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Secondly, it adds to the cost. Now, to be sure, [[reg tech]] providers are master [[rent-seeker]]s, but here, in their bench of paralegal sense-checkers, they have actual out-of-pocket costs. Thus, the [[contract review tool]] must carry a heavy charge ''per document'' review. Better ones charge less than a hundred bucks. Some charge as much as three hundred, ''per review''. ''But the point of automated review is that it shouldn’t cost anything.'' | Secondly, it adds to the cost. Now, to be sure, [[reg tech]] providers are master [[rent-seeker]]s, but here, in their bench of paralegal sense-checkers, they have actual out-of-pocket costs. Thus, the [[contract review tool]] must carry a heavy charge ''per document'' review. Better ones charge less than a hundred bucks. Some charge as much as three hundred, ''per review''. ''But the point of automated review is that it shouldn’t cost anything.'' | ||
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> | 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> | ||
So, unless you can prove that your [[contract review tool]] will make some of your lawyers ''[[redundant]]'', ''it is not saving you any real money''. It is ''costing'' real money — ''more'' than it would for your internal team to just knock off the confi in the first place. | So, unless you can prove that your [[contract review tool]] will make some of your lawyers ''[[redundant]]'', ''it is not saving you any real money''. It is ''costing'' real money — ''more'' than it would for your internal team to just knock off the confi in the first place. | ||
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[[Reg tech]] that doesn’t work without a human standing behind it to prop it up ''isn’t'' [[reg tech]]: it is a ''gimmick''. It is a form of disguised ''[[outsourcing]]''. But you are outsourcing to a black box: to personnel you can’t see, you didn’t hire and you can’t evaluate, but who ''must be'' cheaper than your own personnel, since you are now paying for them, this confounded [[reg tech]],<ref>''Also'' a black box, by the way: how much of the work-product is the tech, how much the [[meatware]]? If they won’t show you, assume it is mostly the [[meatware]].</ref> ''and'' the [[Rent-seeking|rent]] your [[software as a service]] provider is extracting on the whole operation. If the [[reg tech]] checkers are ''better'' than your own people, hire the [[reg tech]] firm as a recruitment consultant, not to provide crappy [[AI]]. | [[Reg tech]] that doesn’t work without a human standing behind it to prop it up ''isn’t'' [[reg tech]]: it is a ''gimmick''. It is a form of disguised ''[[outsourcing]]''. But you are outsourcing to a black box: to personnel you can’t see, you didn’t hire and you can’t evaluate, but who ''must be'' cheaper than your own personnel, since you are now paying for them, this confounded [[reg tech]],<ref>''Also'' a black box, by the way: how much of the work-product is the tech, how much the [[meatware]]? If they won’t show you, assume it is mostly the [[meatware]].</ref> ''and'' the [[Rent-seeking|rent]] your [[software as a service]] provider is extracting on the whole operation. If the [[reg tech]] checkers are ''better'' than your own people, hire the [[reg tech]] firm as a recruitment consultant, not to provide crappy [[AI]]. | ||
=====It makes for ''more'' work downstream===== | =====It makes for ''more'' work downstream===== | ||
Now | Now bear in mind the perverse incentives that operate inside a sprawling organisation. An employee’s primary driver is covering her ''own'' arse, ''then'', where time allows, her organisation’s. When setting up a [[contract review tool]] there are two sets of legal decisions to be made: administrators must configure the general terms of the [[playbook]] in the ''abstract'', and [[legal eagle]]s must , judge how to handle incoming from a counterparty in the ''particular''. | ||
*'''The [[playbook]]''': There is | *'''The [[playbook]]''': There is no [[playbook]] on the planet which stipulates [[walk-away point]]s at the ''actual'', real-life, points at which the organisation will really walk away. Not a one. Playbooks are forged in the abstract, without sight of individual mitigants that might accompany any given [[project]]. They are modelled not on the golden mean, but the lowest common denominator. They will have too many rules, all informed by the timid [[credit officer’s refrain]]: ''it can’t hurt to ask''. They may make that fatuous supposition that ''it leaves us something to concede so that the client can think it has won something''. | ||
*'''The negotiation''': it is a great comfort | *'''The [[negotiation]]''': it is a great comfort to an [[inhouse lawyer]] that she can make decisions, concede technical points, and let ''de minimis'' terms go, on the fly. ''This'' is what gives 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; why she slogged through interminable lectures about [[promissory estoppel]] all those years ago. There is something ineffable, even ''infinite'' about this skill: it is impervious to measurement; this rich forensic magisterium lies beyond the censorial gaze of [[internal audit]]. In this sunlit realm, we [[legal eagle]]s can truly fly. | ||
But a [[playbook]] ''buggers up'' this freedom. It chains our young eagle to the ground. Scarecely can she unfurl her wings, when the [[contract review tool]] has marked-up the document ''to rule'', cleaving to every 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 the whole point is ''saving her precious'' [[time is of the essence|''time'' is of the essence]], it would be ''most'' odd for our young attorney now to ''undo'' those fussy, machine-generated corrections — and so we have created a cyber version of our old friend the [[anal paradox]]. And besides, why is de-stupiding the machine’s output any more useful 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: | But it is worse than that: our [[legal eagle]] is snookered: thanks to this fusspot machine, suddenly her ineffable judgment is ''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, “''L. Eagle departed from the recommended standard term seven times in June 2019''”. The [[rule of self-preservation]], which crushes the abstract yen for autonomy like a bug, discourages any deviation from the guidelines —“good!” squeaks the COO — ''but the guidelines will be stupid''. ''She'' might be incentivised to demur, ''but her counterparty won’t''. | ||
To the contrary, her client is liable to explode into an incandescent rage at the insistence on a two-year term when he expected three. In any case, our brave eagle 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 commercial terms which, had she not used 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 of the stuff''. | |||
===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 | 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 ''any'' 40-page contract— just finding them, even if it doesn’t have much to say about them — would be a useful contract companion. It need not be perfect, as long as it is trainable. This is a much less ambitious, but more realistic, goal. It involves both sides lowering their expectations in the short term, for a greater return in the long-term. It extracts the [[reg tech firm]] from the middle of the process, where it can extract rent as a service, and relegates it to a ''software provider'' which is all we ever wanted in the first place. No, there is not as much money in it, but there isn’t meant to be. That is the very point. | ||
{{sa}} | {{sa}} |