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Form management challenges and strategies, MBA CREF Tech and Servicing Conference in New Orleans, some solid article links, where Open AI is headed and a quote to link Elvis and Tom Brady!
Happy Friday and Happy Mother's Day weekend to all the moms out there! Hope you find time for relaxation.
If you will be in New Orleans at the MBA Commercial Finance Servicing and Technology Conference on May 20-21 definitely reach out - I would be happy to connect and talk about tech for mortgage loan transactions on Frenchman Street!
In this edition we dive into some of the challenges and best practices relating to form management. Be sure to check out the article links too as there was some really good content out there this month.
Scroll to the bottom for thoughts on where OpenAI is headed and a quote that brings together Elvis, Tom Brady and Teddy Roosevelt.
Hopefully you find it useful and interesting. Please feel free to share with anyone that may be interested and have a great weekend!
Matt Basile
If you find this content valuable, please connect with me on LinkedIn.
Leveraging Tech in Transactional Matters
📗 Form Management Strategies
Most commercial lenders (and their law firms) rely heavily on form documents as a starting point for loan documents and most other pieces of paper generated in connection with the origination of a loan. Good forms that fairly contemplate and account for most common scenarios reduce negotiation friction and speed up the loan documentation process, however creating really solid forms and making sure everyone uses them takes a lot of work and thought.
Some challenges include:
📃 Clean Ups / Language Improvements - No matter how many times you proof a document, you always find clean-ups or improvements to language as you work with the documents on transactions. In the heat of a deal the last thing you want to do is worry about updating the form, so it can be hard to motivate at the end to get changes back in.
✉️ Distribution to Team - Many forms are maintained by one or two people and live on some folder on a share drive (or maybe a DMS). This becomes a problem when transactions are moving fast and changes do not get distributed to outside counsel before they start drafting (or before documents are finalized). Distributing forms to hundreds of attorneys via email is not efficient and risks some people missing the email or failing to adopt the changes.
🧩 Document Automation - For those leveraging document automation, usually two copies of the form need to be maintained - a Word version and a "coded" template. If each counsel has it's own automation platform, form changes end up causing a lot of work for everyone and inconsistencies can be prevalent as firms may use different automation platforms (or more likely none at all).
📗 Law Firm Specific Forms - A close relative to the previous two issues, often law firms keep their own copy of forms that include non-material stylistic changes (bold vs. underline defined terms, justification, etc.) or good form improvements / clean-ups (that maybe are not merged into the lender form). They may also have their own state specific inserts. The result is inconsistency of documentation across firms.
🎯 Fallback Provisions - This is probably it's own topic, but maintaining a library of approved provisions to use during a negotiation with the Borrower can be a full time job. You almost never use these in the first draft (so they always need to be deleted), but you somehow need to communicate where they go if used and the ripple effect through the documents. This usually results in a maze of footnotes and brackets (if it is even attempted).
Below are a few strategies to consider:
🏦 Audit Final Documents - Create an audit process at the end of transactions where you look at two sets of blacklines:
➡️ First run the form vs. the first draft of the documents circulated to the Borrower. This will highlight (i) any clean-ups to the form such as typos, formatting, etc. that need to be made every time and (ii) any new concepts that are not provided for in the form that might come up often (ex. state specific inserts, apartment vs. hotel, reserve language that might be new but could be re-used).
➡️ Next run the first draft circulated to the Borrower vs. the final draft of the documents. This will highlight negotiated provisions that might be considered as either (i) form changes because they are middle of the road and you want pre-empt the Borrower comment in the future or (ii) fallback provisions to be used when certain common comments are received from the Borrower.
The audit process has a second benefit of giving you a change to review changes accepted from the Borrower.
👔 Encourage Counsel to Share Form Updates - Encourage all outside counsel to share form updates (even if very minor). Often counsel may not want to bother the client with this but if all share the little clean-ups and other good ideas the forms will keep getting better and more consistent.
😊 Set Aside Time for Form Updates - Don't try to make the form updates on the fly. Other than urgent form changes, set aside a quiet time once a month or quarter to review the audits and make the changes. For lawyers maintaining forms, a good time to do this might be while drafting a new set of documents as you kill two birds with one stone. It is just as much work to clean-up the form before you create the document as it is to make the changes in the deal document (and then again on every future deal!).
🖥️ Maintain Forms in a Central Repository - Leverage a cloud based repository (preferably with document automation included) to maintain forms that can be accessed by all counsel.
