The following article has been produced by a provider of contract and legal software. It highlights a number of available products, but should not be taken as an endorsement of those products by IACCM. There are currently more than 200 available software products in the contract management field and members seeking advice on these options should contact IACCM.
If you are looking at technology to enhance and improve your contracting processes, you are on the right side of history. The contract may not have changed in centuries, but the recent advance of fast, accurate and cheaper technology is a wakeup call that means contracting will never be the same again. How so?
Legal technology, commonly known among practitioners as “legal tech” refers to software that helps contracting professionals do their jobs more efficiently and cost-effectively. Although legal tech is perhaps best known for providing technology software legal teams need to manage their practices, legal should not be the only stakeholder deciding the requirements. Selection of this CM software is an oportunity to get all stakeholders involved. Though very much an emerging sector, legal tech already comprises a potentially $16 billion market1 in the U.S alone and is growing.
The contracting process is one of the main areas this new sector is attacking. Despite being the lifeblood of business, the contract still has not changed for decades, and has faced little, or no, technological disruption. Until now…
The transformation of contracts through technology is one of the major findings during the research of a new book The In-House Counsel’s LegalTech Buyers Guide (downloadable for free).2 It features more than 100 legal technology tools used by leading companies who have maximized their contracting process through technology. The companies include Pearson, AIG, TabTale, Travelocity, Vodafone, NetApp, Del Monte, Axalta Coating Systems, Tongal and Novartis.
Two trends have made contract technology transformation possible. Most of us are aware of both:
- First, the rise of Cloud computing. Software as a service (or SaaS), built on Cloud computing architecture, is a way of delivering applications over the Internet as a service. Instead of installing and maintaining software, you simply access this service via the Internet, freeing yourself from complex software and hardware management. Lawyers use of the Cloud for law-related tasks stood at 38% in 2016, up from 31% in 20133.
- Second, advances in Artificial Intelligence (AI) smartly performs intelligent tasks we usually think only humans can do. AI is helping take more mundane contract work off the plates of lawyers, allowing them to focus on more strategic contract tasks.
In total, five areas of the contract process at all stages, are being transformed by legal technology -- contract drafting, contract review, contract management, and contract due diligence.
1. Contract Drafting
Examples of users include Contract Express, Concord, HotDocs, MerusCase and Contract Advisor
Technology drafting programs are already well-understood for writing an initial contract. It is relatively basic software, having been around for nearly two decades and is used by more than half of lawyers -- who report a 92% satisfaction level.4 Its programs tend to offer questionnaire-style document generation that allows lawyers to review and finalize the generated drafts. In common with all the all legal tech companies, this creates a 24-hour contract service for those requiring contracts.
Speaking about his use of contract drafting for Contract Express,5 Seth Weissman VP and GC of SolarCity says, “Sales can create a contract at 1 am, 1 pm or on a weekend -- whenever they want. You don’t have to go through my department, and we will never slow you down”.
And clients of another provider, HotDocs (including HSBC Singapore) use contract drafting to generate facility letters for its corporate customers. The U.S. Department of Justice uses HotDocs6 across its 94 offices primarily for litigation paperwork.2. Contract Review
Examples of users include LawGeex, ThoughtRiver, Contract Room
AI may be the solution for any law department that spends too much time struggling with the contract review bottleneck. Research results from CEB7 shows that most in-house legal departments at small and midsized companies spend 50% of their time reviewing contracts. This creates delays within organizations, because sales, procurement and other departments waiting for approval cause business slowdown on what could otherwise be a relatively quick and efficient turnaround. In most companies, even the most standard nondisclosure agreements now take a week or longer to review.8
LawGeex9 uses AI to automate the review and approval process of everyday business contracts. AI reviews uploaded contracts to approve them if they match a pre-defined legal playbook or escalates them to the legal team if issues are found.
With AI, LawGeex can answer the question “Can I sign this?” within one hour, reducing legal bottlenecks and shortening contract turnaround time. LawGeex flags issues in a contract for legal teams, prior to signing, reducing time spent on basic contract review and approval. (The top five most popular contracts run through LawGeex each day are NDA, service agreements, SaaS agreements, software Licenses and purchase order contracts).10
3. Digital signature
Examples include Adobe Sign, DocuSign, Sign Genie, Sign Request
Digital signature enables contracts to be approved or signed by any signatory with internet access -- anytime, anywhere even on mobile devices -- freeing leaders to focus on business issues, rather than chasing documents. This technology eliminates time normally used for printing, scanning, emailing or sending documents by post or courier. In addition to time saved, this also provides an audit trail that documents signatures if needed for any court proceeding.
