Bringing technology to the legal front door
When it comes to improving company operations, business leaders have a range of options. Supply chain issues have been a big talking point, as firms ponder whether to diversify suppliers, reshore, friendshore or modularize their product designs – to list just a few possible scenarios. But before going ahead with costly business changes, companies could benefit from double-checking where the biggest bottlenecks lie. And there’s a good chance that contracts negotiation and management will be high on the list. Simply making legal front door operations more efficient and making contracts knowledge more accessible across organizations could bring major improvements to businesses of all kinds.
“Contracts touch everyone in the business and can span a long timeframe,” Tom Dunlop – CEO and co-founder of Summize – told TechHQ. “If every single step of that process is manual, it’s a problem.” Dunlop trained as a lawyer and worked as a member of the in-house legal team at a number of technology businesses. One thing that those firms had in common is that they were scaling fast. Increased business activity generates more contracts. Companies need to hire more staff, negotiate supply agreements, and manage a greater number of sales contracts.
Legal front door
For teams at the legal front door of a business – the entry point for staff to submit requests to review new contracts or query existing terms and clauses, to give some examples – tech start-ups can be a hectic place to work. And in Dunlop’s case, it became clear that manual processes would no longer cut it. Fortunately, working in a tech environment provided plenty of inspiration on how things could be automated. And ultimately, those experiences led him to co-found Summize with IT veteran, David Smith.
The impact of contract bottlenecks on companies can be huge. Dunlop points out that in the absence of automation, 50% of the length of the contract cycle can be stuck in the legal phase. And for firms, this means that the time to cash is huge – a massive problem for start-ups, in particular, as younger firms may not have large reserves in the bank to fall back on.
At the heart of Summize’s contract management lifecycle (CML) solution is the so-called contract analysis engine, which provides a number of functions, including summarizing key elements of the documents that have been loaded onto the system. The legal-tech firm started its development by focusing on the post-signature side of the contract process, helping firms quickly identify the terms that had been agreed upon and the clauses that companies were bound to.
Keeping track of commitments
As the number of contracts in operation scales, it’s not always straightforward for staff across an organization to keep track of things, especially if requests are queued up in the mailbox at the legal front door. Summize’s CLM tool, which utilizes artificial intelligence (AI), allows users to submit a request and get an answer straight away. For example, a client may be requesting payment terms of 45 days on a new contract, and staff can quickly run a search to see whether that’s something the company has agreed to in the past. The CLM system can keep track of key dates, too, gathered during the contract summarization process.
Today, the tool integrates with Teams and Slack, as well as other enterprise software, and can help with a variety of legal front door tasks. Users can submit a request – for example, to generate a new contract – via Teams or Slack, and a chatbot will request the details that are required, step-by-step. And while the process takes place automatically, in-house legal teams retain oversight, but without the burden of having to complete every task by hand.
“It’s not just about efficiency,” explains Dunlop, recalling his background as an in-house lawyer. “You’ve got to manage the risk, as the consequences of making a wrong call could be dramatic.” Going down the chatbot route means that user details can be combined with the most recent documentation. No templates have to be shared and version control is managed.
Looking ahead, Dunlop sees standardization as a big opportunity for more efficiency gains to be made at the legal front door. And the Summize co-founder buys into initiatives such as OneNDA – a crowd-sourced, open-source non-disclosure agreement created by the legal community – and OneDPA, which paves the way for companies to execute a standard data processing agreement.
Traditionally the legal profession has followed a commercial path of billing by the hour, but Dunlop points to opportunities for legal tech to investigate subscription models – monetizing business access to legal knowledge. For example, finance teams have a number of alternatives to using spreadsheets, such as Xero and other subscription-based accounting tools. And a similar trend towards adopting more feature-rich, automated tools is happening too in contracts management, highlighted by CLM providers such as Summize and other operators in the legal tech sector.
Duty-bound to get risk management right, the pace of legal tech may move cautiously, but the prospects for legal teams to be more efficient and spread their knowledge more widely are strong.
20 September 2023
20 September 2023
20 September 2023