Fully-Integrated Contract Lifecycle Processes in a Technology-Enabled World
For decades, many in the legal services industry have heard that technology is going to revolutionize our industry. However, since the advent of the word processor and electronic legal research, much of the ballyhooed technology has been hype. The predecessor of modern AI, expert systems, were going to bring revolutionary change to creation of legal documents. Knowledge management was going to enable us to find any document we had ever created. No more redundancy. Anyone in the firm was going to be able to avail themselves of the aggregated knowledge of those who came before them. In the meantime, things went on largely as they had in the past - using ad hoc approaches to document management, document storage, knowledge transfer and legal processes generally. By and large, after an M&A transaction contracts continued to sit in boxes in the corner, perhaps migrated onto a contract management program.
In many cases, technologies that were supposed to make the practice of law more efficient had the opposite effect. A typical legal technology software acquisition involved a lengthy procurement process in which a company first attempted to define the problems it was trying to solve. During the research/bidding process, requirements would often be changed based on the products’ different marketing claims about their more complex capabilities. This resulted in companies over-purchasing features that they didn’t need or know how to use, and purchasing products that were more expensive than anticipated, in many cases due to the extensive professional services required to make the products work. Following rollout, these products were then often not accepted by their user base due to over-complexity.
At the same time, companies were acting to streamline their legal processes to become more efficient. Companies began to rely increasingly on alternative legal services providers (ALSPs) to handle complex workflows. These providers, whose service offerings include contract abstraction and summarization, M&A due diligence, contract lifecycle management, and contract drafting and negotiation, among others, have already seen consistent increases in year-over-year growth due to the cost savings and other efficiencies provided by these companies.
ALSPs are uniquely suited to combine their process and technology expertise to provide more efficient technology-enabled legal services, for several reasons. First, for new technology to be effective it is necessary to have the capability to make efficient use of the technology. The real metric of whether technology is effective is not whether it makes a process more efficient. It is whether the total cost of ownership of that products results in overall reduction of costs and improved efficiency. Many technology acquisitions failed when looked at from this perspective. Utilizing an ALSP enables companies to shift the cost and risk of technology acquisition to outside service providers with better expertise at technology implementation.
Second, while discrete technologies have the ability to improve the efficiency of a process, such as data extraction from contracts, the ability to integrate different technologies to improve an overall workflow can provide very substantial improvements in process efficiencies, resulting in even greater cost savings. The importance of integration in effective use of technology cannot be overstated. Most companies simply do not have the resources to approach technology with this type of holistic approach.
When considering why technology implementations fail, the real benefits of using an ALSP to perform technology-enabled services become clear. In fact the key factors that make technology acquisitions risky are all mitigated by using an ALSP to perform managed services using technology. These include the cost of the technology acquisition, technology selection, technology implementation, and technology integration. By using an ALSP, companies can receive all of the benefits of new technology, with none of the downsides.
As an example, one area where AI or machine learning software is beginning to have an impact is data extraction from contracts. The process of extracting data from contracts into a usable form has always been laborious, requiring not just the manual extraction of data, but also careful proofreading to ensure the resulting work product was accurate. Early iterations of contract extraction software were rule-based and had poor results as the software’s accuracy in extracting clauses was reliant on language being near identical. Current versions of extraction software deploy machine learning capabilities. Instead of looking for certain keywords, or combinations of words in a certain order the software learns relationships between words and concepts. For many types of agreements, this software contains pre-trained out-of-the-box models that enable automatic extraction of data fields. To the extent a company needs more specific data to be extracted than that covered by pre-trained models, software products often include the ability to create custom-built AI models through supervised learning.
The ability of AI models to accurately auto-extract clauses depends upon the OCR quality (which in turn depends on the scan quality) of the documents. In addition, the software may not be able to auto-extract clauses from non-textual documents such as emails, Excel documents, etc. In these instances, the data will need to be extracted manually. This manual process, together with the manual process of performing quality checks on extracted data, is another important reason to use an ALSP versus doing the data extraction manually.
As noted above, ALSPs are able to integrate different technologies through solutions that allow for the easy sharing of data (e.g., platforms that provide integration out-of-the-box, or “API Integrators” where different applications are easily connected with basic configuration). Robotic process automation is also increasingly being used to complete repetitive tasks in contract workflows and can be used to fill the gaps between systems when technical integration is not possible. ALSPs are leading this effort by incorporating these tools into their service offerings to provide more complete technology solutions – boosted by their process excellence and substantive expertise.
For example, when extracting data from a large contract set, a set of leases for example, the actual data extraction is only one step in the process. Other steps include (i) downloading the relevant documents, (ii) reconciling diverse document sets to identify families of related documents and missing documents, and (iii) following extraction and data clean-up, uploading the extracted data to a contract management system or other tool from which the extracted data can be put to effective use.
Using a content management system with API integration to data extraction and other data management tools enables an ALSP to improve the efficiency of the data extraction process while enabling the customer to run customized searches based on metadata or the content of the document. This also allows the ALSP to create intuitive virtual folders based on any specific metadata category or save search-based hit results. The result is a faster and less expensive data extraction, with improved search capabilities for the customer.
ALSPs will continue to drive value by enabling companies to take advantage of fully-integrated technology-enabled processes. There are currently many different technologies to choose from and companies can become bogged down in the decision-making process. It is these types of complete solutions that ALSPs are building and managing that will allow their clients to continue to meet their contracting challenges. Solutions that require efficient resources, cross-functional subject-matter expertise, processes that are agile, scalable and standardized, and that use integrated technology.