Is it necessary to use complex language in a legal contract? As lawyers know all too well, legal documents are often wordy and complex, and legal precision gets in the way of clarity. Understandably, this legal jargon, commonly referred to as legalese, hampers the way business is done because non-lawyers find it difficult to get around the complex language. If you want to go forward with a business idea quickly, the legal ‘transcription’ should follow smoothly yet it doesn’t. Hence the need to simplify legal drafting. How do you do that? Certainly, legaltech has done a lot in terms of simplifying how contracts are drafted but that does not cover documents that need to be personalised or that are less frequent (or not yet legaltech-able). Easier than building a legal AI solution, lawyers could do something revolutionary: write in plain English.
The Historical Case for Plain English Contracts
It is important to explore the historical context of this topic and where this shift from complex to straightforward legal contracts began.
For centuries, drafters of law have loaded and compounded legal contracts with archaic and overbearing language. The movement towards promoting the use of plain legal language has been spearheaded in 2004 by David Melinkoff’s Language of the Law in which he strongly criticised complex legal language used by lawyers. By moving away from the common practice of saturating contracts with legalese, the goal is for legal proceedings and contracts to be completed at a significantly quicker rate. Agreeing with this notion is scholar Robert Eagleson who states, simple language “lets the message come through with the greatest of ease.”
In the US, this has long been a topic of discussion. In 1972, President Nixon ordered that ‘laymans’ terms be used in the federal register. President Carter also issued an executive order stipulating that government regulations should be as simple and clear as possible.’
As Shawn Burton of Harvard Business School puts it, “a contract should not take countless hours to negotiate. Business leaders should not have to call an attorney to interpret an agreement that they are expected to administer. We should live in a world where contracts are written in accessible language—where potential business partners can sit down over a short lunch without their lawyers and read, truly understand, and feel comfortable signing a contract. A world where disputes caused by ambiguity disappear.”
Where does that leave us in practice in the business world?
How GE Aviation opted for Plain English Contracts
A lot of companies, motivated by a desire to conduct business matters more efficiently, now promote their services on the premise of producing simple and straightforward legal contracts.
Take GE Aviation. When they combined their three businesses into a single Digital Solutions unit in 2014, their sales representatives were eager to drive sales, however their lengthy contracts threw off many potential customers. Customers often needed to review and sign contracts more than 100-pages long before they could start doing business.
Shawn Burton, Digital Solutions General Counsel decided to use plain language contracts and to ensure that the resulting documents were understandable, applied a litmus test. Could high school students decipher what the contract was referring to by looking at the contract alone? When they couldn’t, Burton and his team worked intensely on abbreviating unnecessarily long winded terms.
It took Burton and his team more than a month to write an initial draft from scratch without referencing the existing contracts or any other GE contract. The new contract covered the necessary legal concerns of all the digital services, thus reducing the number of contracts from seven to one. Even better, the draft was only five pages long.
How do other industries fare?
Legal UX in the Banking and Insurance Industry
The private banking industry, in particular, is guilty of using legalese to death in marketing messages to customers, sending them dense messages closely resembling product brochures. This certainly doesn’t help their business when other market players offer a simpler solution – often viewed as more transparent.
In 2018, Commonwealth Bank, the leader in Australian mobile banking, cemented its top ranking for the second year in a row in a study by Forrester Research, which evaluated the mobile apps of Australia’s big four banks. The report found that CommBank led the pack by blending “…extensive functionality with a stellar user experience.” As an example, they use visual cues beyond the standard lock iconography by displaying information about the last login on the home screen, a strategy that engages younger customers to use the app and interact with their bank more frequently.
In the insurance industry, the legalese problem is also acute as insurers are sometimes seen as trying to wriggle out of paying claims by citing language buried in the fine print of policies. Two insurers, Lemonade and Beazley, have begun issuing personalized digital policies designed for humans and lawyers alike. Available in HTML format, these policies are easier to navigate than flipping through pages of small script. Lemonade’s policy 2.0 also includes open source policy wording, enabling consumers to suggest coverage extensions and other changes.
The business results speak for themselves. In the months following the launch of Beazley’s digital policy, the company saw sales increase strongly, and was also able to sell digital policies in a number of states where they hadn’t before.
Plain English legal documents make complete business sense but there’s always room for improvement.
If plain English isn’t enough in the way of simplifying contracts, how about Comic Contracts? These are contracts represented by characters and the agreement is in fact captured in pictures. The inspiration for company founder, Robert de Rooy, was illiterate people or people who may not thoroughly understand the language that the contract was written in. Making these sorts of contracts transparent and accessible for most people benefit all parties and can prevent misunderstandings.
What’s next – emoji contracts?
Helping you Kill your Legalese Darlings
To conclude, long and drawn out contracts may soon be a thing of the past. Individuals and businesses are finding alternative ways of condensing the terms of their contracts by making them more straightforward and easier to get through.
Happy drafting and remember that as always, less is more.