While we describe ourselves at Clearlaw as an AI company, we probably spend more time talking about data. To us, data is not just the foundation of how our AI works, it is the actual output of our platform. Data provides an unbiased perspective on what reality is and when you understand that reality, you can make logical steps forward.
In the context of Contract Lifecycle Management tools (CLM), this understanding allows for automation. It’s basic computer programming. If condition A is met, do this action. If Condition B is met, do this different action. And so on and so forth. The more granular the data, the more automation one can achieve.
LegalTech AI today is pretty good at the categorization of legal documents, clauses, and concepts.
Categorization allows an organization to normalize data from multiple sources and identify clauses that are similar. By extracting specific clauses and recognizing duplicates, one can eliminate the process of reviewing the whole document and limit review to a much shorter list of clauses to review. This limits review from thousands of complete contracts down to hundreds of clauses. This is a major step forward in automation and is where most Contract AI is today.
As we move towards a true understanding of contracts, organizations will have access to even more data at their fingertips. Take a relatively simple scenario from a recent Clearlaw that was undergoing a change of control. The new organization needed to understand the data from the thousands of contracts they were inheriting. Everything from renewal clauses, to limitation of liability, to most favored nations.
As noted, categorization can help decrease the volume of work to get that information, but it doesn’t provide answers to the questions an organization has.
An example of a critical set of data for any organization undergoing a change of control is assignment. There are lots of little nuances in assignment clauses that can affect the new organization, including:
- Can I assign this contract to the new entity?
- Does it require prior written consent?
- Can that prior written consent be unreasonably withheld?
- Is there a notice period?
- Is there a notification process or contact?
- Are there exceptions for affiliates or subsidiaries?
And there are a lot of other data points. To get these data points, you need to understand more than the category of a clause, but an understanding of what the clause actually means. This is where Clearlaw is focused. By providing an understanding of the deeper level of data within a contract or legal document, a CLM powered by Clearlaw’s AI can achieve superior automation in contract review, storage, automation, and obligation management.