It’s no secret that contracts contain an enormous amount of vital data – data about parties, rights, obligations, restrictions, risks, and value—and yet much of that data hides in plain sight as even the most innovative companies struggle to extract it and put it to use.
In some fairness, contracts don’t inherently lend themselves to data mining and insights. That’s because contracts are written with human-language nuance, in unlimited variable formats, are riddled with legalese, redundancy, and packaged in large blocks of dense paragraphs. Consequently, transforming contracts to usable data, which is structured, is tricky.
The legal industry’s struggles in this area have not been for a lack of investment. Companies have been prioritizing data maturity for years as part of ongoing digitization efforts. The recent heavy focus on modernizing the legal function has spurred Law Department spend on Contract Lifecycle Management (CLM) technology systems and have been all the rage. Unfortunately, the results have yet to transform contract data management.
In fact, World Commerce and Contracting Association, the leading association dedicated to raising capabilities in contracting practices, found that roughly 60% of CLM deployments met original expectations and fully deploy as intended. A survey by Onit’s ContractWorks group found that 77 percent had “experienced a failed technology implementation.”
This is not a knock on CLMs. The reality is that even the best technology won’t by itself automatically transform legal departments and their contracting functions into data-driven market leaders. Most legal departments haven’t readied their data for their CLM. Implementing a CLM may give you a place to store digital versions of your contracts, but it doesn’t change the fact that your contracts are still unstructured PDFs sitting in a repository.
Transformation to a meaningful data model is necessary before organizations can use contract data to drive value for their company. For example, you can write a limitation of liability clause in a thousand different ways, but isolating concepts and taking a data-driven approach might look in part like the below:
Limitation on Liability: YES
Cap on Liability Type: SPEND BASED
Spend Based Cap Amt: 2x YEARLY
Available Damages Type: DIRECT ONLY
Exclusions to Cap: GROSS NEGLIGENCE
Doing this at scale, across thousands of contracts and thousands of potential data points to take full advantage of CLM technology is daunting.
Contract Data as a Service
Enter UnitedLex’s new offering CDaaS, an innovative approach sure to transform the industry.
Click here to read the complete article and learn more about how a contract data model works and enables Contract Data as a Service to help companies extract all the data from their contracts and turn it into actionable insights to drive business value and reduce risk.