“We don’t know where the contracts are located. We’ve never tried to locate all of them,'' answered the executive of a major Canadian financial services firm. “We don’t have an objective yet. We just know that it’s information that we might want to view... at some point.”
I had just briefed the executive on a new, AI-driven contract analysis tool. The answers above were to my questions about the storage and organization of the company’s contracts and, more pointedly, what they might be looking to accomplish with this innovative tool.
I embrace innovation in my day-to-day work. I fiddle with our available technology. I habitually customize tracking spreadsheets. I kneel at the altar of internal optimization. My colleagues are either inordinately gracious or they sincerely appreciate my efforts. Internal innovation seems welcome. However, I have found client-facing innovation is not necessarily so.
Last fall, shortly after joining Ricoh Canada, I evaluated a new, in-development contract analysis software tool called Heretik. My first opportunity to export innovation to our clients began.
My task was three-fold: assess Heretik’s capabilities, provide recommendations and evaluate a partnership. I came to the task somewhat experienced, as I had previously used a popular contract analysis software for M&A due diligence. To test Heretik, I launched a mock lease abstraction exercise. I noted strengths, limitations and improvements in colour-coded tables. I awkwardly recall the importance I placed on the aesthetic appeal of my report. Trust me when I tell you, it was very pleasing to the eye.
Heretik was promising. The software scaffolded off of Relativity, the predominant software platform used in eDiscovery in Canada. This relationship enabled Heretik to use Relativity’s robust analytics and other bells and whistles. Heretik’s team and I converged to explore my list of needed improvements and wishes. Their receptivity was noteworthy. With the adoption of the improvements forthcoming, Ricoh Canada was prepared to partner and expand its service offerings to include contract analysis.
“The software will identify and categorize the clauses in your contracts and make clause comparison easy. Financial data and other discrete content can be automatically captured. But no, it cannot automatically summarize clauses.” Unfortunately, no magic beans, I confessed.
M&A due diligence was the low-hanging fruit. A more reliable market, I posited, was the corporate client. Enterprises possess a trove of contracts that, to my knowledge, were only subject to analysis on an ad hoc basis, usually to address a regulatory concern, a judicial ruling, a transaction or another event-based circumstance. Legal departments needed a more efficient way to manage, use, and control the growing tide of information.
Contract analysis software could allow for proactive, exploratory forays into information management. For example, divisional or spatially diffuse organizations, like many in the financial services, could more easily reconcile their enterprise-wide contracting.
The heavy lifting started in advance of Ricoh Canada publicizing the addition to our service mix. I established our internal processes to correspond to the varied work, from intensive due diligence to individual-level scrutiny. Workflows were created for technical oversight, managed review and all levels of engagement in between. Use cases were devised. The business development team, armed with these tools, canvassed prospective clients. Meetings were scheduled. Follow-up meetings too. And follow-ups to the follow-ups.
“What just happened there?” I asked my colleague after we had approached the elevator bay and were comfortably out of earshot of the insurer’s conference room. The insurer’s senior legal counsel declined to divulge, even in vague terms, the functionality that was sought after or the tasks that had prompted the invitation to have me present.
My wake-up call was ringing. The interest was evident, but the results were middling other than one-off, event-based needs. I discovered that our service offering required expansion, and a deeper understanding of our corporate clients’ needs was warranted. I underestimated the extent of siloing. Enterprise-wide storage and systematization was near non-existent, and in-sourcing analysis software was a very recent phenomenon.
Further, my litigation and transactional background was reflected in the use cases that were developed, which did not clearly show what was possible for in-house and corporate work.
We overcame the first barrier more quickly than anticipated. Heretik was packaged with Active Navigation, a file analysis software that could be employed to identify contracts across an organization.
Overcoming the second barrier—creating forward-thinking use cases distinct from transactional activity—is ongoing. I probe prospective clients and reconstruct their efforts or attempt to realize their wishful thinking. Unfortunately, I am subject to the chicken or the egg conundrum: the prospective client wants to know the benefits of using the software first, but without intimate knowledge of the organization’s operations, actual use is often necessary to derive the true benefits unique to that enterprise.
“Your contracts have been analyzed and are ready for inspection. A subset will need to be categorized manually by our specialized team, if required. Those contracts were either scanned, and are of poor quality or possessed complex formatting.” I divulged, noting that client-specific challenges are a certainty.
Obstacles arise regularly. For instance, imperfect scanning and complex contract formats remain a limitation of contract analysis software. No solution is forthcoming, or at least no technology-based solution. For now, we continue to rely on human efforts to deal with such challenges.
Still, organizations will overcome these issues with time. Contract formats will be simplified to accommodate analysis and soon contracts will never leave a digital environment. Until then, designing and implementing an effective internal system, while increasingly necessary, is a challenging proposition. Each company needs to figure out which model meets its specific needs best, now and going forward.
In the meantime, as complications arise, my colleagues and I continue to raise the limitations and address them. For instance, to facilitate eSignatures and the digital exclusivity of contracts, we added an electronic signature software solution, DocuSign, to our suite of services.
Based on my technology-centred background, I always expect challenges to emerge—and moments (weeks) of frustration came and went as I worked through this process of innovation. As I reflect on the past year, a welcome side effect is that I regard innovation less narrowly than I perhaps once did.
Innovation takes a village. Legal departments that succeed in implementing it must cast a wide net and build teams that have legal, project management and technology members working together. They must be open to working with outside partners. They need to think ahead about their needs and changing technology and keep an open mind to emerging solutions.
Innovation is also a progression, not a one-time act. Our innovation cycle at Ricoh Canada has taken me from internal software and process development to driving change externally, only to come back to the internal table again to apply external learnings. In this regard, service innovation entails an interdependence. The client will often be looking to service providers to define the problem as much as it is searching for the solution. And the service provider relies on the client to adopt innovative tools and processes as the best means of solution deployment.
Ian Sinclair is Manager, Review Services at Ricoh Canada, a national provider of specialized eDiscovery Services. Holding a B.Sc. and a joint JD/MBA, Ian was called to the Ontario Bar in 2012 and practiced civil litigation for four years before specializing in eDiscovery. Ian is dedicated to leveraging technology and innovative processes for cost-reduction and case development while ensuring defensibility. Ian can be reached at isinclair@ricohediscovery.com.