Natural language processing
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The JC pontificates about technology
An occasional series.
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One of the Holy Grails of reg tech is natural language processing: some varieties of the same thing: a machine that reads contracts for you. This could come in the following articulations:
- Data extraction: Crawling over your portfolio of 40,000 ISDA Master Agreements[1] to extract the 60 key trading and credit terms out of them that the firm neglected to collect over the last 25 years while it was signing them up;
- Legal agreement review: algorithmically scanning standard-form contracts[2] to identify key terms and risk provisions and save human lawyers from that tedious chore;
- Chat bots: An online, chat buddy to whom Sales can basic legal questions, thereby saving Sales the aggravation of having to talk to the legal eagles, and legal the utter tedium of having to answer the exact same question to the exact Sales person three or four times daily.
Now reading any text involves judgment, interpretation and negotiation of ambiguity — and bringing to the text the reader’s own understanding of the legal background — while legal language is crafted to avoid ambiguity — there are no metaphors in a trust deed — there are still infinite ways of expressing the same idea, and if there is one part of the imagination a lawyer loves to stretch, it is inventing burlesque ways of saying simple things. Understand a well-formed English sentence is not just a matter of applying basic rules of language. It is a dynamic process.
References
- ↑ You know, the ones printed on faded waxy fax paper and languishing in filing cabinets around the trading floor; the ones scanned into a 57 MB tiff file along with three amendments, forty pages of specimen signatures, a power of attorney, hand-annotated emails from Credit and the five key pages of the Schedule missing; the ones that are misfiled as Swiss rahmenrvertrags; the ones that are just not there at all.
- ↑ To date, only one any one has successfully managed is the one that no-one really cares about: the confidentiality agreement