If you asked me, what is the biggest bottleneck in moving the market to more efficient contract management, I’d have to say this:
We need to share more information, make things easier and move toward industry standardization – without back peddling to rebuild what is already working well.
All businesses want to get new contracts in place, quicker and at a lower cost, while controlling risk and easing the effort for senior team members. But it’s not easy to transform their manual processes that were not built for technology automation and artificial intelligence (AI).
Many companies try to start from contract workflows that resemble a Rube Goldberg machine which turns a simple task into an overly complicated or even an outrageous process!
Many spend months, if not years, selecting the right technology and engaging a consultant to redefine contract templates and negotiation positions to get the most out of the system. They then spend more time configuring the new workflows into the system and testing everything. This represents a significant commitment in time, human resources, and budget -- things that many legal departments don’t have.
The industry needs to make it easier than this. So easy that even those with the smallest of budgets can move up the maturity model1 to keep pace with the level of contracting excellence required in a fast-changing world.
We can do this by releasing content for best practices to the market to break through the complexity and provide turnkey solutions and self-help tools to enable all companies -- big and small, regardless of budget size -- to benefit from contracting technologies. We need solutions with the expressed goal of moving to more standardized and commercially balanced content for these technologies.
To this end, I had the opportunity to spearhead and drive several projects to completion and was fortunate enough to be recognized for the success of those projects by the International Association of Commercial and Contract Managers (IACCM) during their 2019 Innovation and Excellence awards2 for individual achievement within both the International and Americas categories.
WHAT WE DID
We created an "implementation accelerator," a full set of standardized CLM design documents to get the same results as industry leading contract lifecycle management implementations: Click Here to Download these documents which include:
- a sample Non-Disclosure Agreement (NDA) template, built in plain English based on industry standard contracting principles from IACCM;
- a model to use for creating an NDA playbook in a few hours;
- a granular workflow, flagging where technology can be used for automation and ensuring the right level of resource is used for each task;
- a list of metrics and KPIs to track;
- a list of data to store in a contract repository, and detailed guidance for how to find the data in a contract; and
- template emails to send out at every step in the workflow.
These standardized design documents can help speed up a CLM implementation to help ensure market leading results are obtained and eliminate translation risks between in-house lawyers and technologists. Materials have already been used to help drive several implementations. As an example, using the NDA playbook generator means a playbook can be built in a few hours and at no cost, as opposed to taking months to complete and thousands of dollars on a consulting engagement.
This package of documents can be followed and tweaked for a given implementation or used as a baseline to build an industry solution (i.e., vendor building an integrated solution). It is an approach that can easily be expanded across contract types.
We developed an objective way to select a contract management system to help companies get better results faster. I describe this approach in my article titled A Quantative Approach to Selecting Legal Tech.3 The article includes the most detailed functional requirements matrix for CLM system selections available in the industry -- along with a demo script -- to help you evaluate and compare different tools based on your needs.
You can download both the CLM Selection Matrix and CLM Demo Script here.4
So, how do these system selection tools help with contract management?
The CLM Selection Matrix and CLM Demo Script4 was publicly released, has been completed by leading CLM system vendors, and has been used by companies to help drive system selection processes. In one recent example a company was able to move through the selection process in a few weeks and ensure that their selection was made based on their specific requirements. In several other recent instances, it was used to identify gaps in systems against market leading "best in breed" systems.
Having done that, we subsequently lead the most comprehensive analysis of AI contract abstraction technologies -- including testing for time savings, cost savings, accuracy (both out-of-the-box models and custom-trained models) and functionality.
I wrote a summary of the findings in my article titled AI Abstraction Tools Driving Real Savings, But Not Yet a Magic Button.5 The full case study supporting it is titled Project Johnny 5: A Case Study in Evaluating AI Abstraction Tools.6 As part of the study we created a new approach to test the accuracy of these systems, released in my Bloomberg article titled Insight - Evaluating AI Accuracy for Contract Comparisons.7 Leading technology vendors were involved in the process by participating in a Proof of Concept8 and providing substantiated content. IACCM was also involved and helped drive the findings that resulted.
