Proactive Legal Design as a Management Tool for Fostering Business Contracting

Abstract

Today’s business is strongly based on contracts. They have many functions. According to recent research, safeguarding seems to be the most common of all functions. As a result, contracts do not support long-term customer relationships, nor do they optimally promote business success. Conventional contracts are legalistic and drafted by lawyers for lawyers. Their language is mostly legalese, with lots of text and no visual elements. Such contracts are not user-centered and are difficult for nonlawyers to understand. They are seen as legal tools, not managerial tools. However, contracts are too important to be left to lawyers. Through multidisciplinary collaboration, a proactive approach, and design thinking, companies can co-create more user-centered and effective contracts and contracting processes that support collaboration, customer relationships, and business success. Design offers tools and methods to bring user-centeredness to contracts and legal information. The use of design methods in business contracting can also have a positive impact on sustainability and corporate social responsibility. Multidisciplinary cooperation is needed to shift from conventional safeguarding contracting and conflict-centered contracts to business and relationship-centered contracting. Through proactive thinking and legal design methods, an organization’s contract capability can become a strategic resource as well as a source of competitive advantage. In this perspective, this chapter presents the existing literature on legal design in business contracting and discusses contract capability benefits for business and related managerial implications. The chapter illustrates, with examples, how design cannot only improve the clarity of contracts and the efficiency of information but also prevent disputes arising from misunderstandings.