Traditionally, managing contracts was a byproduct for lawyers. The real money was in drafting new or reviewing existing ones. Not anymore and here’s why.
Our society is glued together by agreements. Contracts are the engine of our economy. At the top we have treaties and at the lowest level, we use courtesy. In between these levels, we have thick layers of agreements drafted by legal professionals. Ranging from the simple employment contracts to the endless user agreements we all click thru. The more money is at stake, the more intricate the contracts become and the harder they are to manage.
Understanding contracts and their financial impact are vital to any successful enterprise. Most company revenues depend on having signed contracts with their customers. Likewise, the value of a company is measured by the signed agreements with the correct stakeholders. Therefore, two essential economic elements are the text in the agreement and the signature of the parties.
While the text part sat comfortably in the realm of the lawyers, the signature section provided an opening for everyone to storm the gates. We previously discussed the DocuSign IPO and Dropbox acquisition of Hellosign in the larger context of LegalTech.
Update 1: Docusign invested $15 million in Seal Software
Better yet, even Apple demoed their eSign solution on stage back in July 2017.
However, there are more pathways into this universe of contracts and these are provided by the text sections. More precisely: the facts and figures parts of a contract like names, dates, and amounts can be fed to a machine.
New entrants armed with machine learning skillset are now able to fire at this fortress for lawyers called contract.
These new players in the contract management space can also draw on great entrepreneurial skills. They position themselves more attractively as a Google for your enterprise and appeal to a broader market. This enables them to raise a war chest of capital.
Managing your contract has now become this juicy add-on for any text or data analytics company in the world. Any data point which can harm your enterprise is a risk to be analyzed with SmartTech. So after millennia of dominating contracts, attorneys may have to capitulate to machines on reviewing and managing them.
Now once we took this lens and calibrated it to find contract management solutions, we discovered these dormant LegalTech companies. We started looking at these creatures in May 2018 and revealed the first draft landscape in December. Like Jane.ai, their ammunition is hidden in mission statements, product descriptions, use cases or customer testimonials.
If we round them up and calculate their collective investment capital, you see the numbers in the image below. We mentioned the battle-harden gladiators from the Sales (Quote to Cash) and Customer Relations Management (CRM) arena in the Exits analysis.
Now every Cloud Storage, Document Management or Machine Learning solution looking for a problem will have a peek at contracts. It will get tougher to explain to an engineer that a contract is not a math problem. Especially when lawyers created endless fields of text for a machine to mine.
Update 2: Google came to party
In the end, this should not be collision but a collaboration between industries. For the sake of a safe society, having more clarity in contracts would be beneficial to everyone.
Especially when you realize that this legacy mechanism of a contract in text is in a race against a smarter competitor on Blockchain.
Raymond Blijd is CEO at Legalcomplex. Legalcomplex is an analytics company. It finds new companies and ideas that impact the legalindustry by using machine learning. It also provides insights and predict the evolution of the legalindustry worldwide in support of a fair society.
Previous to his role at Legalcomplex Raymond was Manager Online Innovation and Wolters Kluwer Legal & Regulatory.