Results of testing AI abstraction tools
We released our results to the industry and our framework helps companies evaluate artificial intelligence (AI) abstraction tools and distinguish systems based on a given use case. This framework also helps companies decide when to rely on AI results and when to use quality reviews by humans.
AI abstraction vendors use the study as a way to speak to clients and potential clients about the benefits of their systems in a realistic way that also considers the balance between automated machine review and human review. The analysis also helped drive QuisLex's internal colleagues’ and external clients' selection process to incorporate AI tools into processes.
What we gleaned from the system selection processes and the ongoing live project work has given us new insights that will fuel the next round of testing and market data. For example, we are looking at how accuracy scores will change as training data changes.
Trying to make it all even easier, we built a turnkey industry solution to routine contracts by designing and configuring theContract.App from a blank piece of paper. With theContract.App users can put an industry standard (consistent with IACCM's contracting principles10) or customized nondisclosure agreements (NDAs) in place in minutes. It does this by automating standardized, structured content. The process we used to build it can be replicated for other contract types and use cases.
The steps to the build were simple:
- Isolate issues in a typical NDA.
- Define alternative positions for each issue.
- Draft "plain English" text tied to each position.
- Configure it all into an integrated system of out-of-the-box point solutions.
The project only involved a tiny bit of Smarty/PHP11 coding, but this was so basic that a lawyer could do it with no technology background or training. To finalize theContract.App, we joined forces with the blockchain platform LTO Network;12 with IACCM; and with Morgan Lewis & Bockius.
Here is what our end-to-end workflow looks like:
This turnkey solution helps with contract management by enabling users to get powerful efficiencies from best-in-class Contracting Lifecycle Management (CLM) implementations, with no pre-work, setup, or configuration. These efficiencies include:
- a smart intake form;
- automated document generation; and
- integrated e-signature.
To put things in perspective, anyone using something like theContract.App will find that the cost of getting a new non-disclosure agreement (NDA) in place is only a few dollars. For about the cost of dinner, users can upload a third-party agreement for an Artificial Intelligence (AI)-assisted review against IACCM's contracting principles or their own playbook. These costs are drastically lower than the current market rates. Because the signed agreement is hashed on blockchain, both parties always know they are looking at the final agreement that has not been modified.
Mapping each contract to a defined data structure like theContract.App also sets up some interesting use cases down the road:
- Track fallback usage across a set of contracts (i.e., report on how often different positions are agreed across the industry and define what is "market").
- Define risk ratings for a given contract (i.e., how much risk is associated with the final position agreed to for that contract).
- Allow AI vendors to automate the review of third-party documentation (i.e., using search logic and artificial intelligence to bring an offline document back into the structure required to tie back to the company’s preferred positions).
- Digitize legal documents as live contracts, that can be automated by pre-defining legal consequences through decentralized workflow (e.g., we know the termination provision in an agreement has a 10-day notice period and the email address of both parties; therefore, you can automate the formal termination of the agreement).
- A maturity modeltool helps you assess how effectively a person or group is performing and determines specific capabilities needed to improve their performance.
- International Association of Commercial and Contract Managers (IACCM) 2019
- A Quantitative Approach to Selecting Legal Tech, by Chase D’agostino, published in Law Technology Today (LTT), April 26, 2019.
- CLM Selection Matrix and CLM Demo Script
- AI Abstraction Tools Driving Real Savings, But Not Yet a Magic Button, by Chase D’agostino, published in Law.com February 12, 2019.
- Project Johnny 5: A Case Study in Evaluating AI Abstraction Tool, a case study by Chase D’agostino
- INSIGHT - Evaluating AI Accuracy for Contract Comparisons, by Chase D’agostino, published in Bloomberg Law June 12, 2019
- Proof of concept(PoC) uses a specific method to demonstrate that some concept or theory has practical potential.
- Contract App website IACCM’s Contracting Principles provide a set of guidelines to support and streamline the drafting and negotiation of contract clauses. For more information on the IACCM Contracting Principles Click Here
- SMARTY/PHP generic definition
- LTO Networkis an Amsterdam-born company that started in 2015. LTO Network has a hybrid blockchain platform that it uses to build solutions for its enterprise and B2B clients. For more information Click Here and scroll to the heading "What is LTO Network"