82,882
edits
Contract analysis: Difference between revisions
no edit summary
Amwelladmin (talk | contribs) No edit summary |
Amwelladmin (talk | contribs) No edit summary |
||
| Line 8: | Line 8: | ||
''Three hundred and sixty thousand hours of professional work carried out in seconds''. Sounds — literally — incredible, doesn’t it? Preternaturally intelligent silicon minds scanning and processing gigabytes of diverse text in an instant and analysing it for all material quirks and issues, like Zen from ''Blake’s Seven''. [[Get your coat]], [[legal eagles]]. | ''Three hundred and sixty thousand hours of professional work carried out in seconds''. Sounds — literally — incredible, doesn’t it? Preternaturally intelligent silicon minds scanning and processing gigabytes of diverse text in an instant and analysing it for all material quirks and issues, like Zen from ''Blake’s Seven''. [[Get your coat]], [[legal eagles]]. | ||
===Contract analysis or data extraction?=== | ===Contract analysis or data extraction?=== | ||
But let’s just stop and consider what is actually going on here: a bank seeking to reviewing tens and probably ''hundreds'' of thousands of ''its own'' commercial loans. These loans will be rendered in the hideous, overwrought prose of the banking lawyer, to be sure, but — even allowing for template variations and [[Legal evolution|evolution]] (by which I mean periodic [[Cambrian explosion]]s of [[flannel|flannelry]] — to which not even the House of Morgan is immune), ''the contracts will all be basically the same''. If there has been a modicum of legal design applied — okay, that’s quite a big if — there will be a predictable schedule of customer details and economic variables — dates, amounts, currencies, rates, and optional elections — but the ''legal terms'', however gruesomely articulated, will be homogeneous and, in any case ''within the bank’s control'': a commercial bank with half a brain won’t ''allow'' its | But let’s just stop and consider what is actually going on here: a bank seeking to reviewing tens and probably ''hundreds'' of thousands of ''its own'' commercial loans. These loans will be rendered in the hideous, overwrought prose of the banking lawyer, to be sure, but — even allowing for template variations and [[Legal evolution|evolution]] (by which I mean periodic [[Cambrian explosion]]s of [[flannel|flannelry]] — to which not even the House of Morgan is immune), ''the contracts will all be basically the same''. If there has been a modicum of legal design applied — okay, that’s quite a big if — there will be a predictable schedule of customer details and economic variables — dates, amounts, currencies, rates, and optional elections — but the ''legal terms'', however gruesomely articulated, will be homogeneous and, in any case ''within the bank’s control'': a commercial bank with half a brain won’t ''allow'' its customers to wordsmith its standard terms. If it does, then ''that'' is the problem to be solved, not “how can I possibly understand all these varied terms I have agreed with hundreds of thousands of customers?” | ||
Note the irony: | Note the irony: it was only thanks to this kind of technology that we can even ''contemplate'' micro-variations to standard terms: behold the [[technology paradox]]: what Andy Grove giveth, the [[legal eagle]]’s innate appetite for pedantry taketh away. Technology that allows one to ''ignore'' the [[root cause]] of the problem and carry on anyway is ''bad'' technology. | ||
But we digress. In any case, “reviewing one hundred thousand commercial loan agreements” really means “processing one hundred thousand tables of structured data”. This, doubtless, would take (and cost) an ''aeon'' if assigned to a battalion of [[legal eagles]], and would in the process ''drive each of the poor buggers up the wall'', but to be clear it would require ''absolutely no judgement, let alone legal acumen''. It is a matter of transcription. | |||
Assigning a | Assigning a lawyer to this task would, in any era, have been an act of cruel & unusual punishment, not to mention economic folly. It is not news that [[difference engine]]s can process structured data better than [[meatware]]. This use of Pentium processing power is hardly the proverbial [[Apocalypse|horseman on the lawyer’s ridge]]. | ||
===Contract review | ===[[Contract review tool]]s=== | ||
More potentially transformative are emerging | More potentially transformative are emerging “[[Artificial intelligence|artificially intelligent]]” [[contract review tool]]s. These promise to take a ''foreign'' draft, received from a counterparty, and analyse it against a pre-defined [[playbook]], together with other examples which the machine has already learned from, mark it up, and return it for completion of the negotiation. This is much harder than reviewing your own standard terms. Legal text from random strangers can, and often does, say ''anythng''. A common subject for these contract review tools is [[confidentiality agreement]]s, being as they are (a) low risk; (b) ''substantially'' standard: all confis say the same basic things; and (c) ''formally'' variable: there is no limit to the profligacy with which legal eagles can waste qwords in articulate these basic commercial requirements apable of infinite variation in their articulation | ||
