destroyed.
In an effort to tackle inefficiency, most legal tech offerings focus on a single side or single point of the contract process. Sometimes this moves the needle toward contracting efficiency (e.g., e-signature solutions like DocuSign have effectively solved the “last mile” problem of contracting). More often, however, the realized or even purported benefits of legal tech solutions are quite limited.
Put it this way: if your counterparty uses a document automation tool to prepare a contract based on their form, does that simplify or streamline your process of reviewing, editing, and negotiating a document you have never seen before? Is there any relief in steps 1, 3, 4, 5, 6, 7, 8 or 9 of the list above?
Ultimately, the time-consuming, expensive, and fragmented contracting process – involving zig-zagging document versions, redlines, emails, and more – is not the result of one side’s or one step’s deficiency.
Instead, it is a structural problem that requires a structural solution. So we’re building one.
Contracts as flexible standards – a paradox and a game-changing solution
Standardized contracts. To some, they are an overwhelmingly difficult and perhaps impossible goal. To others, they are an opportunity to create efficiency magic.
You may have experienced versions of this magic working with industry-embraced standard form contracts like the YC SAFE (early stage startup financings), the NVCA preferred stock financing forms (priced round startup financings) or the ISDA form (financial derivatives).
Sure, there may be a couple shortcomings with these standard forms, but imagine the parallel universe where the YC SAFE doesn’t exist. Everyone, from law firms to VCs, would likely have their own versions of early stage financing contracts. Redlines would fly. Negotiations would span weeks or months, instead of minutes or hours. Expenses would skyrocket and deal activity would slow under the weight of inefficiency.
Well, that “parallel universe” is the universe we currently occupy for most contracts – from everyday contracts like NDAs, to enterprise contracts like MSAs, to complex contracts like merger agreements.
Together we can overcome our broken, inefficient contracting process. Here’s how:
(1) Standard Draft’s flexible contract standards
There is no playbook on how to create widely adoptable “standard” contracts, but there are lessons on what not to do (particularly if the contracts are meant to work across industries, geographies, and complex use cases). We believe that pushing a one-size-fits-all standard contract is something not to do. There are substantive reasons behind this, but there also is the practical reality that lawyers tend to resist rigidity.
We are approaching the standardization challenge differently – by creating flexible, highly-configurable standard contracts. Why are we betting on this paradox? Because we’ve found that most lawyers and transaction stakeholders agree on three key views:
- First, there is no substantive reason why different people use different words in a contract to account for the exact same concepts.
- Second, the vast majority of contract issues are entirely predictable, even for the most complex transactions.
- Third, despite the predictability of contract issues, there can be variation in the appropriate outcomes to those issues. For example, including a non-solicitation clause in an NDA may depend on transaction context, industry dynamics, negotiation leverage, etc. The issue (whether to include a non-solicit) is predictable. The outcome is flexible.
We are building Standard Draft contract forms in accordance with these key principals.
Our “standardized” forms do not force outcomes. Instead, we equip users with the ability to start from a neutral, balanced baseline (for example, the Standard Draft Mutual NDA) and to configure as needed (click a button to include a non-solicit clause, instead of writing it from scratch or copying it from another document).
Users are empowered to focus on issue resolution instead of wordsmithing.
(2) Standard Draft’s software solution for seamless two-sided drafting and negotiating
Flexible contract standards would go a long way towards streamlining the drafting and negotiation of contracts. But the issues with the status quo go beyond just words on paper.
In order to cut through’s today fragmented process, we are building an intuitive web application for the end-to-end journey of drafting, negotiating and signing contracts.
First, a user selects a Standard Draft contract form for a specific type of transaction. If the Standard Draft neutral version doesn’t do the trick, the “proposing” side configures the form where necessary (by clicking alternative drafting options, seeing the updates in real-time, and automating the creation of the contract).
Next, the “responding” side receives the contract and accesses Standard Draft to see how the proposing side deviated from the neutral version. If necessary, the responding side makes its own configurations (again, by clicking alternative drafting options).
This transparent process continues until the sides are satisfied with the contract and sign it.
We are confident that the symbiotic relationship between our flexible contract standards and our software product will result in a uniquely attractive contracting solution.
The future is bright
Standard Draft’s first foe is a contract that should have been standardized long, long ago: the NDA.
We are creating a robust, flexible NDA for uses ranging from everyday commercial transactions to complex M&A. The Standard Draft NDA, which will be configurable through our two-sided drafting and negotiating platform, will significantly reduce the time and costs of the NDA process.
Cracking the NDA is just the first step. We have exciting plans for the next waves of Standard Draft contract forms and we look forward to engaging with our early adopters to understand their most acute contract painpoints.
Apart from the headline benefits of faster and cheaper contracting, we expect that lawyers and contract users will experience many other benefits by using Standard Draft:
- Network Effects – Reaching agreement will become even easier as more stakeholders adopt the Standard Draft forms. “Let’s agree to the Standard Draft neutral version” can replace the weeks and months of painstaking process that parties currently endure.
- Structured Data – A contract’s story doesn’t end at signing. Today, it is tremendously slow, expensive and taxing to pull data out of contracts. By entering into contracts built upon configurable standard options, Standard Draft users will be able to extract important data in a matter of seconds.
- Key Insights – Drawing upon the anonymized data of users’ drafting and negotiation decisions, Standard Draft can report credibly on “what’s market” and provide other actionable insights.
- Quality Improvement & Democratization – With Standard Draft’s comprehensive configuration options, the human error risk of missing a clause or a word is significantly reduced. Premium contracts will no longer be reserved for those who can afford thousand dollar billable hours.
You are the hero of this journey
Maybe some people enjoy contract ping-pong. The thrill of reading endless pages of arcane legalese. The joy of debating “what’s market” on a one hour call that costs many thousands of dollars. And of course, the euphoria of opening that urgent late night email with the poetic attachment: “SPA—Edits(3)--commentsFinal-Seller.pdf”
But if you are anything like the countless lawyers and non-lawyers who have expressed their frustration and dismay, we bet you don’t want to play contract ping-pong anymore.
Exiting this game will take teamwork. On our end, we are working hard to create top-notch contract forms and a delightful software product. Your end will be even more important. When you consider using Standard Draft, you will have choices to make.
Will you still choose to send your side’s contract template instead of a Standard Draft form? This may feel easy in the moment, but often leads to pain later (in the form of heavy markups, unstructured negotiations, and more).
Will you be uncomfortable with the transparency of a two-sided drafting solution? Or will you prioritize efficiency over gamesmanship?
If you are a lawyer, will you choose to reduce the drudgery of documenting routine contracts so you have more time for high-value contributions to your deals and clients?
We get it: no matter the potential benefits, changing behavior is not easy. Even if the behavior has a long history of maddening results, it takes effort and courage to do something new.
We invite you to take the leap to a better, more efficient method of contracting. And if you do, you’ll become the hero of this contract standardization journey.
