How Lexible, the universal contract language, is disrupting more than 1,000 years of legal contracts
The missing link in our evolution
Mankind has accomplished much in the last 1,000 years. From the language of Shakespeare and the art of the renaissance, to the moon landings and the world wide web, progress has been nothing short of remarkable.
But one thing that has not evolved is the way in which legal contracts are written and used. The basic concepts have not changed since the days of Plato back in 458 BC – the fundamental essence of a contract is still a story-telling narrative. In contrast to today’s digital age, contracts remain rooted in their analogue past. Which is somewhat ironic when you consider that Plato once said: “Never discourage anyone who continually makes progress, no matter how slow.” Perhaps an early visionary of the continual improvement methodology espoused and diligently delivered by Toyota.
And that inertia prevents growth. New technology is powering growth in multiple sectors around the world. Innovation has helped businesses bring new products to market, find new ways of servicing clients, and open up new sources of income for forward-thinking organisations.
But the lack of technological advancements has held back law firms and even ALSP’s that talk a great technology game, resulting in a core problem of unpredictable revenue. In the face of increased competition, traditional revenue streams are unreliable. Businesses in the legal sector need new ways to drive income. This lack of technological advancement is the same within in-house teams where the legal team are too often becoming a bottleneck for deal velocity, and slowing down the sales and procurement teams in getting deals across the line.
At the same time, customer expectations have evolved. Clients demand ‘as-a-service’ delivery, tapping into expert resources and paying for services as and when required. The days when a client was willing to accept waiting for a week for a review of an incoming NDA from their retained law firm are over.
Analysing the analogue problem in detail
In their analogue forms, contracts are difficult to analyse at speed. It is no easy task to manually review a live contract in order to check for specific obligations and clauses; for example to determine how many contracts have specific Force Majeure language that references a global pandemic.
Time, people and money need to be thrown at the problem, which is undesirable for a number of reasons:
- When circumstances change overnight due to unforeseen external factors, the business needs to understand its obligations and risk positions as soon as possible. This is the only data-informed and accurate way to mitigate risk (or exploit new commercial opportunities that may arise). Any delay in uncovering these insights can be costly if not catastrophic.
- Analogue contract reviews need to start again for every new incident or event that merits contract analysis. For example, the Corporate Insolvency and Governance Act 2020 is likely to cause companies to review their supplier contracts to understand their risks should a vendor disappear or get into trouble. Conducting such analysis means a fresh review of the portfolio of contracts. It involves a huge amount of rework – and the cost and time delays that come with it.
- Businesses are looking to do more with less, especially as the full financial impact of the pandemic is beginning to be felt. Companies simply do not want to waste precious resources on manual rework – especially when that rework may detract legal from finalising contracts with new customers and pulling vital revenue forward.
- As well as reacting to external factors, businesses also want the GC to proactively find efficiencies in the contracting process. With a portfolio of analogue contracts, GCs typically struggle to uncover trends or insights to identify ways to improve future transactions. Unlike boardroom colleagues, who arrive armed with analytics and data-driven predictions, the GC has nothing to offer except instinct and experience. The business gains little value from contractual data that remains locked away.
So how can legal teams break the mold? What new tech opportunities exist to change the status quo?
Standardising contracts for the digital age
Digitising contracts at the point of first review is a vital step in tackling these common challenges. By analysing and extracting key data from each contract, a digital asset is created once that can be then called on as many times as is needed to address any number of obligations and from any new angle.
Standardising not just the format but also the contract language also delivers immediate benefits. Commercial contracts are capable of being expressed using a limited set of language; negotiation should simply revolve around the substantive commercial terms that have been agreed between the parties, and it is these that lawyers should focus their attention on. The rest of the agreement could and frankly should be standardised to remove the unnecessary reading time we mentioned above.
All too often, however, lawyers waste their time reading and making sense of variations of legalese in a contract. A simple example, uncovered by ThoughtRiver’s data science team: an analysis of 1.4 million contracts from our database found a staggering 335,000 variations in one of the most mundane clauses: the choice of law clause. This clause is present in all commercial contracts and simply states which jurisdiction’s law governs the contract (England & Wales, New York, etc.). If lawyers have managed to find at least 335,000 different ways of expressing the simplest of things, imagine what that means for the language variation in the rest of the contract involving more complex issues.
Lexible partnerships
Lexible is a universal contract language framework developed by experienced lawyers and leading-edge computational linguists. Lexible is concerned with classifying precise points of meaning often drafted using diverse wording in analogue contracts. It is at its heart a standardised language to describe contracts and unearth the meaning within them.
This means that legal professionals can use Lexible as a building block within ThoughtRiver’s platform to extract critical information from any contract with greater speed and accuracy.
This introduces a range of benefits for legal professionals, with the opportunity to partner with ThoughtRiver on Lexible development to drive efficiencies and to open up entirely new sources of revenue.
Want to discover more about the opportunities to generate critical new sources of revenue by becoming a Lexible partner and authoring new properties on the Lexible framework? Download the full playbook to learn more.