🙏 Leverage Technology for Fallback Provisions - There are some great technology solutions available powered by AI that allow you to favorite approved fallback provisions or find negotiated language. Hopefully this will help to alleviate one of the hardest form / knowledge management problems.
If you are still creating documents by saving your last set of documents and finding and replacing parties and dates with new terms (😖😱😰), hopefully this motivates you to jump into the world of form management! 🚀🚀
Articles and News
🏨 AI & Commercial Real Estate
Some great insights in this Q&A with Niraj Patel of Greystone that highlights some use cases for AI in commercial real estate financing, including creating efficiencies in home inspections, underwriting and collaboration with transaction parties. Totally agree that before you can start to apply tech you need to fully understand your internal processes and workflows. Looking forward to seeing how this space evolves.
🌞Document Automation vs. GenAI
This article does a really nice job examining the document automation vs. GenAI debate and explains why the "burden of doubt" created by the chance of an error with GenAI makes document automation (although hard to implement in complex documents) the clear winner.
✈️ Journey from Lawyer to Entrepreneur
Really nice article from Mat Rotenberg as he reflects back on the transition from lawyer to entrepreneur and the journey of building a legal tech company and the ups and downs along the way. Nothing good is ever easy and he details some of the challenges, lessons and pivots along the way to building a successful product and company.
📉 Have We Reached Peak Legal Inefficiency
Great to see Richard Tromans and the Artificial Lawyer back this year! Some great insights in this article that compares Big Law to Big Oil and questions whether we are at the peak of legal inefficiency where we are "polluting" the economic environment by burning through human billable hours at an excessive rate instead of moving toward more efficient solutions and processes (like coal vs. green energy). He expects firms that get it right to increase both revenues and profits.
🍵 The Art of Crafting Prompts Like Making a Cup of Tea
Nice short analogy by Ryan McDonough pointing out why we can't expect good results with simple AI prompts. Like making a good cup of tea, you need to break the task down you are asking the AI to perform into the minor details in each step and sub-step and create well-structured, context-rich prompts to get really good results.
My Work
🏈 The Man in the Arena
As a life long fan of the New York Jets, I have spent most of my adult life in conflict with Tom Brady. If you know me, you know how I feel about him. Last week I stumbled on the documentary about him called Man in the Arena, which caught my attention because I love this quote:
"It is not the critic who counts; not the man who points out how the strong man stumbles, or where the doer of deeds could have done them better. The credit belongs to the man who is actually in the arena, whose face is marred by dust and sweat and blood; who strives valiantly; who errs, who comes short again and again, because there is no effort without error and shortcoming; but who does actually strive to do the deeds; who knows great enthusiasms, the great devotions; who spends himself in a worthy cause; who at the best knows in the end the triumph of high achievement, and who at the worst, if he fails, at least fails while daring greatly, so that his place shall never be with those cold and timid souls who neither know victory nor defeat." - Theodore Roosevelt
I first came across this quote over 20 years ago at Graceland in the "games room" (actual picture below - apparently Elvis must have been a fan of it too) and have often applied it to aspects of work and life.
I think it is especially relevant in the world of legal tech where you need to dive into complex problems head first with enthusiasm and work hard to solve them knowing the path forward might not be clear or known.
🌄 AI is Going to Get Better and Better
"We're gonna steamroll you" - Sam Altman.
Some good insights into where OpenAI is headed in this interview and a warning to those just building wrappers and broad solutions. Also a good reminder that things are going to get better quickly with these models. What doesn't work now might work in a few months and what works pretty good now might work really well soon... 🚀🤘
Most importantly, the key is to remember that this in many ways is just another cool development tool for folks designing solutions to solve real problems for real workflows. I was a programmer when XML came out and I remember the excitement and people wanting to use it for everything. It is still around in many solutions (including heavily in the background in Microsoft Word) but you never hear about it, stuff just works.
For those law firms and vendors building:
🤼 Figure out what new use cases are possible to be solved now that couldn't be addressed in the past
💫 Make the user experience is simple with a great UI/UX so it looks like magic
🧩 Add value by layering in business knowledge to the tech (no prompt engineering for users)
✅ Make sure results are consistent and accurate
😎 Assume the model is going to get better and your app will just work better when the models get better and cheaper
You wouldn't just release an Access database as a solution when databases became widely available and here you can't just wrap the APIs and expect long lasting change. Just like legal tech that has been around for decades (see Doc Automation), the key is a seamless user experience and understanding existing processes to address change management challenges.
The options for viable new solutions are limitless but just like all other prior apps it is going to take hard work to build quality solutions that work to solve real problems.
