‘Would you like your contract super-structured or generally unstructured as usual?’ is not a question you often get asked. But it’s an area of focus for Linklaters’ tech team, Nakhoda, which has been working closely with the International Swaps & Derivatives Association to develop ISDA Create – its highly structured contract platform.
AL TV talked to Deepak Sitlani, a partner at Linklaters, and Megan O’Flynn, Assistant General Counsel at ISDA, about Nakhoda’s work, and especially the product this has led to: ISDA Create.
In the 30 minute video we explore areas such as:
- Highly structured contracts and the extraction of key data.
- Contract negotiation using the platform.
- Amending large numbers of complex contracts in a short space of time.
- Can we skip the whole NLP doc review thing….?
- The use of smart contracts…and more.
Press play to watch or listen inside the page.
[ Editorial Note: in the video Megan O’Flynn is introduced as the General Counsel of ISDA – however, as is stated above in the article, she is of course Assistant General Counsel. ]
The firm adds that: ‘ISDA Create was launched in 2019 and is currently being used by more than 60 financial institutions for the automation of regulatory Initial Margin negotiations.
A further 150+ institutions, including eight of the world’s 10 largest banks by assets are in the testing phase. Three new document modules are being added to the platform to allow users to negotiate and agree additional documents online, including IBOR and other bilateral interest rate reform documents.’
So, there you go. Who says that firm-made solutions can’t make as big an impact as those of legal tech companies?
And of course, the project connects to the highly-structured vs unstructured contract debate. I.e. if you start with very carefully pre-built contract structures, which are completed in a shared digital space, then with the right tools you can extract and store key data at the point of creation. That in turn allows you to build powerful dashboards that are working in real time – and that are not built ‘after the fact’ by NLP doc review, perhaps months or even years after those highly valuable contracts have been formed.
And super-structured contracts also connect to some of the key ideas around self-executing smart contracts, i.e. that the contract exists digitally from day one.
The flip side is that if you are a virtuoso lawyer and want to write every contract from scratch (….does anyone do that anymore….? [ serious question] ) then the super-structured approach doesn’t always work for you, as you’ll want far more latitude to include things that were never planned on, or that are ‘irregular’.
But, ISDA already sets the standards for how derivatives contracts work – so the question is: why try and re-invent the wheel when ISDA and its members actually want you to make your contracts in a standard way?
Any road, have a watch/listen to the AL TV video and see what you think. This site certainly supports the core idea of what ISDA is doing: setting contract standards. And congrats to the Nakhoda team on embracing this approach.
Thanks to Deepak and Megan for taking part in this AL TV interview.