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Visuals clearly give your contracts a winning edge

Published: 01 Oct 2014 Average Rating: 4.8 / 5 Print
 
This article appeared in Contracting Excellence magazine on 01 Oct 2014 view edition
 

Author: Troels Dittmer Andersen, Co-Founder & Proactive Contracting Specialist, PTA Consult; Anders Pleth, Co-Founder & Strategic Business Consultant, PTA Consult

For decades, businesses have relied on the lawyers' tool of trade - words. But increasingly both law and contracts professionals are recognizing the power of visuals - graphs, charts, text mapping, and schematics - to help improve clarity and understanding

This article reflects research by the authors who tested how people respond to visualized contracts versus traditional word only documentation. They worked with an insurance company in Denmark.

Before starting our research, we knew up-front the driver for better contracts is demand from users for better clarity.  Contracts need to be concise and easier to understand, as opposed to complex and filled with the same old archaic phrasing and heavy verbosity.  Documents must…

  • be intuitive in construction;
  • show consequences instead of writing them;
  • be free of all unnecessary information; and
  • speak directly to the user.

Everyone making such demands is asking the same question: how do we make it happen?  How do we transform word-only contracts into solutions? How do we transform visual techniques and information design into something that is practical and effective?

Testing out our theories …

To begin answering these questions, we approached an insurance company that was about to launch online insurance, providing customers with inexpensive, understandable policies (contracts). We agreed to the following three standards for the graphics in the contracts:

  • Graphics must be instantly understandable to reduce the risk of the reader skipping it.
  • The graphic´s message must be clear and not need any textual explanations.
  • The graphic´s overall message must be clear to all users, including non-technical readers.

Making a start

With this in mind, we started working with the existing insurance contract without compromising legal certainty and consumer protection rules. We asked ourselves basic questions such as “what do I need to know as an insurance policy holder?”

Policyholders need to know when he/she is covered, and how he/she is covered. We decided to design a document that divided the text into two columns. The left hand column states what is covered and when, and the column on the right what is not covered.

By designing the contract in this way, the customer could rely on coverage in the situations given on the left, with risks clearly set out on the right hand side. By adding a grayish color to the right hand column, we  also visually described the situations where the insurance did not provide coverage.

The following graphics illustrate our approach (please note, they are provided for illustration purposes only and, for that reason, have not been translated into English):

We added structure and consistency to the contract by designing every passage in the same way, but ensured they could easily be distinguished by using different color codes matching the company's design profile graphics.

To break the perception of legal text as unreadable to non-legal people, we used small speech bubbles to give key information, with clear guidelines to help users understand the content. 

We supported the final result with visuals like flowcharts, pictograms and illustrations that showed whether or not the customer was covered by the insurance.

Testing the new contracts

To test if our new approach was effective, we asked some people to volunteer for a small-scale test, dividing  our respondents into two groups.

  • Group A received the conditions of the insurance policy in the old way (all words)
  • Group B received our new visualised version of the policy.

The volunteers were all asked the same five questions, in the same order We observed and noted the time it took to answer. Detailed results below demonstrate the effectiveness of the visualized approach in differing scenarios.

Our questions and answers in detail:

Both groups were asked the following questions. Group A used traditional documentation, and the Group B the new visualised version.

  1. What does the basic coverage of this insurance include?  This was very tricky for Group A, as they could not find a clear answer anywhere, as opposed to Group B who quickly found the answer on the front page of the conditions. We believe this to be a very relevant question: what is basic and what do you actively have to add to your insurance? How else can policyholders feel confident in what they are buying? None in Group A could answer the question while all in Group B had the answer within five seconds.
  2. Who belongs to the insured group of people?  The two groups took about the same amount of time to find where the answer was hidden - but Group A took significantly longer to read and understand the content before they could answer the question correctly. On average, Group B answered the question correctly 20 seconds faster than Group A - and we believe they will be better able to remember the provision subsequently, due to the intuitive and visual design of the condition in question.
  3. What is the coverage under the home insurance if your bicycle gets stolen? And under which conditions will you get compensation?  This question showed how easily a policyholder could get confused by not looking the right place. Many looked under “bicycles” and correctly answered the first part of the question, but could not find the answer to the second part, which was under “theft.” The reason people typically look to see if their bicycle is covered by insurance is if their bicycle has been stolen. In recognition of this we inserted a speech bubble guiding people to the correct place. This led Group B directly there, whereas Group A had to go back to the table of contents, eventually finding the right page containing the correct answer. 
  4. What are the insurance sums in the liability insurance?  This question showed how effective it is to present information in table format, rather than just black and white text. We placed all the headlines on the left hand side of the table and added the relevant information next to them on the right, making it much easier to find the answers. Nothing textual was changed, but Group A took on average one minute to find the correct sums, whereas Group B all found the correct sums within 25 seconds. 
  5. How many days are you covered by the travel insurance, when you are on vacation abroad?  This question showed how effective it can be to think outside of traditional legal terminology. In the table of contents we included a short description of each of the travel insurance provisions, creating an overview and guiding users to the answers they are looking for. The table of contents was written in plain language, leaving the comprehensive terms to the actual provision in question, so that users can understand the differences in the provisions before proceeding to the detail. The final result was amazing: the record in Group B was only 17 seconds, whereas the average in Group A was close to 3 minutes.

Our conclusions …

We believe companies should try to implement more visual content in their contracts. Depending on the context (B2C or B2B), the visuals may serve differing goals, eg ease of doing business, company design and marketing and enabling fast online business to evolve. There will be a phase of trial and error, but we believe visuals are coming to future contracting and will become a permanent trend.

End note

[1] Barton, et al: Visualization: Seeing Contracts for What They Are, and What They Could Become (2012), p 14.

About the authors

Troels Dittmer Andersen, MSc in business administration and commercial law from University of Aarhus (Denmark).  He has extensive legal and contractual experience in developing visual contracts that takes advantage of interdiciplinary qualities. He is a successful advisor and safeguards his clients to simplify their contracts in order to release resources and keep focus on the core business. Recently he is engaged in public procurement where attributes of proactive contracting and contract management are becoming increasingly crucial.

Anders Pleth, MSc in business administration and commercial law, is experienced in developing and implementing proactive commercial contracts. He strives to challenge established best practice and continues to add value to businesses through development of proactive legal tools and processes. The journey of overcoming the challenges of future contracting is his motivation. He has worked with proactive contract implementation and business development in small businesses as well as international billion dollar companies. He seeks to channelize his operational and legal knowledge into best practice contracting and strategic sourcing.

About PTA Consult

PTA Consult provides commercial & contractual solutions to private and public organizations, safeguarding them in optimizing their business outcomes and minimizing their risk exposures.

The primary focus is on contract management, proactive contracting and specifically visual contracts, as we believe this is a neglected area of focus in today's business environment.

We advise our clients at all stages of the contract lifecycle from project inception, procurement and bid support through contract award and post-signature management. More inspiration at www.pta-consult.com

 
 
 

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