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Welcome to the Elevate Together Podcast: Voices of Change in the Business of Law

Nicole Giantonio: Hello, this is Nicole Giantonio, the Head of Global Marketing at Elevate. The podcast episode you are about to hear is part of our Expert series. We’re offering an introduction to a white paper we recently published on Contract Lifecycle Management (CLM) and the integration of technology into the contracting process.

Stephen Allen: So, this is Stephen Allen; I’m Vice President of Get Sh*t Done at Elevate. I am delighted today to be hosting a talk with Dr. Roger Strathausen and Rob Couch, who have recently put together a white paper that Elevate is publishing around not just the current trends in contract life cycle management, but why contract, how to contract, who owns the contract, indeed, a wide-ranging series of thought leadership. So, gentlemen, I wonder if you could just introduce yourself and give a bit of your background. Roger, if I could start with you?

Dr Roger Strathausen: Sure. Thanks, Stephen. I’m an independent business consultant; I’ve got experience from SAP and Accenture. I’m currently acting as the Vice-Chair of the Supervisory Board of the Liquid Legal Institute, a non-profit association committed to promoting digitalisation in the legal industry. I’m happy to support Elevate and have been happy to work with Rob on this white paper.

SA: Thank you and Rob?

Rob Couch: Rob Couch here, Managing Director of Consulting, focused on the contracting and CLM practice at Elevate. I’ve been focused on contract management for the last 20 plus years. I’ve been doing business process re-engineering for the last 40 years.

SA: Thank you, Roger and Rob. So, rather than hear a bunch of stuff from me, I think people will be much keener to hear what are the key subjects that you cover in your white paper. So, I wonder, Roger, if I could start ith you, if you want to outline the core tenet of what the paper discusses, and then maybe with Rob, we can dive into a bit more detail.

DS: Yes, of course. I think there are three main points that I took from Rob because most of these ideas in the paper come from Rob, I’m kind of like the writing machine and giving a little bit of external insight into it, but Rob really has been the brain and the person with the experience behind all of this. But in the executive summary, you mentioned three points. First, we call it the ‘Evolution of Contracting.’ We also talked about contracts, but we wanted to show and point out that contracting is a business activity. A lot of stuff around contracts and contracting is currently being done by legal, and that has good reasons. Still, from a historical and also a systematic perspective, we wanted to point out that contracting is, first of all, a business activity. It is one of our upshots and our predictions for the future, that contracting, while currently residing mostly in legal ,will return to being this business activity involving more business people from procurement, from sales, people who want to make deals, you know.. Doing business and for whom contracting is necessary important add-on, but it’s not the centre of things as a legal person may have to look at it.

So, that’s one of the upshots of the paper; I think contracting is about business. Secondly, one important thing that I really learned from Rob is that technology matters. So, we’re looking at full constituents of contracting.  We’re looking at technology, processes, content, and people.  We wanted to show that the time at which a particular contract management solution has been developed is important for what that solution can do because the kind of the technological possibilities at the time of the development will influence the capabilities, even if they add on stuff later. AI is a good example. You have a lot of , CLMS tools out there right now that can do AI, but only very few of them have been designed from the data model and from the beginning with this AI capability in mind, and that determines how they can develop into the future and what they can do.

And the third aspect that Rob and I wanted to point out is that AI is the future. Now, it sounds trivial because that’s what everybody says, but it’s true. It will help us to do more things in the contracting space that are related, again, to the business, like understanding how we can use contracts as digital assets that have value, where we compare many of these contracts and find patterns through AI and things. That will allow us to speed up the process and to be more efficient and more effective, more compliant, and that will be the fourth-generation, which we believe is not yet really there. It’s only about to emerge, but we’ve described the history of the first three generations to make us see and understand how this fourth-generation can and will come about.

SA: Thanks, Roger. That was a useful ground setting. Rob, do you want to add anything to that or want to dive into the detail?

RC: I think to add to what Roger said, the evolution of the technology within this space cannot be ignored as the impact it is having on the ability for what can be done in the contracting process is great. And this is where AI is going, to completely change the rules related to how contracting is done. The processes that had been controlled by legal, controlled by the attorneys with the education to understand how to do negotiations, how to identify language that can replace another language, can now be incorporated into the technology such that these can be suggested to business people, allowing them to operate within the arrangement that has been set up by legal.

SA: Cool. And just on that point, I’ll jump straight to this, because this is always the concern with lawyers, “Are we going to be replaced by the machine?” We saw people that did handwork replaced by machines in the ’70s and ’80s. Is it now people that do brain work who are going to be replaced, or is this machine, to kind of Roger’s earlier point, going to be, to enable people to do more things? So, is it an AI in terms of artificial intelligence, it will replace the intelligence of lawyers artificially, or is it a kind of intelligent assistant that lawyers will help codify or apply and still do the kind of difficult thinking  effectively? And we’ve all been in there as lawyers. Or a lot of the people listening will have been there as lawyers where you get called on a Friday at 7:00 PM. I want to check one more point, is the machine going to enable lawyers? Is it going to be a good thing and enable them to go home early? What’s your view in terms of that evolution that’s yet to come?

RC: I think the evolution that’s coming is going to assist in the process, not replace any of the people participating. The lawyers still need to be the ones to construct the content, to identify how that content is related to the business terms and to the arrangement. None of that’s going away. What this is going to help is allowing for business people to process their contracts within the contracting process that they already do today by utilising legal assistance that’s been offered through the computer. As opposed to having to email them or phone them up to get quick responses. This way, the attorneys then can focus their activities and their efforts on other areas that are more critical to the company related to what they’re doing as opposed to transactional work that a computer can handle for them.

