Contract analysis: Difference between revisions

Suddenly the cost proposition that swung the business case doesn’t work: you assumed you were saving an hour [[legal]]’s time, which you unitise at, say, $250. But that is a ''nominal'' cost. It is sunk.<ref>Unless you were briefing out your confis to a [[law firm]], in which case, ''really?''<ref> A new [[confi]] coming in doesn’t generate that cost, and firing the thing out to your [[contract review tool]] doesn’t save it. The cost of your own [[legal eagles]] is fixed, and notoriously hard to [[shredding|shred]] back to your business. Legal eagles just sit there, on the firm’s dime, ''whether you use them or not''. Most work very hard, of course — the [[legal eagle]] who punches out at 5pm on the smacker on ''any'' day, let alone ''every'' day is a rare bird. He ''will'' look at that [[confi]], and anything else that needs to get done, at some stage during the day. ''[[Legal eagle]]s don’t work to rule''.<ref>As it happens, the occasional [[confi]] can be a pleasant distraction: a nice re-charger after a hard morning slogging through a series of regulatory change stakeholder [[Skype]] calls. Hey, management team: why don’t you try to get rid of all the ''stakeholder management calls''? ''There'' is a question.</ref>  

Now this is not so much a function of the technology but the perverse incentives that operate inside a sprawling organisation. Bear in mind an employee’s primary driver is covering her ''own'' arse first, ''then'', where time allows, her organisation’s. There are two places where legal decisions need to be made: Firstly, in configuring the [[playbook]] that supplies the parameters for the [[contract review tool]]; and secondly, by the [[legal eagle]] herself, in combat during a live negotiation, when confronted with a challenge from the counterparty.

*'''The [[playbook]]''': There is not a negotiation manual nor a [[playbook]] on the planet which stipulates [[walk-away point]]s at an ''actual'', real-life, point at which the organisation will actually walk away. Not a one. It is wrought in the abstract, without the benefit of individual mitigants that might accompany any project. It is modelled not on the golden mean, but the lowest common denominator. It will have too many rules, and all will be informed by the [[credit officer’s refrain]]: ''it can’t hurt to ask''. They may even employ that fatuous supposition that some justify by reference to [[behavioural economics]], that ''it leaves us something to concede so that the client can think it has won something''.

*'''The negotiation''': it is a great comfort and solace to an [[inhouse lawyer]] to be able to make commercial decisions, to concede technical or finicky points, and let ''de minimis'' points go, on the fly. ''This'' is what gives the [[legal eagle]] her ''wings''. This vouches safe [[Drive: The Surprising Truth About What Motivates Us - Book Review|her ''autonomy'', her ''mastery'' and her ''purpose'']]. ''This'' is why she shows up for work. ''This'' is why she slogged through all those interminable lectures about [[promissory estoppel]] all those years ago. There is something ineffable, even ''infinite'' about that knowledge: it is impervious to measurement; it lies in a rich forensic magisterium beyond the censorial gaze of [[internal audit]]. You cannot ''quantify'' it. In this sunlit realm, we [[legal eagle]]s can truly fly.

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?  

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''.

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.