Author: Gloria Yi Qiao
Many companies don’t have a smart contract management system at all. For these companies, they store their agreements in some kind of shared drives, or worse even, on people's hard drives. Anyone with an ounce of sensitivity for data security and collaboration will immediately realize this is not the right way to manage contracts. So they look for a solution, typically a contract lifecycle management system (“CLM”).
Having a CLM is much better than not having a system at all. You can now digitalize all your contracts, sort them, and if you know how to set it up, to search for certain attributes such as expiration dates.
However, knowing what AI can do with contract generation and management, having a CLM is just half of the battle. There are lots of true automation you can deploy in addition to or on top of a CLM, many of which are not being offered or properly set up by a CLM Vendor.
So what kind of true intelligence can you deploy with a system like Trusli? Here are some examples.
1. Pick and choose what kind of templates to send to whom
All lawyers know that we don’t just have one set of templates. We have multiple templates, or at least multiple versions of the same language, so that we can pick and choose depending on who we send the templates to.
So if your template generation is limited to picking out the counter party’s name, place of incorporation and at most governing law/jurisdiction, it’s not sufficient. A much more sophisticated way to go about it is to generate different “flavors” of templates using AI. To do this, the AI needs to learn the type of transaction, the nature of the relationship between the parties, the applicable laws, and the specific needs of the client. Once we teach the AI these various deciding factors, the system should be clever enough to generate different versions of the same template to be sent to the counter parties. Find this to be fascinating? Please schedule a call with us to find out how we can help you to set this up depending on your own careabouts and key considerations.
2. Define multiple layers of fallback provisions
Similarly, many lawyers will have a legal “playbook”, but having one set of “fallback provisions” may not be sophisticated enough. Maybe you want to start with a strong position and make a medium strength concession. Maybe you won’t even start so strong (see the template generation provision above) and then make a much more lenient concession. For example, if you are negotiating a contract with a large company, you may want to start with a strong position in order to get the best possible deal. However, if you are negotiating with a small company, you may want to be more flexible and make concessions. Having different sets of fallbacks and knowing how to apply them according to your own precedents and circumstances will become critical for more efficient and amicable contract negotiations.
3. Perform an audit of all your contracts and their respective key provisions
As the head of legal, do you ever wonder if all of your contracts are compliant with the company's predefined rules? Even better, are you certain that they meet other compliance standards, such as those imposed by the SEC (if you are a public company or about to become one)?
Other than pure compliance, do you want to take inventory of the status of your current contracts? For example, do you know how the limitation of liability stack up among all your contracts? Do you want to know how much liability is your company currently exposed to?
How about strengths of contracts depending on the author? Does your entire legal team impose the same standard? Which global supply manager can negotiate the strongest limitations of liability and/or payment terms? If you are burning with all these questions, let’s talk.
Performing an audit will help you identify any potential risks or problems, and ensure that your contracts are up-to-date and compliant with all applicable laws and regulations.
4. Create tags that are much more sophisticated than pure labels
It’s easy to keep track of contracts using your CLM for things such as counterparty name, type of contract and even expiration date (maybe). However, how to find contracts where you accepted a “weak” indemnification clause? How do you label it when you enter into such a contract and more importantly, how do you find all of them later? Do you have to scramble when you get asked by the GC or the CEO?
Using Trusli to track the status of your contracts will help you identify any contracts that are nearing expiration or are in danger of being breached. You can also track any changes that are made to your contracts. This will help you to ensure that your contracts are always up-to-date and compliant with all applicable laws and regulations.
5. Keep track of changing states of the contracts
Here is another interesting one: contracts are not set in stone. We enter into amendments, extensions, and sometimes multiple SOWs under the same master agreement. How do you keep track? How do you monitor all contracts as living objects as opposed to dead PDFs? Do you keep track of all the parent-child relationships among master agreements and SOWs, and better yet, sort them by date or number?
These are just teasers to give you a flavor of what a true sophisticated intelligent automation system can do, like track all of the changes that are made to your contracts, including amendments, extensions, and new SOWs. If you are looking for a way to manage your contracts more effectively, then a sophisticated intelligent automation system is the answer. These systems can save you time and money, and they can help you to ensure that your contracts are always up-to-date and compliant with all applicable laws and regulations. If your answer to the questions above is “I want all of these”, let’s chat soon.