Case Study: LCN Legal uses document automation to build transfer pricing app

LCN Legal has used Documate‘s legal document automation software to create an expert system out of one of the most complex areas of law: transfer pricing. Below is our interview with the co-founder Paul Sutton and a case study on legal document automation.

What is transfer pricing, you ask? It’s the set of rules addressing the level of charges (e.g. fees, royalties, interest) paid between associated entities, and therefore, where profits are made and taxed. LCN Legal helps multinational groups and their tax advisers create the intercompany agreements they need to support their transfer pricing and tax compliance obligations.

Their suite of automation and expert system tools, including the Fast Track ICA Drafting Service, are designed to bridge the gap between ‘tax’ and ‘legal’. They allow international tax and transfer pricing professionals to use the information they already have about the corporate groups they’re looking after, to create best-in-class agreements. LCN Legal has even created Chinese/English bilingual versions of the document automation tool for intercompany agreements, as well as suites of legal documents for documenting group restructuring steps.

In our case study on legal document automation below, we interview Paul Sutton, co-founder of LCN Legal, on his background, his document automation process, and the “5 for 1” book pledge whereby LCN donates 5 new books to a school in China for every product they sell online.

Tell us about yourself in one sentence. 

I’m a husband, father, corporate lawyer and beginner in almost everything.

Transfer pricing is a unique area of law that you don’t usually hear about in law school.  What led you down the path to this career? 

I started off as a corporate M&A commercial lawyer, mainly helping German, Swiss and Austrian clients on transactions involving the UK. Then, I joined KPMG’s law firm in 2001 – and started working alongside the international tax teams there. I really enjoyed the let’s-work-together-to-solve-this problem way of working, and decided to specialise in the legal design and implementation of corporate structures, especially international businesses. Transfer pricing is all about understanding how multinational businesses work from a commercial and economic perspective – and it’s fascinating to help bridge the worlds of ‘tax’ and ‘legal’.

You recently launched a bilingual document automation platform for intercompany agreements for transfer pricing compliance.  Can you tell us about the steps you went through to set up this expert system? 

The most important step was just deciding to do it. Looking back, we should have done this ages ago. We then took the simplest agreement type in our toolkit of template agreements. Then, we sat down and wrote out the questions for the online interview – focusing on the users’ objectives, not the legal clauses. That was fun, and it really helped us get clear about why we included certain clauses in certain situations, and whether that reasoning was actually correct. From then on, it was just a matter of pushing through.

Thanks to Documate‘s support, it was a whole lot easier than I expected. Adding the bilingual Chinese functionality was then a matter of re-engineering the templates, rather than the interviews.

What have been the most successful methods of marketing your document automation platform? 

Well, it’s still really early days for us. But one of the most exciting things has been the ability to offer free trials as part of our beta testing. Mainly to get feedback on how the platform can be improved, but also as a marketing tool.

We’ve now had feedback from dozens of leading transfer pricing professionals across 4 continents. That’s like rocket fuel for driving the functionality of the platform overall. And means that we are truly serving a community of tax, transfer pricing and legal professionals.

What does LCN Legal do differently that brings unique value to your clients? 

We’re not afraid to explore areas that we don’t yet understand. We know that if we care enough and if we keep improving incrementally, we’ll create something which is world class.

What was the “a-ha” moment that led you to build an expert system platform? 

It’s funny. As lawyers, we’ve been hearing a lot about the role of technology in law, for many years. But I never really related it to me. It just seemed a vague threat that lawyers could be replaced by computers. I don’t know when the moment actually came, but somehow I realised that our small firm like ours could use this technology, and take charge of it. And just fix things that need fixing – like: Why are most intercompany agreements so bad? How can growth-stage multinational groups get the agreements they need, without blowing their budgets? Why is legal advice so expensive? How can we leverage the information which tax advisers already have? How can we grow our own business, without hiring ahead of the curve?

You recently moved to China, right?  What have been the most striking changes in your lifestyle as compared to the UK? 

It’s been such a privilege to move our family to China for a year, and really get stuck in. We’re living in a place called Xinzheng in central China, which is a satellite of Zhengzhou. The food is incredible here, and in many ways the quality of life is really good. But there’s a huge hunger here for broader perspectives. And the English language is seen as a window to the world. It inspired us to create a ‘5 for 1’ book pledge, which wouldn’t be possible without the tools Documate has provided.

LCN legal visits a local school in Xinzheng, Henan Province
LCN legal visits a local school in Xinzheng, Henan Province, where Paul’s wife and co-founder Xiaofang Sutton is from.

Are there any books or podcasts that you recommend for lawyers who want to follow in your footsteps? 

Too many to mention, but they would include ‘The Surrender Experiment’ by Michael Singer and ‘Start Something That Matters’ by Blake Mycoskie (the founder of Tom’s Shoes). Anything by Jim Rohn or Anthony Robbins.

What would you be doing if you weren’t a lawyer? 

Don’t laugh, but I would be a software programmer. Or a boxer (minus the fighting, just the Rocky-style training). Or a novelist. Or a photographer. Or a fashion designer. Or watercolourist.

Paul is the co-founder of LCN Legal and the author of “Intercompany Agreements for Transfer Pricing Compliance – A Practical Guide”. He is passionate about bridging the gap between tax and legal professionals, and helping multinational groups create effective corporate structures for transfer pricing compliance. Contact LCN Legal at info@lcnlegal.com.

Read more case studies on legal document automation here. To learn more about how you can create legal document automation, expert systems, and legal apps with Documate, go to www.documate.org. Or you can contact us at hello@documate.org.