Major educational publisher, Pearson’s in-house counsel calculated that e-signature saved the company hundreds of thousands of dollars a year, was 70% cheaper than manual processes, and assured a 66% reduction in turnaround time.11
A leader in this space, DocuSign,12 rose to prominence in 2003 and quickly grew in the real estate world for signing leases and other contracts. DocuSign sends an email to the signee requesting a signature, then uses red arrows to show where signatures and initials are needed. This technology also integrates with customer relationship and contract management solutions, including Microsoft products, Salesforce, and Oracle. In addition, Sign Request13 , which offers a free starter package, was nominated for the Dutch Fintech Awards, a comprehensive free service for digital signature.
4. Contract Management
Examples include Agiloft, Getting Contracts Done, Effacts, SharePoint, Salesforce, ThinkSmart, SpringCM, Apttus, Exari and Clio
Contract management technology is the most mature of the five technologies. And yet, despite the proliferation of players, many businesses still lack formal document and content and matter management systems (managing all aspects of the corporate legal practice). In some cases, this means departments relying on simple file shares and document folders.
Features of so-called “big box” contract management solutions can include contract management, calendaring, document management, task and time management, and billing.
Nick Finnie, head of legal operations and IP management at the Swiss global healthcare giant, Novartis said, “Everything used to be paper-based, stored locally and moved from attorney to attorney around the world. Now, you log into the system, access the entire file, and access related files with a matter that involves, say, 20 countries. This allows me to compare and contrast what has happened—so the ability to access the information to do my job has dramatically increased and improved.”
One example from this space, SpringCM14, a Salesforce Platinum Partner, manages contracts, documents and all types of content to accelerate productivity. The product used by global brands -- including Facebook and Google -- includes workflow, mobile and security features that eliminate time-consuming manual steps.
5. Contract Due Diligence
Examples include Kira Systems, LegalSifter, Seal, Leverton
Finally, lawyers in particular, have a role to ensure contracts are not hiding obligations, other liabilities or legal exposures. Legal teams must keep up to date with the ever-changing compliance rules globally, from IFRS to evolving legislation such as Dodd-Frank. When a major event such as an M&A transaction occurs, the faster you can access those contracts, and the more contracts you can analyze, the faster you will strike better deals.
For customers of AI, due diligence includes some of the world’s largest corporations and professional services firms. This contract technology is already being used to review billions of dollars in M&A transactions and to extract and manage data of multi-national corporations in several languages. Technology can ensure swift renewal of contracts or notify account owners of pending contract expirations. Users can also create reports that show at a glance which contracts will expire and in what timeframes.
One player, Kira Systems15, helps enterprises uncover relevant information from unstructured contracts and documents. Using AI, Kira manages due diligence, general commercial, corporate organization, real estate and compliance. Kira Is designed to help companies who lose an average of 5–12% of contract value due to lapses in administration of obligations. Some examples are failure to automatically renew contracts on clearly specified auto-renewal dates; failure to receive credits when due, or failure to send invoices when money is owed. Customers, who include some of the world's largest corporations and professional services firms have used Kira on over $100 billion of M&A transactions in 2015 alone.
What’s not to like?
The rise of these technologies is revolutionizing contracting processes and changing the entire contract mindset in businesses. Contracting can now look to the future in a way not possible before. Contract professionals are moved away from mundane tasks to more strategic management obligations.
It’s happening, thanks to legal technologies embracing data-driven decision making; 24-hour automation; using clear workflows; opening opaque legal processes; speeding up collaboration; establishing and hitting key performance indicators (KPIs) faster and more accurately.
- $16 billion market AGC Partners: article titled Legal Technology
- The American Bar Association (ABA) homepage See also: https://www.americanbar.org/groups/law_practice/publications/techreport/2016/cloud_computing.html
- The dawn of fully automated contract drafting: machine learning breaths new life into a decades-old promise; Duke Law and Technology Review
- HotDocs – 2017 HotDocs Ltd Ó2017 All Rights Reserved
- APPTUS - 10 Eye-Popping Contract Management Statistics from the General Counsel’s Technology Report - Ó2017 Apptus Corporation All Rights Reserved
- Lawgeex – Contract Review Automation – Ó2017 LawGeex. All Rights Reserved.
- Brandwatch – LawGeex (Ref 11)
- ContractRoom – Negotiate Less. Agree More – Copyright Ó 2014 Contract Room, Inc. All rights reserved.
- DocuSign – Make the Case for Electronic Signatures in Your Law Firm – ÓDocuSign Inc. 2017
- SignRequest A service for getting documents signed
- SpringCM – When Your Documents Flow, Work Flows.
- Kira Systems – Uncover Relevant Informtion from Contracts with Kira – ÓKira, Inc. 2017
ABOUT THE AUTHOR
Jonathan Marciano is the Director of Communications at LawGeex, providing AI contract review platform for businesses. He has previously led communications at SimilarWeb and EY.