contracts

Hey Google! What’s your Legal Endgame?

Hey Google! What’s your Legal Endgame? 1160 725 Raymond Blijd
Read time: 3 min.

Early April Google snapped its finger and unleashed their A.I. on corporate contracts. What’s the Endgame?

While watching the cool voice services being unveiled at Google IO, I couldn’t shake the one they did a couple of weeks earlier at Google Next on documents understanding A.I. It slowly dawned on me why they entered the legal industry specifically through contracts. This move can be viewed from a couple of angles but here’s the one I see really moving the needle.

Shortgame

Let’s address some concerns many echoed when the news first hit about Google doing contracts. Can the Legal Industry trust Google with corporate data? Wouldn’t they just sell it to the highest bidder and post ads alongside your contract like in Gmail? In the short term, that would backfire right away. The legal industry can not relinquish data in that fashion, lawyers are bound by ethics.

However, here’s the paradox: 2 of the top 4 most expensive keywords globally in Google AdWords are the ones lawyers buy. If you run a traffic check on any of the popular LegalTech companies sites that recently raised large sums, you’ll notice that a significant chunk of their traffic isn’t organic. Like many other businesses, they heavily rely on AdWords, Twitter, LinkedIn, and Facebook. So even when professionals have ethical standards, the unit economic reality remains harsh. The Legal industry needs Google to prop up volume and drum up demand.

So as creepy as it may sound, showing ads on your corporate data is as crazy as renting your couch to a stranger. In the future, an algorithm can anonymously pick the name of the most suitable professional or firm to handle a certain legal matter. Of course, you’ll have to opt-in and adjust the permissions on your corporate data like any other privacy setting. From the perspective of a consumer of legal services and the eventual file owner, this will be different. They may not mind an objective mathematical suggestion of the best legal provider. Especially if the suggested provider is cheaper than your current one.

Midgame

At the other end of the spectrum sits Data Security. One of the most famous data leaks in human history (Panama Papers) originated from a reputable law firm. Attorneys may be adept at securing legal risk but IT ones aren’t their forte. The medical industry has elaborate laws like HIPAA to handle health data, while the legal industry operates on a pinky swear. Data breaches can happen to anyone but many rely on Google, Apple, Microsoft & Amazon (GAMA) to secure documents. They possess enough engineering expertise and financial firepower to protect our files against breaches or ransomware. Professionally, we’ll be reluctant but remember, personally we already entrust GAMA to secure our most intimate photos.

Another argument states that Google may not have the expertise to handle the legal heavy lifting. Google’s goal is to have everyone play and apply their A.I. on any data. And if they want their machine to take the lead in legal they need to feed it as much legal data as it can. Specifically of the ‘dark matter’ variety meaning data behind corporate firewalls.

That is why Google partnered with corporate data custodians that could provide it with access to dark matter.

  • Accenture ($119B);
  • Iron Mountain ($10B);
  • DocuSign ($4.5B);
  • Box ($2.7B);
  • UiPath ($440M);
  • Taulia ($176M) and;
  • Egnyte ($137M).

Combined with Google ($890B), they represent about $1.3 trillion of consumer trust in them handling documents of any kind. Now, why would they pick contracts and agreements?

Longgame

One reason Google and others choose contracts is their immediate impact on a company’s bottom line. All companies need to track income or manage their spend and most of those numbers are buried in contracts. The Legal Industry tends to get wrapped up in the minutiae of legal problems. However, companies have more pressing practical issues like is this a profitable deal or am I being defrauded.

As we hinted in our previous post ‘Breach‘, the new players aren’t so much interested in legal hazards but rather the financial analytics. We provided some samples of Sales and Enterprise startups managing customers contracts. In the last months, some curious new services latched on this trend of managing subscriptions. G2Crowd recently launched a service called Track to manage software spend, usage, contracts, and compliance. Similarly, Product Hunt offers Founders Club: a single membership with access to a group of tools and services. In short: a single contract to manage others.

