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Spotting in Contracts the Provisions You Really Care About

Last week I asked this on Twitter:

And I posed the same question in a post on the LinkedIn group for A Manual of Style for Contract Drafting. (The home for the group is here.)

This wasn’t a casual inquiry. After all, LegalSifter combines artificial intelligence and expertise to help with review of contracts, so it stands to reason that I’d be interested to know what people would be particularly eager to be informed about.

So I tallied the responses and compared the concerns expressed against what our product can do. Here are my thoughts on some of the responses, chosen largely at random.

Excluding Consequential Damages in a Confidentiality Agreement

On LinkedIn, Kevin Phelps said he really doesn’t want to see a waiver of consequential damages in a confidentiality agreement. I share that concern; I did this 2011 blog post about it.

Would LegalSifter spot such a provision? That depends on two things. First, do we have a Sifter—that’s what we call the algorithms we build to spot targeted issues—that looks for exclusion of consequential damages? We do. And second, is that Sifter included among the collection of Sifters—we call each such collection a “document type”—used to review confidentiality agreements? Users with a LegalSifter “Essentials” subscription would use our out-of-the-box document types, and the ones for confidentiality agreements include the Sifter that looks for exclusion of consequential damages. So yes, this issue would be flagged for those users. But a user with our “Professional” subscription is free to customize their document types, so whether their document type for confidentiality agreements includes that Sifter would be up to them.

Russian Governing Law

In this tweet, Mark Anderson offered a parade of horribles:

Let’s look at just the fourth item on Mark’s list. Would LegalSifter flag that the governing law is Russian law? A year ago I rebuilt the Sifter that looks for governing law provisions, so it’s now a thing of beauty. In today’s LegalSifter, the Sifter would flag the governing law provision and the user would read the provision to check the governing law against their list of preferred, acceptable, and unacceptable jurisdictions. In the future we might automate that comparison.

The Governing Law and the Jurisdiction Where You Can Bring a Dispute Are Different

A related concern was expressed on Twitter by Trevor Gates: he’d want to know if the governing law were different from the jurisdiction where the parties may bring any dispute.

As already noted, LegalSifter will flag the governing law provision. And thanks to our nifty suite of jurisdiction Sifters, you’d be alerted to a range of different issues. In today's LegalSifter, the reader would compare the two provisions; in the future, we might automate that comparison, too.

An Acknowledgement of Representation by Counsel

On LinkedIn, longtime reader and sounding board Vance Koven said he wouldn’t want to see in the other side’s draft an acknowledgment that the parties have had the opportunity to be represented by counsel—that would tell him that “someone has buried a lot of gotchas.”

Now that’s interesting! We don’t have a Sifter to look for that kind of provision, and I suspect that many of you wouldn’t find that kind of provision too disconcerting. But I like Vance’s take, so we might well build a Sifter for this. Perhaps amongst ourselves we call it “the Vance.”

The Road Ahead

What did this exercise tell me? That we’re alerting users to what they care about. Currently in some instances we’re alerting them to separate issues and asking them to make the connection. Although we might make things even easier in the future, what we’re currently doing is a big improvement over letting users think to look for the provisions themselves and then actually look for them.

In terms of what we have yet to do, addressing Vance’s idea is a drop in the bucket compared with the many kinds of transactions for which we could offer additional valuable advice. We already cover the most fundamental kinds of transactions, and over time we’ll branch out into other, more specialized areas. For example, our customers are now able to use LegalSifter when reviewing sponsored research agreements. I look forward to further expansion of that sort.

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