Although many of our team members have their roots in eDiscovery, contract review and contract data extraction are a cornerstone of our service offerings. Our prior experience handling huge document reviews in the context of litigation has made us believe that the possibilities of mining contracts for critical data are limitless.
We spend a lot of time talking to our clients about the evolution of contracts, here are some of the questions they are asking:
How is technology being used to improve contract review?
When companies are involved in a financing or a M&A or they are evaluating the impact of new regulation, the company will have to review a large number of agreements in a very short period of time. Traditionally, companies hired large teams of attorneys, who could review agreements with great speed and pick out the relevant clauses.
Today, software is allowing attorneys to accelerate that process and changing the way companies are interacting with their own contracts. Rather than ask attorneys to read through the agreements and pick out specific clauses and data, AI and machine learning technology can ingest and process agreements and then extract the relevant information.
Is This Just for M&A Due Diligence?
No. Gravity Stack’s contract review solution not only speeds up the review process, it has built in workflows for repapering agreements that contain triggering clauses. For example, not only can we identify an agreement with a change of control provision, it also creates the workflow to generate and track third party consents.
So, in addition to the M&A transaction, our clients lean on us to help them with post merger integrations and, as noted above, responding to regulation. Additionally, many of our clients have simply engaged us to review their agreements and found glaring discrepancies between their financials and their contracts.
Does AI replace the need to have lawyers manually review contracts?
No. Our contract review tools do not replace attorneys, although we can definitely accelerate tasks that, historically, were performed manually by junior attorneys. Simply knowing that certain agreements contain certain provisions is only a starting point for most attorneys. Our contract data extraction tools give lawyers insights on day one of a due diligence that would have taken weeks if not months to produce.
The fact that we are a subsidiary of Reed Smith LLP allows us to work closely with top attorneys to help them develop a modern, data driven approach to contract review.
Does my legal department need to purchase its own contract review platform?
It depends. Most companies do not need to review everyone of their agreements regularly. If you work for a serial acquirer that regularly conducts large scale reviews, then having your own system in place may, in fact, make sense, and we can help you with that. However, the overwhelming majority of companies need to review huge numbers of agreements for specific events, not as part of the ordinary course of business.
Most of our clients do not want or need to purchase another SaaS tool that needs to be implemented, they simply want to understand their obligations.
Should my legal department purchase a contract lifecycle management tool?
Again, it depends. The idea of a CLM sounds nice in theory — and there are definitely companies that have need to purchase a CLM — but study after study shows that very few departments love their CLM. We have heard stories of multiple companies that are stuck in long term contracts with Apttus (recommended by a consultant that had a prior relationship with Apttus), and many organizations that have Apttus do not even use it.
While our team at Gravity Stack has led several CLM implementations for our clients, we always counsel that companies that, prior to making a purchasing decision, they should figure out what goal they want to achieve and then make sure that buying a CLM will actually accomplish this goal. In other words, does your organization have an actual problem to solve or have you heard of other organizations implementing a CLM?
We also counsel clients that, prior to fundamentally changing their contracting process by tossing a CLM into the mix, a task with very heavy change management costs, they should first understand the data in their legacy contracts, a task that requires little to no change management.