law
Honey, I Shrunk The Contract: How Plain English Is Helping GE Keep Its Business Humming
The reason: Customers often needed to review and sign contracts more than 100 pages long before they could start doing business.
The new business inherited seven different contracts from the three units. The clunky documents were loaded with legalese, redundancies, archaic words and wordy attempts to cover every imaginable legal. No wonder they languished unread for months. “We would call, and customers would say, ‘I can’t get through this,’ ” says Karen Thompson, Digital Solutions contracts leader at GE Aviation. “And that was before they even sent it to their legal team! Who is going to pick up a 100-plus-page document and sort through it to find language they disagree with? We were having trouble moving past that part to what we needed to do, which was sell our services.”
For those customers who did read the contract, negotiations would drag on and on.
That’s when Shawn Burton, Digital Solutions’ general counsel at the time, aided by a squadron of intrepid employees spread across GE, decided to deploy a disruptive and unconventional contract weapon: plain speak. Burton harked back to his law school days when he studied Plain Language, a way to condense the written word to the clear basics. He dusted off his textbooks and, with the help of his GE language commandos, used it to write a new contract. “I applied a litmus test: If someone in high school couldn’t pick this up and understand it without any context, it wasn’t plain enough,” he says.
Burton then launched a Plain Language workshop for his team where he actually dropped the old contract into a garbage can with a satisfying thud.
It took Burton and his team more than a month to write an initial draft from scratch without referencing the existing contracts or any other GE contract. The new contract covered the necessary legal concerns of all the digital services, thus reducing the number of contracts from seven to one. Astonishingly, the draft was only five pages long.
“At first many said, ’You missed a ton of stuff,’ ” Burton says. “It was just so jarring and different." Image credit: Shawn Burton. Top image credit: Getty ImagesHe was able to compress statements and sentiments that previously ran on for paragraphs or even pages into just one or two sentences. For example, the so-called “force majeure” clause — a standard contract clause — in an old contract read: “Neither Party shall be liable or be in breach of its obligations under this Agreement to the extent performance of such obligations is delayed or prevented, directly or indirectly, by causes beyond its reasonable control, including acts of God, fire, terrorism, war (declared or undeclared), severe weather conditions, earthquakes, epidemics, material shortages, insurrection, any act or omission by any governmental authority, strikes, labor disputes, acts or threats of vandalism or terrorism (including disruption of technology resources), transportation shortages, or Customer's failure to perform (each an “Excusable Delay”).”
Burton abbreviated the mouthful to a single simple sentence: “Neither party will be liable for failing to perform any obligation in this contract resulting from circumstances beyond the party’s reasonable control."
The compliance with laws clause also became dramatically shorter and simpler. Before the plain language transformation, one of the compliance with laws clauses consisted of five distinct subsections, nine sentences, 417 words and — believe it or not — a reference to “The President of the United States.” It now reads: “During the contract term, we will comply with all of our legal obligations.” One sentence containing 13 very understandable words.
Burton and his plain-language team took the new contract to the Digital Solutions business leaders as well as to outside counsel for their reaction. “At first many said, ’You missed a ton of stuff,’ ” he says. Burton said that the reaction was understandable. “It was just so jarring and different,” he said.
But after he pushed them to read it again, he says, “they did a 180.” Everything was there — all of the risks associated with the digital services were addressed by the contract. It was just boiled down to the essence, he says. With a few adjustments, the business had a working contract.
With the new contract, negotiating time is down 60 percent and customers are responding to the new way of doing business.
Nick Brodribb, head of legal at Qantas Airways Ltd., had this to say about the contract: “Australian lawyers have for a long time been dealing with redundant language in U.S. legal contracts. The drive towards plain English we have seen from GE, along with companies like Airbnb, gives us great hope for the future. Plain English should save time on the front end of a transaction, which allows the business to get into the project quickly, to manage it more easily and potentially to resolve disputes sooner.”
Other GE businesses are now considering implementing Plain Language into their own contracts. GE Additive, a new manufacturing business, plans to use Plain Language contracts from the start. “Plain Language introduces, preserves and grows the entrepreneurial spirit,” says Eric Kantor, GE Additive general counsel. “What we want to do is help our team mitigate risk without cluttering their agreements in a way that slows them down.”
“My utopia,” Burton says, “is two non-lawyers sitting over lunch and reading the document, understanding it and signing it.”
Cheers to that!