A List Style stores the information about how to number each level. That includes the format of the number ( "1" or "a" or "i"), whether the number is preceded by text (eg "Chapter 1" or "Part A"), whether the number includes previous levels' numbers (eg paragraph 1.4.3), and the indents (the distance from margin to number and from number to text).
When you apply a numbered style to a paragraph, Word automatically applies the list template and list level linked to that style, and you do not need to access the list template directly. The result is that the paragraph will have the same list template and belong to the same numbered list as all other paragraphs in that style, and its numbering will simply continue from the previous paragraph in the style.
So I spent some time trying to figure it out, playing with Normal.dotm and the various styles (List paragraph, List Number, List Bullet etc etc). And finally, when I've got Normal.dotm open (i.e. I'm editing that template file), I get my result: I apply a standard numbered list, and it comes up flush left (i.e. not indented) and hanging at 1.0cm (cos I don't use inches...) and with a tab stop applied at 1.0cm as well - funky stuff!
At this point, you could click OK and start your document. But, let's modify the scheme instead. Click the Define New Number Format button. In the resulting dialog, click the Font button and choose Chiller from the Font list and click OK (only once). Click inside the Number format control—to the left of the example character—and enter Heading, as shown in Figure D. Click OK twice. If you check the properties now (Figure B), you'll find a numbering scheme. Click OK once more to return to the document. Heading 1 in the Styles Quick Gallery displays the new numbering scheme.
A List Style stores the information about how to number each level. That includes the format of the number ( "1" or "a" or "i"), whether the number is preceded by text (eg "Chapter 1" or "Part A"), whether the number includes previous levels' numbers (eg paragraph 1.4.3), and the indents (the distance from margin to number and from number to text).
I agree, MS documentation completely fails concerning multilevel lists. Additionally, it is not even close to being intuitive. But more than that, the controls for it are actually ambiguous and misleading. Then too…..there are still bugs in it. To be fair, there is nothing simple about this operation….but still….Microsoft, you've got bzillions of folks and could do this a little better. Whem my multilevel lists start going squirrely on me I usually make sure my active cursor is located in my list and then click >multilevel list>define new multilevel list. I check everything is set the way I want (it usually is) and hit "ok." So that seems to just refresh everything and set the list straight again. I don't know if it actually does define a new one (or how I would ever select it again if I wanted to) but that works best for me until MS fixes it.

I agree, MS documentation completely fails concerning multilevel lists. Additionally, it is not even close to being intuitive. But more than that, the controls for it are actually ambiguous and misleading. Then too…..there are still bugs in it. To be fair, there is nothing simple about this operation….but still….Microsoft, you've got bzillions of folks and could do this a little better.
If you start to type in what appears to be a numbered list, Word formats your manually typed "numbers" to an automatic numbered list. The main benefit of this option is that you do not need to click any button to start numbering and you can choose your numbering style as well. For example, if you type "(a) some text" and press Enter, it starts numbering using the "(a)" format.
Although there is a built-in Document Property called Revision Number (which you can see if you select File + Properties + Statistics, this is of no use, because it is incremented every time the document is saved. From a Quality perspective, the document revision number (we'll call it the version number from now on to distinguish it from the thing that gets incremented on each save) should be incremented each time a document is redistributed, and not each time it is saved (it could be saved many times during a single editing session).
multilevel headings in legal format are just soo badly broken. If it requires 6 steps to do a basic everyday document management process, why is there not a choice for a more reliable solution. I have been fighting this for about half  an hour – I may was well use notepad to do my documentation at this point, but I will persevere… or I will start a brand new document. How broken a solution is that. …car won't start, get a new car!  Thanks for the pointers, almost there.
Starting an auto-numbered paragraph is deceptively simple. See those buttons on the top row of the Paragraph section of the Home tab? The left-most one is for bullets; the next two to its right are for numbering and multi-level numbering, respectively. Simply click the button to toggle the feature on, or click on the drop-down arrow on each button to select a specific style. If you don’t like any of the delivered choices, you can click Define New to set your own.
The easiest way to implement a numbering scheme for headings is to add one to a heading style. To illustrate, we'll modify Heading 1 by adding a numbering scheme. First, right-click Heading 1 in the Styles gallery (in the Styles group on the Home tab). Then, choose Modify as shown in Figure A to launch the Modify Style dialog. If you thumb through the default properties, you'll not find a numbering scheme (Figure B). Click the Format button and choose Numbering as shown in Figure B. If necessary, click the Numbering tab. Choose the predefined scheme that's the best match for what you want (Figure C).
If the list you want is as simple as "1", "2", "3", you'll appreciate how easy it is to apply this type of numbering in legal documents. Simple numbered lists are different in Word 2000 than they were in Word 97. In Word 2000, the default for even the most basic list is multi-level. For example, if you number an item and press Enter and then press the TAB key, Word automatically formats this number as the second level in an outline numbered list format. Single and multi-level numbering are explained later in this chapter.
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