Is Contract Analysis the Next eDiscovery? Cimplifi Thinks So

The narrative goes like this: law firms once thought they could hold onto all of the high-volume eDiscovery work, but it didn’t last. Specialist review groups, backed by plenty of tailored tech, took over a lot of the work. Now, it’s contract review’s turn.

‘Technology Assisted Review’ is a term coined by eDiscovery, but it fits a range of legal jobs when it comes to reading documents and figuring out what is in them.

After all, that is exactly what it is when you do M&A due diligence, or when you fillet a company’s contract stack for business info – you use tech to assist in your review. It’s not the same exact process, but the overall idea is the same: speed the delivery of the desired outcome using tech and specialised staff.

People who come to the use of NLP contract tools from the transactional world may not see things this way, but if you started your career in the eDiscovery world, then it’s not such a big leap to extend this view to cover other legal activities.

This is also the thesis that is shared by companies such as Cimplifi, which started off with a focus on eDiscovery, but is now very much focused on how it can also help with non-litigation document review needs.

They also work very closely with DocuSign – which as readers know – is pushing forward its own CLM offering along with a contract analysis capability, with the latter coming from Seal Software.

Cimplifi is able to handle the tech aspects of review and they can also put together the human teams to handle the process. I.e. they can build the NLP models to handle any specific review needs you have, plus put together the experts and project managers to handle the matter.

A couple of weeks ago in New York, Artificial Lawyer spoke to Cimplifi’s Charles Post – Executive Vice President, Contract Analytics & Lifecycle Management, Steven Harber – Executive Chairman, and Marla Crawford – General Counsel, and who is also someone with very extensive eDiscovery experience.

Together they made the following points:

  • History is about to repeat itself.
  • Contract analysis using NLP tools is easier than doing eDiscovery, and it will follow the same path, even if it will be slower to be adopted.
  • As with eDiscovery and the huge demands on time it created (and costs), law has no choice but to catch up in relation to transactional contract review and similar work such as large-scale contract repapering for inhouse teams.
  • Law firms used to be able to charge out associates at their standard rates to review documents for eDiscovery, that eventually ended for most of that kind of work. Now specialist eDiscovery groups have dedicated staff to do this with a different economic model.
  • Just 10 people could handle a million-document project for M&A due diligence.
  • Reviewing contracts is actually easier than eDiscovery because you are looking at less information, e.g. looking just for certain clauses, or for an inhouse team just extracting key data points.

Their argument does indeed sound compelling. They also added that when it comes to the legal world – and probably all parts of the economy – ‘where there is mystery there is margin’.

Or to put it more prosaically, where things appear to be really hard and complex because most people don’t understand how to do something, then that thing becomes rarefied and expensive. But, once you demystify it, make it explainable, and find ways to standardise the processes needed to do that thing, then everything changes.

If external parties can 1) provide (or procure) the NLP tools and/or build custom models for the job, and 2) provide the project managers and staff to handle the vast majority of the contract review, then it makes total sense to do this. I.e. contract review doesn’t have to be a mystery where top legal experts must handle all parts of it. It’s a process. It can be understood. It can be broken down into logical segments. Those segments can be rationalised and made more efficient with better use of talent and leveraging of technology.

Hence the rise of ALSPs, law companies, and the Big Four’s growing capabilities, to do exactly this, whether for transactions or for CLM / managed service tasks related to corporate doc stacks.

However, there is one difference here. At least in the US, eDiscovery will almost certainly be seen as fundamentally necessary because of the enormous amount of corporate data (from company files to emails to text messages) that these days need to be filtered. It’s hard to imagine a scenario where either the parties, or the judge in the case, would think it’s fair to review 10 million items in a civil litigation entirely ‘by hand’ inside a law firm. It would take ages and cost the parties a fortune. It just would not fly.

At present, when it comes to large-scale contract review projects, it does still fly to do it ‘the old way’. There are no judges to intervene in transactional work to order a speedier and more efficient process so they can get to the core of the matter. With transactions it’s all down to the clients to say what they want. And, clearly, as yet, they are not all saying they want something very different.

The question then is: will this change?

The answer is: yes, eventually.

As more and more companies embrace things like CLM with NLP capabilities, and also work with external managed services groups that deploy similar tech, then inhouse lawyers will increasingly find it odd that their advisers don’t use similar approaches when a transaction comes along, or for a repapering project.

Change may come not because new tech arrives – it arrived some years ago – but that the ‘penny drops’, and then things move quickly because perceptions are expanded.

This goes to something this site has observed again and again in the legal world: it’s not so much the tech that leads the adoption, but the idea of changing what you do. I.e. once the client buys the idea, the rest will follow.

(One could, of course, add the need for making tools and processes that really do make life easier. If clients want change but the tools are cumbersome, it just holds everything back. Look to Apple and Steve Jobs for this one. They didn’t invent a lot of the products that they made billions of dollars with, they just made really excellent products that people could easily use. There is a moral there…)

But, moving to the conclusion, once upon a time clients used law firms to handle most of their bulk eDiscovery work needs, now they don’t. The perception of what was possible – indeed necessary – changed. Can that happen with contract review, not just in some cases, but in nearly all high-volume contract review scenarios? Yes, it can. We are not there yet, but we are moving slowly and steadily in that direction.

Cimplifi is certainly ready for when this happens.

1 Comment

  1. Contract review is mostly a search and find, junior lawyers won’t be doing them, so it will be automated eventually, slowly, but not by everyone. Too many older lawyers are stuck in culture phobia. All this AI wants to target contract writing.
    With respect to contract drafting, contracts are both skill and art; so it’s hard to imagine how AI thru NLP can replicate human judgment, experience, or negotiation.
    At least for now.
    Boilerplate contracts- construction, employment, NDAs, purchase agmts, even some IP- will be automated because not much ingenuity or talent experience is needed there.
    But that’s where AI tech wants to go. Cut the human labor. Bring legal spend down to a CFO or CLTnot the GC – she’ll be outsourced anyway- and it can and should happen eventually too.

    Time to switch careers all current and future paralegals.AI will come for you.

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