But even here the technology disappoints and, in predictable ways, makes an existing problem even worse than it otherwise might be. Institutions are decommissioning review systems the same way they are repatriating once offshored operations functions.<ref>Isn’t it funny how you never hear about ''cancelled'' offshore operations?</ref> It is worth investigating why. | But even here the technology disappoints and, in predictable ways, makes an existing problem even worse than it otherwise might be. Institutions are decommissioning review systems the same way they are repatriating once offshored operations functions.<ref>Isn’t it funny how you never hear about ''cancelled'' offshore operations?</ref> It is worth investigating why. | ||
| Line 48: | Line 48: | ||
Immediately, the [[playbook]] interferes with the free run of our young eagle’s magisterium. Before she can even unfold her wings, the [[contract review tool]] has marked-up the document ''to rule'', faithfully cleaving to each enacted stricture of the [[playbook]], however prudish, [[tiresome]] or nonsensical. It is like Horton the goddamn Elephant, doggedly sitting on a nest up a tree. Now bearing in mind that ''saving her precious'' [[time is of the essence|''time'' is of the essence]], it would be ''most'' counterproductive for our young eagle now to ''undo'' all those fussy, machine-generated corrections — and so we see we have created a cyber version of our old favourite the [[anal paradox]]. And, [[paradox]] aside, why is de-stupiding a machine’s output any more valuable than de-stupiding the original draft in the first place? Did ''that'' cost get baked into the business case? | Immediately, the [[playbook]] interferes with the free run of our young eagle’s magisterium. Before she can even unfold her wings, the [[contract review tool]] has marked-up the document ''to rule'', faithfully cleaving to each enacted stricture of the [[playbook]], however prudish, [[tiresome]] or nonsensical. It is like Horton the goddamn Elephant, doggedly sitting on a nest up a tree. Now bearing in mind that ''saving her precious'' [[time is of the essence|''time'' is of the essence]], it would be ''most'' counterproductive for our young eagle now to ''undo'' all those fussy, machine-generated corrections — and so we see we have created a cyber version of our old favourite the [[anal paradox]]. And, [[paradox]] aside, why is de-stupiding a machine’s output any more valuable than de-stupiding the original draft in the first place? Did ''that'' cost get baked into the business case? | ||
=====The measure of a [[legal eagle]]===== | =====The measure of a [[legal eagle]]===== | ||
But it is worse than that: our legal eagle is snookered: her ineffable judgment is, courtesy of this fusspot machine, | But it is worse than that: our [[legal eagle]] is snookered: her ineffable judgment is, courtesy of this fusspot machine, suddenly ''measurable''. The bureaucrats can run MIS reports. They can see what she is doing. They have a yardstick, and it will tell them things like, “''Lauren Eagle departed from the recommended standard agreement term seven times in June 2019''” The [[rule of self-preservation]], which overrides an abstract yen of autonomy whatever {{author|Daniel Pink}} might say, discourage deviation from guidelines, ''even though the guidelines are stupid''. But, dilemma! If she ''doesn’t'' intervene, her client is liable to explode into an incandescent rage at her insistence on a two-year term when he expected three. In any case, she can expect to be knee-deep in negotiation, hastily-convened conference calls and, after a time, some hard-tack reverse-ferret [[client relationship management]] on a point which, had she not bothered with the contract review tool, ''she would never have raised at all''. Look — it ''is'' only a [[confi]], and it will get sorted out, but remember the original point of the [[contract review tool]] was to ''cut down on work and save costs, not generate more if it''. | ||
===There is a role for CRM=== | ===There is a role for CRM=== | ||
If you step back and re-contextualise the promise of [[reg tech|reg-tech]], there is a role for [[automated contract review]]. But it is not to supplant humans, but just to give them a scratchpad. If the AI does work at all and you can take out the human backstop, and throw ''anything'' at the software, and commit to training it as you go, then you might find it starts to be useful after a while. A machine that can pick out indemnities, governing law, limitations of liability and exclusions in a 40 page contract— just highlighting them, even if not having anything much to say about them — that would be a useful contract companion. This is a much less ambitious, but more realistic, goal. | If you step back and re-contextualise the promise of [[reg tech|reg-tech]], there is a role for [[automated contract review]]. But it is not to supplant humans, but just to give them a scratchpad. If the AI does work at all and you can take out the human backstop, and throw ''anything'' at the software, and commit to training it as you go, then you might find it starts to be useful after a while. A machine that can pick out indemnities, governing law, limitations of liability and exclusions in a 40-page contract— just highlighting them, even if not having anything much to say about them — that would be a useful contract companion. This is a much less ambitious, but more realistic, goal. | ||
{{sa}} | {{sa}} | ||