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All content by Kyle E. Mitchell, who is not your attorney.

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Index Card ContractsCommon Form for paper people

A few folks have asked me to explain Common Form in “nontechie” terms. I’m more than happy to speak with those interested individually, but want to try at least one metaphor here.

A Thought Experiment

Imagine it’s 1930. You head an urban business law firm. You meet a man downtown who runs a back-office services firm. He offers to provide as many administrative assistants as you require, twenty-four hours a day, seven days a week, for the present-day equivalent of $100 per month.

There is a catch. None of the assistants read or speak English. They can recognize and even copy English characters, but haven’t the faintest what they mean. The assistants can be trained by demonstration to follow rules by rote, which they do at breakneck speed and without error. Once trained to perform a task, any assistant can train any other, in their own mysterious but evidently precise native tongue. That is all they can do for the price.

One might train an assistant to fetch memoranda from a bin, view the name at the top, and file in a corresponding file. This they will do reliably and immediately. If many memoranda come through the bin, more assistants can always be trained to the task. Other assistants might search the bins or timestamp memoranda as they come in.

How might such assistants revolutionize contract drafting?

One Approach

Rent the office space next door, downtown. Fill it with rows of card catalog files. This is the new public library of contract language. The catalogs will hold index cards, just as in a library. But instead of a book index, cards will hold reusable bits of contract.

Adopt a few conventions in preparation of form contracts: circle your definitions, rectangle defined terms, underline cross-references, double-underline fill-in-the-blanks, and indent each subsection four additional spaces. These conventions make it possible to train assistants to receive and process form contracts at the front desk of your new library.

Intake

The first assistant lays out the form’s pages head to foot in order. The contract came in as a stack of pages, but now lays flat, like a banner, down a long table.

The next assistant cuts left-to-right across each page immediately after any block of text. The contract is now a line of papers of irregular length, one per provision. Where a page break falls within a single block of text, an assistant tapes the pieces together.

Next, they stack the assembled papers. The assistants now have an ordered stack of papers, each of which contains a single form provision.

This stack goes to a transcription assistant, who sits at a desk. On the left side of this desk goes the stack of cut-up contract. On the right are boxes for inbound and outbound index cards.

The transcriber works as follows. He takes a paper off the top of the stack, places it in the center of his desk, and measures how far it is indented. If there are any more papers left on his stack, he checks the top paper’s indentation, too. If it’s indented any further, he pulls that paper off the stack, and places it atop the first in the center of his desk. He keeps pulling off papers until he runs out of contract or finds a paper that’s indented the same or less than the one in the center of his desk.

He then turns to the top paper in the center of his desk, and pulls out a blank index card. Beneath the red line on the card, he copies all of the text of the topmost paper. He then places it in a box to his right, where it’s picked up by a search assistant.

The search assistant’s job is to compare the card to every other card in the catalog, one by one. If she finds an exact match, she trashes the new card written by the transcriber, and returns the old card found in the catalog.

If she doesn’t find an exact match, she hands the card to another assistant who turns a lottery machine to generate a big random number. He writes that number at the top of the card, then returns it. In this way, each index card bearing a provision receives a unique lottery number.

On return to the transcriber, the card is either the new card with a new lottery number, or an old card with number from the catalog. The transcriber continues writing cards for each provision, but in cases where a provision of greater indentation follows one of lesser indentation—one subdivision of the contract containing another—the transcriber also writes the headings and lottery codes of subsections, in order, on the index card for the containing section, and circles it twice.

When the transcriber has written an index card for each provision of the contract and the stack to his left has disappeared, he writes one master index card for the contract itself. That card contains just the lottery numbers of the top-level subdivisions of the contract. This and all the other index cards he has written are sent to the card catalog for filing. The lottery number of the master index card is sent back to the filing attorney, as a receipt.

Each card in the file thus contains the text of a contract provision, as well as the lottery numbers of other provisions it contains. Each card bears a unique lottery number. The whole of the received contract is now contained in the card file, on many index cards.

Reassembly

Reassembling a contract stored in the catalog is straightforward. Say that our contributing attorney loses their copy of a form, but retains their filing receipt.

An assistant at the library starts by searching the catalog for a card with the same lottery number on the receipt. There can only be one. She copies any text on that card to paper. If the card contains a lottery number, she indents four additional spaces on her copy, and repeats the same process for that lottery number. At the end, she’s a copy of the form contract as it was submitted to the library.

