LegalTech Tapas: Clause + BakerHostetler on Smart Contracts

Hello and welcome to another episode of LegalTech Tapas with Andrew Jardine. In this podcast Andrew gives a short summary of Clause, the smart contract creation platform, and chats with Head of Revenue at Clause, Parsa Pezeshki, and Diana Stern, Lawyer and Legal Innovation Designer on the IncuBaker team at US law firm BakerHostetler.

Please click the player below to listen. Enjoy! (Approx. 18 mins)

Episode transcript (What does Clause do?):

Let’s start with the basics, what is a smart contract? O.K., so exact definitions vary here depending on exactly who you feel like talking to, but typically this means something like an automatic self-executing contract, where the terms of the contract are written as a series of rules a computer can follow. These contracts are often stored on a blockchain, but that doesn’t have to be the case, they could be just saved on your company’s network.

And why would you use them? The same reason you’d automate anything else really. Being able to automate the execution and management of obligations in your contracts will save you time, reduce execution error and provide improved data.

Specifically what Clause is offering us here is a software tool that makes it easier for you to create those smart contracts, think of it as kind of like Microsoft Word but for smart contracts. Usefully Clause realised early on that codifying entire contracts would be difficult to do because in many cases the grey areas of contracts just do not translate into hard and fast rules that a computer can follow. Because of this Clause emphasises using their tool to create smart clauses, which you can then overlay on top of your human language contract rather than creating the entire contract digitally, this allows your to partially automate the obligations which are more clear cut.

Other than just writing those smart clauses, the platform also helps you to manage some of those contract actions with a growing list of integrations to external tools, things like Slack, Stripe, Docusign and more. Allowing you to automate payments, communications or even just do data entry to your other systems.

This may still be a little abstract to understand for some though, so let’s do a quick example.

Imagine your business has licensed some cloud based software, and as part of that contracts the vendor has an SLA to maintain 99% software availability uptime, if that is not achieved there is a partial refund. Using Clause you could create a smart clause that measured the availability of that website and if it fell below 99% automatically trigger the appropriate refund be sent to your bank account. 

Episode transcript (Who should use Clause?):

As far as legal technologies go, smart contracts are certainly a more nascent one, so it is worth posing the question who should start using this?

As with most enterprise technology there is some initial effort to implement the tool. So you need to make sure the benefits will offset the effort.

I’d suggest that organisations where there are complex contracts that require high touch management, over a long period of time, would be a good fit as there is a greater opportunity to automate transactions over that contract life. Likewise if you have high number of standard but single transaction contracts that could be good too.

In order to benefit from the really endless list of things you could do with smart clauses it does help (although is not totally essential) if you are an organisation that already has some good data to work with (supply chain for example), as the smart clauses have to make decisions based on something. It can also really help if you have access to a good internal IT team, because the existing integrations that Clause provides while good, are not likely to cover off every system that you want Clause to integrate with. 

Recording Note: Diana Stern’s full title is ‘Lawyer and Legal Innovation Designer’ on the IncuBaker team at BakerHostetler not ‘Product Designer’ as stated in the episode

About Clause:

Clause is the leading provider of smart legal contracting technology, enabling users to add Smart Clause® provisions to turn their existing legal agreements into “living documents” that integrate with enterprise software systems and blockchain networks. Companies in industries as diverse as supply chain, insurance, telecom, financial services, retail, and others can use Clause to automate compliance with legally binding contract obligations, reducing operating costs and minimizing revenue leakage. The Clause platform also provides real-time visibility about the contract performance of partners, suppliers, customers, and other counterparties. Connected Contracting® functionality from Clause can be accessed via a web application or the Clause API. Clause’s Smart Clause® technology is a driver of the DocuSign Agreements CloudTM. Clause also established the Accord Project with leading law firms, standards bodies, and technology organizations to develop the foundations of smart legal contracts and distributed ledger applications for transactions. For more information, please visit

About BakerHostetler:

Recognized as one of the top firms for client service, BakerHostetler is a leading national law firm that helps clients around the world address their most complex and critical business and regulatory issues. With five core national practice groups – Business, Labor and Employment, Intellectual Property, Litigation, and Tax – the firm has nearly 1,000 lawyers located in 14 offices coast to coast. BakerHostetler is widely regarded as having one of the country’s top 10 tax practices, a nationally recognized litigation practice, an award-winning data privacy practice and an industry-leading business practice. The firm is also recognized internationally for its groundbreaking work recovering more than $13 billion in the Madoff Recovery Initiative, representing the SIPA Trustee for the liquidation of Bernard L. Madoff Investment Securities LLC. Visit

About Legaltech Tapas:

Legaltech Tapas is a regular podcast that serves up bite sized summaries of the latest legal tools, what they do, and why you might use them. Each episode discusses a different legal tool, and includes an interview with a guest from that company so you can hear directly from the horses mouth why you should be using their product.