Automating Legal Document Workflows from Generation to Completion

Digital transformation in banking and capital markets transactions is increasingly extending to legal documentation. An area seen by some, probably unfairly, as one of the last bastions resisting the onset of workflow automation. However, to the wise, complex transactions potentially involving many separate internal functions and external parties cannot continue to be manually processed.

The golden opportunity for the legal function lies in the digital extraction and utilisation of data that can be automatically structured in a way that allows it to be auto-transferred and placed in related and future documents. The benefit therefore is that an automated process, leveraging technologies such as; AI etc. can boost efficiency, cut costs and help drive business growth.

Banking legal workflows, as we know it.

Let’s face it, and many of us have probably done the same thing before. Somebody needs a complex document on a specific topic. What do you do? Faced with either: a) start with a blank sheet, b) google something similar and use that as a starting point or c) modify a previous similar document that you have on file… most of us would take option c and if that fails, option b. It is hardly surprising therefore that most initial drafts of legal documents are prepared by hand generally consuming many hours of detailed and focused effort.

This is not all. The process to negotiate legal terms and contracts, plus the ongoing transaction management is generally conducted by phone calls, un-tracked e-mails or even face-to-face (probably un-recorded) meetings. When viewed in this way, as a; manually intensive, laborious, probably expensive and potentially risky workflow, it is not surprising that astute legal leaders, when seeing the digital transformation happening around them have opted to investigate change.

Banking legal workflows, as they can be.

 The hypothesis is this. If document generation and workflow automation software can handle banking transactions, then it can handle the ‘legals’ that exist as part of that. In fact, when you think about the key advantages that these systems bring, the argument is even stronger: 

• Controlled and consistent processes, especially those that monitor change history and mandate the correct approvals are far better at managing risk.
• Automated processes drive consistency, efficiency and save cost.
• Software brings the benefits of better storage and retrieval, which is vital for legal documentation.
• Intelligent systems incorporate monitoring and reporting functionality; aiding decision making, flagging errors and driving continual improvement.

A diagram of the generic process flow is summarised below:

The key to automation of legal workflows is the effective application of structured data. This is data that is held in a defined ‘structure’ (or framework) that makes it; readable, usable and therefore capable of interpretation by a machine.

Again a simple analogy is to ask yourself, how many times do you ‘copy and paste’ or how long to you spend transforming a mess of data into something you can work with? We would all agree that if data were to be structured first time (at source) then life would be so much easier.

Now, here is the clever part! When the data is structured. Machines can be programmed to read documents and extract that data saving the legacy ‘copy and paste’ effort and enabling a flow of data for other uses. Capmatix, the software solution from LPA uses AI/OCR (Artificial Intelligence / Optical Character Recognition) to automate data extraction.

Furthermore, when a bank of structured data is built up, AI / machine learning can recognise trends and patterns deriving predictive insights that could have been missed. For example, imagine the ability to identify patterns in counterparty behavioural response to certain legal document types or elements of documents. Predictive analytics could indicate optimal courses of action.

Whilst that may be the sexy part, the true value of workflow automation and document generation software such as the Legal Document Navigation tool is the more everyday process of; drafting, emailing, dispatching and filing. All of which can be automated and tracked maintaining a full audit trail. Not only are changes tracked, but approvals can be set to only pass when the correct permissions are granted. Considering the multiple changes that occur at different stages and natural human fallibility, systemising and recording all changes (what change, who made it, who approved it, when and why) enables solid decision making and helps to improve efficiency in the process to arrive at an agreed legal document.


Example screen below shows the progress status of the various contract approvals in a workflow:

Example product / agreement agnostic applications of LPA Legal Document Navigator.

• IBOR repapering
• CSA
• ISDA
• GMRA
• GMSLA
• TAX
• OTC Derivatives
• Cash / Loans
• KYC process  

Client use case.

Whilst working with an investment bank, one branch was processing over 60 CSAs (Credit Support Annexes) a month. Each one involved negotiations with six separate internal departments, including; trading and front office, collateral management, risk, compliance etc. With over 50 data points plus fall-back clauses creating each CSA, the task had become concerning. By implementing a solution with LPA the bank were able to harmonise inter-departmental and client negotiations thus saving time and increasing efficiency and output. Regulatory compliance could be ensured and the whole process was combined within one platform.    

An example of a user screen summarising the key status on in progress contracts is shown below:

To learn more about the Capmatix Legal Document Navigator software tool from LPA, you can request a demo here.