A recent piece “All rise: The era of legal startups is now in session” by Nicole Bradick in VentureBeat describes how funding for companies in the legal space (technology providers as well as Newlaw firms and LPOs) is starting to catch up to the market’s potential. The legal market is undergoing serious changes, and Nicole’s piece is worth reading to understand why it presents so much opportunity.
We were included as an example of a company doing innovative things in the area:
The upward trend is almost certain to continue, given that we are still in the early stages of disruption of such a vast industry. So far, in the first three months of the year, legal tech startups have received around $50 million in funding (or over $150 million if a more inclusive definition is used). Startups are attacking every segment of the legal market, including legal research (Judicata), legal self-help (Shake), online dispute resolution (Modria), contract automation (Diligence Engine), electronic discovery (Logikcull), practice management tools (Clio), legal marketplaces (UpCounsel), legal education (Mootus), analytics (Lex Machina), and more.
It’s an honor to be mentioned among such excellent legal tech providers.
We are happy to report that the DiligenceEngine system was not impacted by the serious Heartbleed SSL bug.
A recent piece “After Heenan Blaikie, is it all over for Big Law?” by Alec Scott in The Globe and Mail’s Report on Business Magazine included DiligenceEngine in a discussion of changes in large firm law. After several pages on challenges to traditional firms (primarily outsourcing, new model firms, and efficiency-focused clients), Osler, Hoskin & Harcourt LLP (a leading Canada-HQ’d firm) using our system on a deal was cited as an example of how good firms are trying to be more efficient:
It’s not as if Big Law has been twiddling its thumbs while all this change—economic, cultural, technological—swirls around it. … Osler recently employed a computer program developed in part by a young Canadian lawyer to aid in due diligence on a $900-million (U.S.) deal that closed in January—Chemtrade Logistics’s acquisition of General Chemical Holding Co. Built over three years, Noah Waisberg’s DiligenceEngine searches contracts for relevant clauses and puts its findings into summary charts. The tool is used (after training) by lawyers. It’s not outsourcing per se, but it can dramatically reduce the time an associate spends on due diligence.
As longtime Globe-reading Canadians who rarely have permission to discuss specific deals we helped on, it was really a treat to be featured in this article.
I’ll be in Calgary April 7–8, speaking at the Canadian Corporate Counsel Association National Conference. Headline speakers include Beverley McLachlin, Chief Justice of the Supreme Court of Canada, and Jim Leech, recently retired President and CEO of the Ontario Teachers’ Pension Plan (one of the world’s largest institutional investors). My panel “Innovation and the Legal Industry. Will you Capitalize on It?” features Joe Milstone (Canadian NewLaw leader, Partner and Co-Founder of Cognition LLP), Mike Ayotte (popular Twitter and blog commentator who goes by “The Last Honest Lawyer”), and is moderated by Fred Headon, (President of the Canadian Bar Association and in-house lawyer at Air Canada). The conference looks great (register here). And our session should be fun: Joe, Mike and I have real disagreements over whether Biglaw can be be efficient. My experience with DiligenceEngine has been that some large and great firms are very focused on improving their work product and efficiency; Joe and Mike think NewLaw is the answer. Could be entertaining. I’m looking forward to it.
This also means I’ll be out in Calgary for a few days. If you review a lot of contracts (say for legal due diligence or contract management purposes) and are interested in doing this work faster and more accurately, I’m happy to meet up while out there and discuss further. Get in touch!
Automated contract review came up in a recent piece in The Wall Street Journal on “The Data Companies Wish They Had.” In it, the Journal “asked companies what data they wish they had—and how they would use it.” SeyfarthLean CEO Ken Grady had a clever idea regarding a future use for automated contract review:
Playing Better Defense
Historically, law firms that specialize in defense work, like Seyfarth Shaw LLC, are reactive: When clients are sued, they respond. But Ken Grady, CEO of the Chicago-based firm’s consulting subsidiary SeyfarthLean, would like the ability to predict lawsuits—and prevent them.
How? By analyzing reams of contracts and looking for common traits and language that often lead to problems. For instance, he says, “do we find that a company’s standard contract, with few modifications, seldom leads to a dispute, but those contracts which salespeople modify often lead to disputes?”
Comparing two contracts side by side is time consuming and expensive—let alone doing that for the thousands typically held by a large corporation. But software is evolving that could analyze, and make sense of, contracts with greater accuracy and at much lower cost, Mr. Grady says.
Companies have a lot of contracts; their details can be obscured by volume. It is terrific to be building technology that can help expose this potentially useful information, and we’re excited to discover uses for it we can’t even imagine yet. Have ideas? Please feel free to get in touch.
The delightful Spanish legal market expert Eva Bruch discussed DiligenceEngine in her recent presentation “Herraminetas tecnológicas de gestión, marketing y comunicación de los despachos de abogados” given at Universitat Oberta de Catalunya in February. Start at about 12:50 into the presentation to see. Really made my co-founder and me smile to see our system—once just an idea, now helping lawyers in deals—discussed in a foreign language in a far away place!
Improving Contract Management and Analysis — Ron Friedmann
I have found Ron Friedmann to be a terrific resource on law practice technology and legal profession changes. His Twitter stream is among the best sources for information on these subjects. So it was really nice to see him covering contract review software. His post helps lay out the value of contract review software, and briefly describes our system and that of another contract review software vendor with a fairly different offering, Seal Software.
As related in the Contract Review Software Buyer’s Guide, more and more companies are offering contract review software systems. The key differences between competing systems, to me, are:
- Contract Provision Extraction Accuracy. A number of contract review software systems will automatically extract contract provisions/details/metadata from agreements. The big question is how accurately they do this. It is quite easy for software to accurately extract data from agreements that it has been pre-trained for, but a lot harder for it to perform well on unfamiliar agreements and poor quality scans. If you (i) are considering contract provision extraction software and (ii) plan to review agreements that are not drafted off a template you have in advance or are in the form of poor quality scans, you should pay attention to how systems you are looking at perform relative to each other. There are likely real differences. A main underlying issue here is that some vendors build their contract provision extraction models using human-written rules, while others (like us) use machine learning technology. Also, different vendors use different types of people to train their systems. While you may or may not care about the “how” systems like ours work (though “how” really does matter here and is understandable), you likely care about accuracy. Know that it can be very different across systems.
- Features and Interface. Different systems, different features and UI. Certain contract review software systems, for example, do not offer automatic provision extraction. Others include different takes on document comparison and views of source documents. Some of these extra features may matter to you and some will not. And you may take better to one interface than another.
There are going to be lots of other differences between systems (e.g., pricing, service, ease of setup), and these deserve attention too. Nonetheless, you should definitely spend time comparing accuracy and features/UI. These should have the greatest impact in determining which system will help most in your contract review work.
If you’re interested in more information on details worth caring about in this relatively new and growing area, the Contract Review Software Buyer’s Guide is worth checking out.