‘Contract Tools’ Is A Toolkit for Reviewing Complex Contracts in Word

Any job is made easier by having the right tools. That’s the idea behind Contract Tools, a Microsoft Word for Windows add-in designed to provide attorneys with the right tools to analyze, navigate, search, proofread and edit contracts. While it can be used with any length document, its real value is most apparent with longer documents that contain multiple provisions, defined terms and cross-references.

The product comes from the company Paper Software, which was founded by two brothers, Benjamin Whetsell, a lawyer and former associate at Fried Frank in New York City, and Nathan Whetsell, a computer engineer. The company also markets a more full-featured contract-analysis application, Turner, which works only on Macs.

Once you’ve installed the Contract Tools add-in in Word, then opening a new document triggers the software to automatically perform an analysis of it. I opened a 100-page contract and the analysis took just a second or two. The add-in also opens the Contract Tools pane to the right of the document. This side pane is your primary control center for navigating and working within the document.

Within the side pane, a drop-down menu allows you to select any of the software’s core functions, all of which are designed to help you navigate and proofread the document. Using the information it gathered during its initial analysis, Contract Tools shows:

• Provisions. This displays a list of all provisions within the contract. Click any one to navigate directly to it. Then click the back arrow to return to where you were in the document.
• Defined terms. This shows a list of all defined terms in the contract and the exact locations where they appear. The software identifies defined terms by searching for terms that appear in quotation marks; you can change this to have it search for terms that are bold, underlined or italicized. Contract Tools automatically finds both singular and plural versions of terms.
• Cross-references. This shows all cross-references within the contract. These can be sorted by referenced item, count or location. Double click on a cross reference to go to the reference point in the contract.
• Related items. Use this to find items that are related to an item you choose. For example, if you are working in a provision, select Related Items to find other provisions that cross reference the provision you’re in.
• Drafting errors. This shows all occurrences of the following types of errors: undefined terms, duplicate defined terms, miscapitalized defined terms, formatting inconsistencies, list order, and unmatched punctuation.
• To-dos. This helps you keep track of unfinished and incomplete items within the document. It does this by looking for placeholders (___, [___], {___}, [•], {*}), text enclosed in square or curly brackets, highlighted text, comments, footnotes, and endnotes.
• This is a list of ancillary documents such as annexes, appendices, exhibits and schedules that are referenced in the document.

The side pane also includes a search function, where you can search for words and phrases. A nice feature of this search function is the ability to insert tokens for number, date, time of day, unit of time, money, and word. Insert any token to limit the search to that type of item. Select the money token, for example, to find every instance in the document of an amount of money. Some tokens can be combined with text to find phrases. For example, use the number token with the word “shares” to find phrases such as “1,000 shares” or “ten million shares.”

Highlighting Problems

Another function of Contract Tools is to alert you to potential problems in your document. At the bottom of the side pane is an issues pop-up menu. Click it to show a list of the issues the software has found. Contract Tools finds and displays the following types of issues:

• Unused defined terms and defined terms that are used only once.
• Cross-references where the referenced item cannot be found.
• Drafting errors.
• Incomplete items as indicated by placeholders, highlights, brackets and the like.

This issues menu is potentially one of the most powerful features of Contract Tools. In the first contract I tested, for example, it found a total of 173 issues, including 53 unknown cross references, eight defined terms that were never used, and various other problems. Most of these turned out not to be mistakes. Most of the unknown cross references, for example, were not mistakes, but rather were references to external documents or statutes.

I then tested two additional contracts that I downloaded from the SEC’s EDGAR database. In these, all of the issues the software found turned out to be false alarms. But I don’t consider that a problem with the software. I could see why the software flagged them and, personally, I would always rather be safe than sorry when drafting a critical legal document.

As you review each error, you can choose to ignore it so it no longer shows as an issue. If you later change your mind, you can restore the issues you’d chosen to ignore. If you find an undefined term, you can define it and then save the document, and Contract Tools will update its analysis. In fact, you can update the analysis at any time, either by saving the document or by clicking an analyze button.

Working Within Documents

While Contract Tools’ primary toolkit is the right pane, it also provides several handy features within the document itself. One is autocompletion of defined terms. As you are drafting a document and you start typing something that is a defined term, Contract Tools shows a drop-down autocomplete list of defined terms that match what you are typing. Simply choose one to insert it.

Whenever you see a reference within the document, you can double click it to go to the reference. For example, my contract contained a reference to Section 3.4(a)(iii). By double-clicking on that reference, I was taken to the section. To return to where I was in the document, I just clicked the back arrow.

The same is true for defined terms. If you see a defined term in the document, you can double-click on it to go to the term’s definition, then hit the back arrow to return to where you were.

Also within the document, drafting errors appear underlined in yellow to help them stand out.

Other Features and Price

Some other notable features of Contract Tools:

• In the pane, you can use the Assistant view to display a second pane, letting you work within two at the same time.
• You can make Contract Tools include defined terms that it finds in another document, a useful feature when you are working with related documents.
• As you scroll through a document, the name of the item or section you’ve scrolled to appears in a large window, so you can more easily scroll to a particular location.

Many of the default proofreading and analysis settings in Contract Tools can be configured to your preferences. For example, it can be set to ignore certain types of words – such as common jargon or phrases that appear in U.S. statutes – and certain types of drafting errors.

I tested only Contract Tools but, as mentioned above, Paper Software also sells Turner, a contract analysis program for Macs. It is a standalone application, not a word processing add-in, and therefore is able to include features not available in Contract Tools. Among them:

• Create new defined terms, provisions, and other contractual elements with a few clicks.
• Create cross-references by clicking what you want to cross-reference.
• Get updates to information about your contract in almost real time.
• Format your entire contract with a few clicks.
• Export to common file formats, including DOCX, PDF, and EDGAR-ready HTML.

A seven-day free trial is available for both Contract Tools and Turner. After that, they are sold on a subscription basis. Contract Tools costs $19 a month or $190 a year. Turner is $24 a month or $240 a year.

The Bottom Line

Contract Tools is not just for contracts — it can be used to work with any type of structured legal documents, such as corporate bylaws. It is not intended for proofreading briefs, memoranda or documents that lack the structure of a contract.

As its name suggests, Contract tools provides a set of tools specifically designed to streamline and simplify review of long and complex contracts. It enhances the speed and accuracy by which a lawyer can navigate, search and edit an agreement.

Potentially its most critical feature is the issues menu, which alerts you to problems in the document. In my review, most of the red flags it raised were not actually problems or mistakes. But, as I said above, I would rather err on the side of caution and allow the software to alert me to items that do not appear to be right.

There are two clear benefits to lawyers of using Contract Tools. One is that you end up with a document that has been carefully vetted and proofread than you might have done without the application. The other is that it should enable you to complete your review more efficiently and therefore in less time (and at less cost).

If drafting and reviewing long or complex contracts is a regular part of your practice, then purchasing a Contract Tools subscription makes sense. At a cost of $190 a year, it will pay for itself in no time. If you only occasionally work with long contracts, then you’d have to weigh the cost for yourself.