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In this episode, NEX host Kingsley Martin and Tim Cummins discuss:
The most important legal technology changes that will happen in the next decadeThe benefits of contract lifecycle management technology platform tools and how to make the most of data-driven contracting methodsHow the European Commission (EC) is thinking about new ways to measure EC economic activity as a contract ecosystem
“Ten years from now, I think we will absolutely have seen a massive increase in the standardization of contract terms. We are moving toward a world of greater clarity, of intelligibility, and we start to understand the performance and outcome impacts of our terms and conditions.” -Tim Cummins
About Guest Tim Cummins, President, IACCM
Tim Cummins is President of the International Association for Contract & Commercial Management and leads the Association's extensive research programs and interactions with universities and business schools. Prior to IACCM, Tim's business career included executive roles at IBM including a period on the Chairman's staff, leading studies on the impacts of globalization and the re-engineering of IBM's global contracting processes. His earlier career involved the banking, automotive and aerospace industries, initially in Corporate Finance and later in commercial and business development. He led negotiations up to $1.5 billion in value and his work has taken him to over 40 countries. Tim's writing is extensively published and he has acted in an advisory capacity to government bodies in countries that include the US, UK, Australia, Canada, and Japan, as well as regular briefings to senior managers at many of the world's largest companies.
About Host Kingsley Martin, Chief Contract Scientist, Akorda
Kingsley Martin is Chief Contract Scientist and Co-founder of Akorda. In this role, he guides the development of Akorda’s AI software by creating data-driven methodologies that form the basis of contract science. Kingsley regularly consults with law firms, large corporations, and governments to optimize their contacting processing. Kingsley is also the founder of KMStandards and contractstandards.com. Kingsley served as CIO at AmLaw 100 firms and held strategic planning roles at Thomson Reuters. Kingsley holds law degrees from Oxford University and Harvard Law School.
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Contract Negotiation 3.0: Legal’s Next AI Frontier with Guest Derek Schueren - CEO, Akorda
Derek Schueren, CEO and Co-founder at Akorda shares his insights about using technology, and specifically AI, to help corporate counsel and corporate sales leaders negotiate contracts faster and with lower risk. Prior to Akorda, Derek was the Co-founder of Recommind, a big data analytics company where he worked with global 2000 clients, global law firms and technology partners in the areas of eDiscovery and information access.
In this episode, NEX host Kingsley Martin and Derek Schueren discuss:
The contract negotiation “time-lag” and resulting deal risk that inspired Derek to get into the market again with a new legal and sales technology platform solution after his last company’s exit.The “sell-side”, and “buy-side” benefits of automating contract negotiation.The productivity benefits of capturing contract negotiation data for legal and sales teams.The “hype” around what artificial intelligence can do, and how a focused product strategy to automate the most important use cases is the key to getting the most out of legal AI today.A case study of a Fortune 500 tech company using contract negotiation technology to automate their sales contract negotiation process.“We're still using 18th and 19th century tools to negotiate contracts in the 21st century. I think that actually having data at hand to drive our negotiation decisions will be critical to future success in this industry .” -Kingsley Martin
Guest Derek Schueren is CEO and Co-founder at Akorda. Previously, he was Co-founder at Recommind, a big data analytics company where he worked with Global 2000 clients, global law firms, and technology partners in the areas of eDiscovery and Information Access. He is also an active investor and advisor to various start-ups with a focus on enterprise software and artificial intelligence. Derek holds a BS in Molecular Biology from Brown University and a Masters from the University of Oregon.
NEX Host Kingsley Martin is Chief Contract Scientist, and Co-founder at Akorda, where he guides the development of the company’s AI software by creating data-driven methodologies that form the basis of contract science. Kingsley regularly consults with law firms, large corporations, and governments to optimize their contacting processing. Kingsley is also the founder of KMStandards and contractstandards.com. Kingsley served as CIO at AmLaw 100 firms and held strategic planning roles at Thomson Reuters. Kingsley holds law degrees from Oxford University and Harvard Law School.
SHOW TRANSCRIPT
KINGSLEY MARTIN: Welcome to NEX, The Contract Negotiations 3.0 Podcast. My name is Kingsley Martin and I am the Chief Contract Scientist at Akorda and your host. The NEX podcast is for corporate counsel and corporate sales leaders who need to learn all about the latest contract negotiation technology. This podcast will feature leaders from legal technology, sales and general business functions and we will discuss the best practices, challenges and opportunities of modern contracting.
My guest today is Derek Scheuren, CEO and Co-founder of Akorda, where his mission is to transform how businesses contract. Prior to Akorda, he was the Co-founder of Recommind, a big data analytics company where he worked with global 2000 clients, global law firms and technology partners in the areas of eDiscovery and information access. He is also an active investor and advisor to various startups with a focus on enterprise software and artificial intelligence. Derek, welcome to the NEX podcast!
