The Financial Times reports that the EU’s central government in Brussels is working on a common contracts system [paywall] to make it simpler to conduct business between countries in EU member states.  Presently, doing business between countries in Europe is, well… doing business in another country.  Most EU members are already using common currencies, common exchange rates, and other tools to make it simpler to coordinate business in Europe.  But businesses doing business in Europe need to write their contracts separately for use in each country, implemented differently for each country.  What’s being proposed now is a new standard of contract that will work in all EU member countries.

The idea is that parties entering into agreements could then opt to use this as the basis for their dealings if they felt that it would be more suitable. The “28th system” could be suitable for cross-border transactions – for example, if a Polish supplier was dealing with an Italian contractor but was unfamiliar with Italian law, or if a French consumer was shopping on the internet and wanted to be sure of the rules governing his purchase.

It’s almost like an API for contracts.  Write your contract by this standard and be sure it’ll be interpreted the right way in every EU country.

Admittedly, this is one of those “preliminary pre-discussionary meetings” for a project that may never see the light of day, but we sure hope it does.

James Kwak, a Yale Law professor, noted on Baseline Scenario that “maybe 15% of students (my wild guess) come in wanting to be corporate lawyers but 75% end up at corporate law firms (first job after law school, not counting clerkships).” Kwak argues that bright, idealistic students wind up in law school because of the expectation that it will open doors for them into fields where they’ll be able to tackle big, important challenges. Three years later, these same bright students leave law school in debt, and run into the open embrace of large firms, where they’ve been recruited since their first summer after law school, by the promises of security, stability, and the belief that corporate law is what they’ve been training for.  Yet law schools train legal generalists; people deeply familiar with the principles and frameworks of the law, reasoning, and argumentation.  Law schools are in the business of training problem solvers.

And yet, when you hire a law firm on behalf of your business, these newly minted barristers are actually working for you, and you’re footing the bill for their corporate law training as they’re billed out at exorbitant hourly rates.

Stop paying to train these young, recent grads through their law firms and start hiring them to tackle your biggest problems. Give them opportunities beyond just papering deals; let them handle the business development, the operations management, the negotiations, or even product development.

What’s more, more law school graduates expecting to head into corporate law are finding the door closed when they graduate and need to apply their skills elsewhere.

Recruit right from the law schools if you have to. At the end of the day they want to tackle big challenges (the most prestigious law school students wind up serving as clerks for judges or go onto legal fellowships).  For many lawyers, Atticus Finch was their inspiration, even if they find themselves searching for tax loopholes all day.

Your business probably has what these graduates have been searching for all along: big challenges that they’ll be able to apply themselves to. Make it clear from the get-go and that they’ll be problem solvers, not cogs. They’ll be happier and your business stronger.

Or give one a try over the summer.  They’re used to hearing about their friends’ rafting trips, sky boxes and beer bashes, but few law students hear of their friend who spent the summer launching a new company.

Stop paying for young lawyers’ Corporate Law training through big law firms.  Bring them in-house and set them loose to tackle your toughest business problems.

In a recent press statement, the proposal aims to combat complexity and ambiguity in financial offerings with new rules that would require certain deals to be written as a computer program.

For the non-bankers reading: financial instruments come with an owners manual called a Prospectus. The Prospectus describes how an investment opportunity, like a structured product or derivative instrument, behaves. As you can imagine, the more complex the instrument, the more complicated the manual, sometimes reaching over 500 pages.

For some instruments, like the ones that (arguably) brought the global economy to its knees, the Prospectus’s details that would allow an investor to understand the toxicity of the underlying assets are buried somewhere in those 500-page documents. Normally sophisticated investors have a difficult time fully understanding the deal; and, as is sometimes the case with these types of investments, the past performance figures trump any desire to fully understand the instrument’s behavior and collateral, assuming the buyer could understand things in the first place.

So, what’s the pragmatic solution to document obscurity?