Bottom line, more players are getting into the ‘contract management’ game to support better financial decisions. This ever-expanding group understands that the facts and figures matter just as much as the legal clauses. Better financial management starts with good contract insights. Yet, getting into corporate contract management may not be the most lucrative space.

Endgame

We live in a subscription economy where both our professional and personal well-being are tied to periodical payments. Instead of purchasing stuff, we are moving to a licensing model for our everyday needs. We all feel the soft squeeze of fees impose by these subscriptions. And that is because recurring revenue became an I.V. drip for most companies.

So the bigger market for contracts isn’t corporate, it is consumers. They may not have the means to acquire elaborate vendor management expertise but the same principle applies. That is why credit services, insurance companies, and personal finance apps will bypass banks and go straight for the contracts. Yet understanding these particular documents still mostly resides with a human legal professional, not a machine. And due to the massive scale for this need of understanding, makes this endeavor economically unsustainable.

Let’s forget about the technology or the industry for a second. Picture yourself in your living room when you suddenly get a spark: can I lower my insurance costs today? Where can I stream Avengers: Endgame for the lowest price? Or how about all my vendor contracts that have 90-day payment terms?

Your smart speaker wakes up…

Breach: New Players in Contract Management

Breach: New Players in Contract Management 1920 1080 Raymond Blijd
Read time: 3 min.

Update 2: April 19, 2019

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.

Gates

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.

Barbarians

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.

Breach

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.

Arena

Now once we took this lens and calibrated it to find contract management solutions, we discovered 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.

LP Contract Landscape 2

Unchained

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 a clash but a collaboration between industries. For the sake of a safe society, having more clarity in contracts would be beneficial to everyone.

Especially when we realize that this legacy mechanism of a contract in text is in a race against a smarter competitor on Blockchain.

Why We Hunt For Harmony in LegalTech

Why We Hunt For Harmony in LegalTech 2560 1440 Raymond Blijd
Read time: 2 min.

After hunting 214 apps on Product Hunt and gathering them in the Epic Collection, here are some new theories on what a legal app really is. Or should be.

Two years ago I had 3 insights:

  1. The top voted legal apps are least likely to come from legal professionals;
  2. Practical is popular with hunters;
  3. Blockchain is an epic technology;

About 143 apps later, I’ve noticed some other trends.

Contracts & Taxes

One of the 27 tax apps I saw was literally called Death & Taxes. Ironically, it has since died. Nonetheless, the most hunted apps help you run your startup and deal with..contracts. Since most apps help you generate contracts, I was a little disappointed in the number of apps that actually help you understand them. Nevertheless, I was charmed by the simple beauty of some generators like this homegrown one: Docontract.com

Privacy & Harmony

With just 30 apps totaling over 11,000 votes, Privacy and Civictech seem to be dear to our hearts. To illustrate this strange struggle: Arrest SOS can be classified as a Marketplace but it feels more like CivicTech. Because our reality of increased risk, surveillance, and scrutiny, shouldn’t diminish our right to a fair treatment by those in power.

In another spectrum, I discovered examples where privacy was exposed by choice to ensure safety. Apps like CitizenWatcher or Companion literally help you navigate your city like a Redzone or be a Vigilante.

Patterns & Warnings

If you visit the Epic collection you’ll see the top 3 mirror the pattern described above: first is a curated source for founders, and the third is a payment app called Privacy.com. However, it is the second on the list that had my attention. A message for the Legal Industry: #FinTech is here.

Btw, if you are a little confused by the methodology of tagging legal startups e.g. isn’t Patents part of Intellectual Property? Or when is FinTech a legal app? It’s tough and you can read here some of the challenges of classifying legal. Ultimately, tagging legal apps according to legal principles may not make any sense in the real world. Besides our lives are already complex, we don’t need legal to make it worse.

So the rationale is to capture the apps that seek to reduce complexity and restore harmony in society. I believe that is what the legal industry was trained and hired to do.

Join the Hunt

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