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…
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:
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.
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.
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.
 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