When it comes to Asset-Backed Securities, the Securities and Exchanges Commission has a possible answer: let the math be math and use computer code to express the financial data, renderable on a computer.

The proposal calls for transparency in an unprecedented way, where Prospectus and deal terms can be easily subjected to objective and investor-driven analysis as sophisticated as the investments themselves. This is in contrast to the rating agency models where investors use rating agencies to guide buying decisions, where security-issuers can use rating system weaknesses to their advantage in obfuscating the real risks associated with the opportunity.

Here’s how the SEC explained it in the proposal [pdf] summary:

We also are proposing to require that, with some exceptions, prospectuses for public offerings of asset-backed securities and ongoing Exchange Act reports contain specified asset-level information about each of the assets in the pool. The asset-level information would be provided according to proposed standards and in a tagged data format using eXtensible Markup Language (XML). In addition, we are proposing to require, along with the prospectus filing, the filing of a computer program of the contractual cash flow provisions expressed as downloadable source code in Python, a commonly used open source interpretive programming language.

While a computer-parsable Prospectus will not solve all issues related to protecting investors, it’s a great first step in bringing transparency and understanding to unyielding complexity in new financial offerings and products, and may help prevent another sub-prime mortgage crisis.

Earlier this year, Silicon Valley lawyer Ted Wang and venture capital firm Andreessen Horowitz released an early free version of Series Seed documents that help young businesses intelligently and cheaply structure the legal documentation around raising seed capital.

We see this as indicative of a small business trend: industry standard agreements with default deal terms that make sense for most business transactions. Simply, the less time companies spend on negotiating and nitpicking over legal language, the more these companies can do in less time.

They’re not exactly “boilerplate”. Like actual boilerplates (slabs of rock), boilerplates contracts tend to be unique and require careful inspection before use. However, with documents featuring standard terms written in uniform language, “boilerplates” can truly act like the commodity they are, reducing legal expenses throughout the document drafting and review process..

Naturally, we like this trend and are excited to see more from Series Seed.

It doesn’t quite work that way for travel agents any more, but it’s still the primary way we interact with lawyers. Though you now probably e-mail your attorney, the way you work together is fundamentally the same as it was 30 years ago.

It’s 2010. Times are changing.

Today, law firms use all kinds of technologies and outsourcing to lower their costs, building tools that help them do their jobs. But, despite improved law firm operations, little of that benefit has reached the client. However, with technologies focused on the client’s experience, paradigm shifts are possible.

No computer can (nor should) replace a trusted attorney; however, normal client-attorney relationships leave power largely in the counsel’s hands. Inasmuch, an attorney’s set up optimally to provide legal advice, but sub-optimally when it comes to everything else—like producing contracts or deliverables. In the latter instances, you can unwittingly turn on a profit center for the firm as the billable hours between back-offices resources eat your retainer with work that—GASP!—you can (and sometimes should) control.

The lawyers themselves may not realize the inefficiencies in this system: they’re lawyers, not Operations executives, and this is the way it’s always been done. But, there’s misaligned incentive to control costs when the client pays for the inefficiency.

If, however, you were to convert your lawyer’s back-office from behind-the-scenes profit mill into a shared resource between a law firm and its client, things would be different. And cheaper. And faster. New technologies can make this possible.

Tell us, when was the last time you called your travel agent to book a flight?

What we have there is a technology preview for the upcoming launch of LexMachine: a product that makes contracts easy-to-make and easy-to-use. Please play around with the software and send us your feedback.

Some technological notes and caveats:

• The Alpha was built and designed for modern web browsers (IE8, FF3, Safari 4, Opera, etc.) and may not display cleanly on older browsers.
• The contracts you make are not stored anywhere except in your browser.
• The URLs are copyable and will work between sessions.
• We do not capture or store any identifiable information EXCEPT for your e-mail address (if you elect to give it to us) in the bottom form.
• There may be some errors, so if you find them. Please report them.

Beyond that, please enjoy the application and let us know what you think!