SA: Right. And that, Roger, brings me back to a point which I loved in the white paper. This is your point that it kind of started as a business activity, and then it was owned by legal and it’s coming back. I just want you to expand on this a bit with a response to some of what Rob has said.  A contract used to be a shake of hands, that’s how business people did a contract, and whether you saw the technology-enabling business people to get back to  that, “Okay, we’ve got a deal done,” and then the deal’s done, rather than, “We think we’ve got a deal done and now somebody’s going to negotiate it and bend it out of shape,” and all those things.

DS: Exactly, Stephen. I think that is our positive outlook to the future, that it might come around full circle. It started with, like you said,  the shake of the hands and then went over to the lawyers for good reasons, because things became more complicated and transactions became more complicated. Things go wrong, and you needed security and compliance.  Our hope is that with the help of artificial intelligence, like Rob just said, it will go back to the business people and enable them to do business, maybe not as quickly and easily as before with only a shake of the hand, but as Rob wrote in the paper, with a click of the mouse and maybe some involvement of the legal people.

So we do believe that there is a clear tendency in all the four constituents of contracting, as we call them, technology, process, content, and people, that things become more inclusive, simpler – more standardised, more structured, more modular – that there is a tendency towards inclusion and simplicity, and we do show that in the white paper. We can see that in all four elements, and that supports this kind of return to the business mentality. I do want to add, if I may, one thought to what you Stephen and Rob discussed before, where you said, “Oh, there’s this fear of lawyers  being replaced,” and Rob said, “No, that’s not going to happen, it’s more enabling the business people and that lawyers will have more time to focus on the strategic stuff,” which I think is true. I also do think, though, that there are and there will be some lawyers or paralegals being replaced. I think that we can see that in the industry already having happened, lawyers making deals in the software industry, I know that.

If you support it with technology and you have better templates and can even reduce the negotiation time by having a library of allowed deviations and so on, I am sure that some people will have to let go. And these are individual fates, and they concern us, and I hope that every company will take care of its people as good as possible. On the other hand, this is a normal pattern, a normal development in the business. New technology always changes the business models and affects jobs, and that’s one side of the thing. The other side is that it will always create more jobs than  lost, that is also shown by history. To sum it up, it means that lawyers also will have to change, they will have to adapt, they will have to learn new things and to get along with technology instead of ignoring it or fighting it.

And I don’t know, Rob, if that is something that you’ve seen in your projects or in your dealings with lawyers, but I’m not personally a lawyer, but I can say that some of the lawyers that I know through our association, and those are the open-minded ones, but they’re not always at ease with technology.

RC: No, I agree, I mean, while the legal space has been, probably from my experience, the most difficult group within a company to accept and adapt to technology being introduced in what they do. I believe part of the issue has always been the maturity of technology has never been sufficient to address the complexity of what it is that is done in legal because it’s not just data, but they’re dealing with content, the language, and on top of that, you’re dealing with the language of multiple countries. So it’s not always something you can boil  down to just a common data element. And, as a result of that, the technology generations that we talk about in the white paper address these types of issues that are trying to be addressed by these technology tools that have not yet got enough or sufficient base-level capability in the way that they are built. And that’s what we’re starting to see now with AI being brought in. You had earlier vendors who were adding AI into their tool, now what you’ve got is vendors producing CLM tools where AI is part of the original design, and so, therefore, it is being designed against use cases, not just a toolkit that you can use to do AI on your own.

SA: Just to pick up on that, and then I want to ask a kind of further question, I suppose the key is, right, that to stay relevant,  and people that just do the job the way they’ve always done it always, are at risk of being overtaken by technology. But if you’re there to evolve how you assist the business with your legal advice, then actually these tools are enablers rather than threats. And on that, we talked a bit about a third and fourth-generation earlier, and I know, Rob, you were just discussing  where the AI is today and where it has been and where it’s going to go. In terms of that cycle, from it’s been  a shake of hands to really probably where we are now, which is quite a complex set of procedures and processes and governance, and the technology (whilst it massively improves that) contributes to some of that technology.  I’d say that some of that complexity to the fourth-generation, which is where I think you’re going to say, “Well, we start to see the downward curve back to simple.”

If I had to force you, how far on that timeline are we, and how far  away, just predictions, from getting into that kind of downward slope into the fourth-generation and back to something that’s more akin to a handshake?

RC: I think we’re still a way away. The CLM space is 20 years old. One of the common jokes I make is, 20 years later, the same question is still being asked, “How do I locate my contract?” I think this is where the continuing evolution of technology, and with AI, we are literally children with AI in figuring out these use cases, figuring out how they might want to be. So, what you’re seeing right now, of these initial vendors that are coming out with AI use cases, they’re the first ones. They’re basically, in essence, gathering feedback to figure out how to improve the way they operate, how to improve the usability, the actual adoption of the tool. It’s not just enough that an AI tool can do its work to present a solution or an answer to your problem, but it needs to be done in such a way that it’s usable within the environment in which you operate.

And I think as a result of that, probably over the next 10 years, we’re going to be seeing a continuing evolution of how AI is going to interact with the user because there are further improvements to technology coming. Right now, where we talk about computers, keyboards, mouses, and the technology working in there, we’re also getting AI to listen to us and talk to us. That’s the other change that’s going to be coming; the way that we interact with our computers. And that will continue to cause the evolution of technology in the legal space with regard to how to gather, listen to information that is not data, and therefore react to it and provide a solution to it.