DEREK SCHUEREN: Kingsley, it's great to be here. Thanks so much.
KINGSLEY MARTIN: We usually like to start our show with a fun fact about our guests. Please tell us something surprising about you.
DEREK SCHUEREN: Surprising! Well, a lot of people don't know I'm half Peruvian. My mother was born in Arequipa and so I've spent a lot of time in Peru. Actually, I made a pact with the Co-founder of my last company that when we exited the company, we would go and climb Machu Picchu. We recently did that, it was amazing. We took the Salkantay Trail up to Machu Picchu - it’s such an amazing place and so remarkable that even so long after construction, the walls are perfectly intact. I have always been interested in how the Inca culture was able to do something that even today, in the modern world, we have difficulty in doing.
KINGSLEY MARTIN: I must admit, I didn't know that Derek, and I've known you for many years.
DEREK SCHUEREN: Well, there you go. This podcast is bringing us together!
KINGSLEY MARTIN: One of the most important questions I wanted to ask you is that, you've already built a successful company in the eDiscovery space, what has inspired you to take on the challenge of automating contract negotiation?
DEREK SCHUEREN: That's a good question. I wake up in the morning sometimes and I ask myself this very question. I found that it was incredibly rewarding to work with my colleagues at Recommind and with the clients who really transformed an industry. It was a super exciting time. I found after our exit, I really had this desire to try and do something like that again. One of the areas that I found was the most frustrating, and one of the biggest pain points that I had during my time at Recommind was actually getting contracts done. I worked with a lot of large enterprises and large government agencies and we would negotiate very big deals - seven-figure, multi-year deals for SaaS, and for eDiscovery. When we got to contract negotiation, we had to let go of control. Prior to the contract, we would control everything from starting the call, cold calling, and all the way to getting the customer to say yes to a deal. We would then take this contract and we would give it to the customer and we would get back their red lines. We would give it to the lawyers and our staff and it was amazing because we controlled the process so tightly and then we would suddenly no longer be involved. It moved into the legal phase, and the lawyers would run with the contract and then get back to us.
I always remarked about how strange that was to be in a process that you control so completely and then you just give away this process to someone else who does not have an incentive in the same way, and who may not have all the context. Sometimes we lost deals, or sometimes deals would get extended. I was very curious about this pain point.
I went back to the market and I said, is this lag time something that others experience as well? As I started to talk to more people in the market, I realized that this is a pain point for every company. And it's not just sell side, it's buy side as well. Every company has pains and stories about how difficult it is to get contracts done. And what's remarkable, especially, being here in the Silicon Valley, is that it's very rare to find such a prevalent pain point horizontally, in multiple enterprises, and there is no real traction to change the process. So I thought to myself, maybe this is an area that we can provide unique value and we can really help enterprises be able to contract with one another in a better way, in a more modern way. That's why we created Akorda.
KINGSLEY MARTIN: I can absolutely agree with you with respect to the challenges, as someone who started off in private legal practice and moved over to the technology and vendor side, I'm completely aware of those challenges. What are the solutions to these challenges?
DEREK SCHUEREN: Well, I believe the solution starts with breaking down the siloed nature of contracts. Really creating more transparency because contracts touch everyone in the organization. You're effectively making promises on behalf of the organization, and so the ability to create more transparency is one of the key drivers. Equally, you need to also provide the tools and data to the people who are driving the contract negotiation.
I find it interesting that increasingly, these legal departments and contract professionals are being asked to do more and more with the same set of resources, but they're not provided with any new technology to help them. If you look at how contract negotiation is done, it has barely evolved from the seventies. It's barely evolved from redlining fax documents. Now we redline in MS-Word and email, but it's kind of the same thing. So there's really a lack of help and support for these people that are doing all of this work.
Then the third is really data capture. If you do break this out and you're able to be more transparent, you're also able to capture a lot more data than you do today. By capturing data and tracking metrics at different points in the negotiation such as approval times, you're really able to run a better shop. You're able to provide data to the executives both in legal and sales/business or procurement in order to help them get their jobs done more quickly, help them contract better with the other side, and hopefully provide better contracts so that both sides have a good long term relationship that they can build off of.
KINGSLEY MARTIN: I can agree to that, these are great observations. We're still using 18th, and 19th century tools in the 21st century. I think that actually having data to drive our decisions is also going to be critical to the future. These are still serious challenges. Can you also talk about the key benefits and opportunities that come from automating contract negotiation?
DEREK SCHUEREN: Absolutely. Some of the benefits if you automate contract negotiation on the sell side is that you are able to accelerate your deals. You are able to better get a handle for your contract portfolio risk. When you start to use technology to better standardize what it is that you're doing, you're really able to better serve the business and be able to better serve the counterparty in terms of the obligations that you're agreeing to.
