How Clearlaw's AI Engine is winning the 3rd Party Paper War

As contracts are the basis of all business arrangements, they are critically important to the function of any enterprise organization. Naturally, the software marketplace has responded with dozens of Enterprise Legal Management (ELM) and Contract Lifecycle Management (CLM) tools designed to optimize legal operations. These tools can rapidly route redlines for review, assemble contracts quickly, organize document storage, and manage e-signature. However, these capabilities are dependent on a single major assumption; that the system can recognize the contract.


This isn't as easy as one would think. Contracts come in all different shapes and sizes. If you have done your fair share of contract negotiation, you have probably seen dozens of clauses worded differently that have the exact same meaning, while also seeing a single word change the entire meaning. As one can imagine, this can be a real struggle for any technology trying to organize their contracts.


This is no small issue for any organization. At Clearlaw, we like to say that 50% of all contracts is third party paper to someone. In nearly every business transaction, one of the two parties is working off someone else’s paper, or legal template. Contractual tools have developed workarounds to normalize these contracts, but they are lengthy processes that include manual entry of data, highlighting contractual areas, and metadata tagging, just so the system has a complete record of one's contractual history.


For organizations that do tons of contracts every month, that's a lot of manual work. Over the course of a year, that can be thousands of hours of manpower, often by highly skilled and expensive resources. These manual processes can bog down an organization and leads to increased operational costs. In a worst cause scenario, this leads to a breakdown of an organization's business processes and poor adoption of ones legal tools, opening an organization to risk. This struggle is what Clearlaw calls the War on 3rd Party Paper. And until today, 3rd Party Paper was winning.


This is where the Artificial Intelligence and Natural Language Processing engine from Clearlaw comes into play. Our technology reads contracts, taking into account the content and context within legal documents, extracting the key clauses, subclauses, obligations, and data points and organizing them into structured data, irrespective of whether our system has seen this contractual framework before.


The value proposition of this is twofold. First, this allows contracts with entirely different structures to be compared on the key data points within. Clearlaw’s system identifies those key values, allowing your organization to compare contracts side by side. No more having two documents open at the same time, losing one's place, and using control F in Microsoft Word. When applied at scale, the data we provide allows an organization to find problematic contracts before they are issues, look at legal contractual trends, or search for lookalike clauses within seconds.


The second value is that this system can be tied to one's rules engine within you contract or legal tools. In a pre-execution scenario, the data and rules can identify clauses that are out of compliance with your standard contractual gives and gets, greatly reducing the review time and reducing human error. Imagine a world where one's legal technology told you that a 3rd Party Paper Nondisclosure Agreement (NDA) was compliant and ready for signature without any human review.


The war with 3rd Party paper isn't over yet, but the tide has turned. With Clearlaw that future is today. We would love to show you how we do it.