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Contract analysis: Difference between revisions
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But let’s just stop and consider what is actually going on here. J.P. Morgan reviewing, presumably tens and probably ''hundreds'' of thousands of commercial loans. (I am allowing JPM’s [[legal eagles]], for whom I have great respect, ten hours to review each loan.) | But let’s just stop and consider what is actually going on here. J.P. Morgan reviewing, presumably tens and probably ''hundreds'' of thousands of commercial loans. (I am allowing JPM’s [[legal eagles]], for whom I have great respect, ten hours to review each loan.) | ||
These loans will | These loans will be lengthy and rendered in the hideous, overwrought prose of the banking lawyer, to be sure, but — even allowing for template variations and evolution (by which I mean periodic [[Cambrian explosion]]s of flannelry — to which not even the House of Morgan is immune), ''the contracts will all be the same''. There will be a basic, predictable, schedule of customer details and economic variables — dates, amounts, currencies, rates, and optional elections — but the ''legal terms'' of the loans will be more or less homogeneous. | ||
So, “reviewing commercial loan agreements” means processing thirty thousand tables of variables. This, doubtless, would take an ''aeon'' if assigned to a battalion of [[legal eagles]], and would in the process ''drive each of the poor saps up the wall'', but to be clear it would require ''absolutely no judgement, let alone legal acumen''. | |||
Assigning a ''lawyer'' to this task would, in any era, have been an act of unusual economic folly | 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 information better than [[meatware]]. JP Morgan’s sensible use of information processing power is hardly a horseman on the lawyer’s ridge. | ||
===Contract review tools=== | ===Contract review tools=== | ||
More potentially transformative are | More potentially transformative are emerging “artificially intelligent” [[contract review tool]]s. These promise to take a contract 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. A common subject for these contract review tools is [[confidentiality agreement]]s. | ||
But even here the technology disappoints and, in predictable ways, makes an existing problem even worse. 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. | ||
====The problem statement==== | ====The problem statement==== | ||