You know, Kingsley, obviously you've had quite a career in this area. You have seen this type of contract relay of negotiations and obligations. What are your thoughts around how all of this works?KINGSLEY MARTIN: You know, moving it from an anecdotal world to a data-driven world and when we look at and actually run the economics of contracting and particularly the benefits of deal acceleration, we find that the potential benefits and opportunities run into the millions of dollars a year for large scale companies. So with that attractiveness of that amount of benefit, we really want to look at all possibilities. It comes down to contract simplification and contract tools to be able to automate the contract negotiation process. But I think we also have to address the elephant in the room - the hype around using AI in many industries. Can you help us understand and separate fantasy from reality? What can legal AI really do relative to contract negotiation?
DEREK SCHUEREN: This is a good point. There is a large amount of hype about what AI can do across many different industries. The reality is that a lot of these industries don't even know exactly what AI use cases make sense, nor do they have the training data that would allow them to then run the algorithms and create the models to do much of the automation or semi-automation of these processes. In our case, we are very focused on contract negotiation. We are very focused on responding to red lines or responding to third party paper and trying to assess what the reviewer can accept, or what the reviewer needs to reject. How can the reviewer get to a deal that’s good for the company and that the counterparty will accept? Since we are very focused on these specific use cases. As a result, it makes it a lot easier for us to build training data, algorithms and models to automate or semi-automate some of these processes.
It's important though, for us to realize that even though we are so focused, we in kindergarten, or maybe first grade as an industry when it comes to AI. This is very important because I think people get the sense that AI is this kind of magical thing, and it is going to replace everyone and impact jobs. It is very important for people to understand that this is not how it works, and not the reality. This is not what is happening today. Much like we did at Recommind we are really using technology to help people be able to do more. We are trying to help make humans better able to do more and more work. As we get more sophisticated down the line, hopefully, we'll be able to automate some of the lower risk, lower value kind of contracts to help people be able to focus on the higher-level things. But we're pretty far away from a machine being able to identify what are all the risks in an indemnification for example, and ameliorate those risks and get to something that the legal and business teams feel will be accepted by the other side.
KINGSLEY MARTIN: Thank you. That really just gives so much better perspective in terms of the types of tools and the evolution of those tools. Now, another question that I might have as a potential customer is, what other resources do I need to implement automation and contract negotiation? Do you need data scientists on staff too?
DEREK SCHUEREN: That's another good question. If you are told you need data scientists on staff, then you're probably talking to the wrong people. Every day you're negotiating contracts, every day you're making decisions about risks and then figuring out how to get through them. You generate valuable data. You need to be able to then capture that data and use it to help you determine how to better drive risk models and how to create models that help you better do your job. And then you can generate insights - “Hey, when you have this type of risk, you generally try and do A or B.” So here are the solutions that you typically use - 70% of the time you use A-solution and 20% time you use B-solution and then 5% are some outliers.
So it's a great question. If you're doing this right, you're already providing the data. It's just about capturing it, harnessing it, and then utilizing it in order to help you do your job better. You don’t need a data scientist, you need tools to help you capture the data and processes you already have,
KINGSLEY MARTIN: Derek, this is really helpful and I think people will learn a lot from this. Let’s try to make it real and give our listeners some context. Can you provide a practical use case and example of the use of AI in contract negotiation?
DEREK SCHUEREN: Sure. A good example is actually a call I recently had with a large Fortune 500 technology company who is trying to automate the sales process. This use case is about order forms or SaaS agreements for a large tech company. Specifically, they have order forms that have legal terms in them and they want to be able to get through those more quickly and be able to deal with those red lines faster. Obviously, getting deals done faster means they get the revenue in the door more quickly and they don't lose as many deals in this legal process. This is a great example. We are looking at the historic data of all of the order forms and the changes that they have accepted in the past, which allows us to better understand their specific risk model.
We are also looking at their playbook to help automate that process as well. This is so that when the contract professional or the lawyers looking at the changes being made, they have the tools available to them to understand what have they historically agreed to, and then how can they move, you know, from A to B to C. This is a good example of helping automate or semi-automate and accelerate the sales process.
KINGSLEY MARTIN: Thank you. That's really helpful. And one last question. If listeners want to learn more about AI in the contracting space, can you point them to some resources that they may look to?
DEREK SCHUEREN: Absolutely. There's a couple of organizations, iaccm.org as well as cloc.org that have great information. These organizations are an aggregation of mostly larger enterprise companies and together they have information around legal AI. Listeners can also go to akorda.com to learn more. We have a blog and some other content that could be helpful as well.
KINGSLEY MARTIN: Thank you Derek for sharing your insights and joining us. Indeed if you want to learn more about Derek Schueren and Akorda’s technology, please visit akorda.com. Thank you, Derek.
DEREK SCHUEREN: Thank you.
Thanks for listening to the NEX podcast. Send questions or comments to [email protected]. We would love to hear from you.
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