Bonterms – The New Player In Open-Source Contract Standardisation

Bonterms is a new US startup that provides open-source standardised contracts to the market. Backing the project is a committee that includes lawyers from Google Cloud, PwC, Wilson Sonsini, Twilio, Toyota, Altassian and more.

As with the oneNDA project – although using a different approach – the San Francisco-based company is releasing a series of contracts for anyone to use, starting with an NDA. However, many more are planned, and an open-source SaaS or ‘Cloud Terms’ contract is already also available.

The company, created by Todd Smithline, who previously ran his own law firm and was a GC before that, also aims to expand the offering to provide a new, more structured way to negotiate contracts. Interestingly, his niche firm, ‘Smithline’, which worked with some of the biggest tech companies in the world, only offered fixed fees.

Todd Smithline.

Coinciding with the launch, Chris Walker, most recently at legal tech startup, DraftWise, has joined the company as Co-Founder and Head of Product. He will focus on the planned ‘Negotiation as a Service’ platform. 

Commenting on the new standardised Cloud Terms document, Smithline said: ‘Across the industry, among players large and small, you hear the same thing – the legal side of adding one more user to a Cloud service is just too difficult.

‘Customers and providers each have legitimate concerns, but the current approach of starting from one side’s unbalanced terms and then trying to redline, negotiate and Zoom your way to an agreement isn’t optimal for anyone.’

He explained to Artificial Lawyer that the NDA they had created was just one page, while the Cloud Terms contract was about seven. He added that he had seen SaaS/Cloud agreements that ran to 170 pages. So, this is a massive change.

All well and good, and great to see more standardisation here. How does it work? The simple answer is that it uses what they call a ‘cover page’, and then an automated standardised document, where you input variables and they are added into the highly structured terms.

However, perhaps even more than the approach, what is noteworthy is the wide range of experts that Bonterms has assembled and who back the project. After all, any standardisation project’s success is predicated on buy-in from key market participants. In this case it looks like Bonterms has got that – and they’ve only just started.

The Project

The idea, as they explained it, is that: ‘Bonterms [can provide] a neutral, open-source agreement that is balanced between both parties and drafted by a committee of experienced lawyers to reflect industry best practices.

‘The parties make any changes to the Cloud Terms by cover page and attachments, simplifying and shortening the negotiation process. The open-source nature of the agreement (released for free under Creative Commons BY) makes it easy to implement and the use of standard terms allows legal teams to focus on what really matters and restores goodwill back to the process for both parties.’

The Cover Page approach, which feeds into the standardised contract.

Smithline stressed they want to make sure they have a framework that allows additions to the contracts. ‘Open source is not ‘never change it’. Open source means you can change it,’ he said.

I.e. although these documents are standardised and informed by a committee of lawyers, they are not set in stone and adaptation is welcome.

He added that you could link, for example, the Cloud Terms to other legal agreements that went hand-in-hand, such as a DPA. This gives additional flexibility to lawyers.

The overall idea is to get as standardised and rationalised as possible, but without sacrificing the very real need of lawyers and their clients to modify and adapt. This way, Smithline hopes the Bonterms standard documents will see wide uptake.

The company has received seed funding from VC group, XYZ, and select angel investors in the technology and legal sectors. The open-source contracts are not where they plan to make their revenue, but rather in the new Negotiation as a Service platform that they are now building.

Walker added: ‘While we’re part of a larger open legal wave, we’re also heading in our own direction and developing a Negotiation as a Service Platform. Our software vision is to preserve good will from the start and allow the parties to focus on what they really care about in the negotiation.’

The core of this is around taking a very structured approach to key elements of the contract. But, more details will come as the product takes shape.

Overall, this is a very welcome move. It’s all the more interesting as Smithline is not just a lawyer with decades of experience in the tech sector, but ran a successful law firm that only used fixed fees. And it’s this focus on efficiency and benchmarking that led him to create Bonterms. Added to the work of oneNDA and others, the standardisation movement is really taking shape now.

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