Reference

The lottery numbers give us a new way to refer to contracts and parts of contracts, from a lowly definition of “Business Day” to hundred-plus-page credit agreements. Any attorney with access to the library and a valid lottery number can request a copy of that item. Furthermore, the attorney can be assured the library will give the same contract for any given lottery number tomorrow and twenty years from now. The assistants aren’t trained to replace or change what’s written on index cards once they’ve been filed.

This makes the library interesting for clients as well as lawyers. If two business become independently familiar with a form in the library—say, a short-form nondisclosure agreement—they can do a deal on the terms of that form by reference to its lottery number.

Notice what the library cannot do.

The assistants are not librarians. They have no understanding of the content of the index cards they handle. They cannot recommend contracts by topic or similarity to others, nor can they guess fixes for typos in lottery numbers they are asked to find.

The process is also limited. At no time do assistants mark any index card as coming from any particular source. When a patron asks for a contract by lottery number and receives it from an assistant, they know someone submitted it. But they do not know when it was submitted, who submitted it, or why.

If the library limits the number of requests any patron can make at a time and for any particular form, they can prevent patrons from learning whole classes of information. Patrons can’t request the same form day after day, hoping to notice when it is added. They cannot try to request every form in the library by asking for every possible lottery number, one after the other.

Verification

If an attorney received a draft from opposing counsel that purports to be a standard whose lottery number she knows, she can quickly verify that claim by submitting the draft to the library. If the form is known to the library, it gains no new content, but will return a receipt. It’s easier to compare the lottery number on that receipt to to the lottery number of the standard than to check their content, word by word.

Indices

In addition to reference by lottery number, our conventions for marking up form contracts make it possible to index in other useful ways. Assistants can recognize the various markings for definitions, term uses, cross-references, headings, etc. Without a clue what they mean, assistants could review cards on their way into the cabinets and create dividers in a separate catalogs for each defined term, heading, or fill-in-the-blank followed by cards bearing the lottery numbers of contract-language cards that contain corresponding annotations.

For instance, assistants might create indices of definitions. Patrons could then request all definitions of a term like “Intellectual Property”, yielding a list of lottery numbers the attorney might then request. The same procedures could identify, say, every cross-reference to a provision entitled “Confidentiality”. With a bit of extra legwork, rote procedures could also produce “every form entitled ‘Stock Purchase Agreement’ containing a form entitled ‘Noncompetition’” or even “every definition of ‘Material Adverse Change’ in a form entitled ‘Merger Agreement’”.

There’s nothing to prevent assistants from storing noncontract information indexed by lottery number, too. The library might permit patrons to submit annotations by lottery number, and include these with a copy of any contract containing the annotated provision. The same could be done with court decisions, or to cross-reference public filings.

Drafting

The same processes used to index a library can assist an attorney preparing and reviewing agreements.

Imagine an attorney revising a large but structurally sound credit agreement who is unhappy with its governing law provision. They send out for governing law provisions from the public library, and find one they like better. They construct a new form, swapping in the new provision for the old.

Assistants run the same indexing procedures, but starting from scratch. If a term appears in the definitions index, but not the used terms index, the new provision defines an extra term. If a term appears in the used terms index but not in the definitions index, the new governing law provision uses a term that isn’t defined. And so on for references and fill-in-the-blanks. Rote procedures can show exactly where in the contract such problems arise.

Common Form

The army of assistants is a metaphor for cheap computing power. The system is Common Form. The library is a server that stores contract provisions coded like the index cards. Requests are sent and received by computer over the Internet.

There are two key differences.

First, any single modern computer is faster than any conceivable army of assistants. Even complex requests between computers over the Internet are a matter of seconds at most. More typically, milliseconds. Smartphones have more than enough power and capability to perform all the operations of Common Form libraries and drafting assistants. Server storage for even a massive public library costs tens of dollars per month.

Second, Common Form’s lottery numbers aren’t purely random, but come from a cryptographic hash function. They appear random, in that even very similar provisions will receive markedly different, arbitrary looking numbers. But if you give 100 copies of the same new form contract to 100 different libraries, each will return a receipt bearing the same number. No library is a more important source of identifying numbers than any other. Patrons and can check one library receipt against another if they suspect foul play or malfunction.


As always, I welcome any feedback or questions. Special thanks are already due Jason Boehmig, cofounder of Ironclad, who endured the very first telling, and Ansel Halliburton, attorney at Kronenberger Rosenfeld, stalwart companion down many a dark rabbit hole.

Your thoughts and feedback are always welcome by e-mail.

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