Weagree’s contract automation solution is already sending a shudder through the legal industry. And now this Legadex partner is shaking up the legal profession further with contract lifecycle management, ‘AI’ and other smart contracting solutions. We spoke with Weagree’s founder Willem Wiggers about the firm, his vision, what he’s learned and their ambitions.
Weagree was formed in 2006, but its gestation began years earlier. With founder Willem Wiggers’ foray into studying mechanical engineering (which he quit after a year, but not before acquiring a useful understanding of software and programming). With his subsequent law degree and research at various top institutions worldwide. With five years in Allen & Overy’s M&A practice. And five more years at DSM, Linklaters and Philips.
Wiggers didn’t know it, but his combination of engineering interest and legal experience would be ideal for the fork his career would take. This started to emerge in 2006 when an ex-colleague asked if he had any thoughts on how his multinational company should deal with its global contract know-how. He did: it needed to improve its model contracts and their accessibility.
What you need is something users like…
And then Wiggers said something fateful: “I told him they should put their contracts into a database or centrally managed system. This would make templates so easy to use that people would want to work with these model contracts rather than their own.” The next question, of course, was how to do this. “I was like, ‘Well, this may be very difficult, because you need someone who is an excellent contract drafter and who also has insight into technology and software’. And then he looked at me as if to say: ‘What about you?’”
Even in 2006, the idea of automating contract drafting wasn’t new. Wiggers himself had previously been involved in some contract automation attempts “and discovered what didn’t work”. With that and the conversation in mind, he spent his evenings designing software specifications, found programmers to develop a prototype and the ball started rolling.
Or it would have done but for the aftermath of the 2007 crisis. “We had our post-prototype solution ready in 2007, when no-one was thinking of spending money on new things, let alone of stepping into an innovation project.” It took another year for Weagree to find its launching customer: chip-machine maker ASML. This was soon followed by research organisation TNO, AkzoNobel, Endemol Shine and organic food company Wessanen.
8 reasons to join the contract automation wave
- Minimise your legal department’s response time.
- Save time and improve your productivity
- Improve the quality of your contracts (no ‘noise’)
- Shorten the time-to-signature transaction cycle
- Comply with contracting requirements
- Optimise accessibility of your contract templates and model clauses and the processes of maintaining them
- Get one-click insight into workflow and transaction statuses
- Make your people happier by making their work easier
Find the bright spots
It was a steep learning curve, but also a useful one. He learned, for example, that to make a success of contract automation, you need to change mindsets as well as processes. And he learned something else surprising: start with what you have rather than first try to develop perfect model contracts. Not because perfect isn’t better, but because it provokes endless discussion in place of action.
“It is better,” Wiggers says, “to accept that automating contracts is not a one-time thing anyway – it’s an ongoing, never-ending process with challenges of its own.” Companies need to experience the benefits of innovation – even if the contracts themselves are not initially optimal – because this will make them go on. Find the bright spots, avoid focusing on possible problems.”
Experiencing is believing
“We see companies struggling for years on making a contract template ‘perfect’ – it is trash-in trash-out, they think. It’s what many think. We have seen cases where the head of legal decided to just start, instead. What happened? People involved,” Wiggers explains, “felt that automating the contract created momentum. They clearly feel responsible for the end-result.”
And they start sharing suggestions for improvement. In no time, these templates have been perfected – in a first round involving the ‘ambassadors’ within the customer, and a second round involving their colleagues and clients. “This illustrates that lawyers may focus – for good reasons – on preventing possible problems. But they may also overlook the bright spots and that starting less-perfectly can unleash higher engagement; a shortcut to perfection.”
Faster means accelerating to better
It’s something Wiggers witnesses over and over: once people experience automated contract creation in action, the accelerated turnaround, higher quality and the ability to create contracts lower in an organisation creates pull from within. It also leads to many more contracts being created and signed – which means less risk.
The upshot is that companies that use contract automation generally enjoy better legal protection. When BASF, for example, shuts down one of its 40 plants for routine maintenance, it may need to manage hundreds of suppliers working on-site over a month-long period. Precision planning and adequate arrangements are crucial. The purchasing agreements related to such a shutdown can exceed 100 pages each. Wiggers: “Once they automated that document, they measured a response time reduction from, on average, three days to merely two to six hours. Over the first four years, BASF doubled the volume of contracts they created. Doubled year on year.”
Currently, Weagree captures the full contract cycle, from the creation of a term sheet or letter of intent to expiry of the definitive agreement resulting from it, and organises and manages all contract data
Start small, unless you start big
That kind of contract, focused, limited and easy to oversee, is a good way to begin. But Wiggers stresses that there is no one ‘correct’ way to introduce contract automation. “What helps, depending on your challenge, is that you start small,” he says. “Start small and celebrate quick results.” Non-disclosure agreements are a favourite.
But Wiggers has also seen customers plunge in with their flagship agreement: “Endemol Shine started with its TV-format licence agreement, and I think that’s the most complex agreement you can possibly find.” It has parameters that impact on each other, plus intellectual property rights, regional licenses and options that cover royalty calculations, payment in instalments, secondary rights, evaluation programmes and so on. “They create each licence with our software,” Wiggers notes. And Endemol Shine does something else, too – the company exports those contract data into its IT system. Cue what Wiggers views as the next big opportunities: collaborative contracting and integrated contract-data management.
8 steps to implementing contract automation
- Establish contract drafting conventions that support both upgrading model contracts and inserting them into the Weagree Wizard
- Upgrade your model contracts
- Select and upgrade the clauses of your model contracts for insertion into the clause library
- Identify your user groups and their template requirements
- Train your administrators
- Prepare for use (insert templates and optimise Q&A)
- Start using!
- Incorporate into daily work (this will probably require a change management programme)
Data and AI are creating new opportunities
The move to automating contract management began eight years ago with Weagree’s collaboration with the United Nations. The project involved writing an implementation programme related to nine model contracts and automating them for use by SME in developing countries and elsewhere.
This then led to a contract automation website, launched last year. As part of this, the UN wanted to research users’ choices and preferences. “So, we built artificial intelligence analysis into our tooling,” explains Wiggers. When he mentioned this to other people, they asked if Weagree also offered contract management. “We didn’t, but we realised that with this artificial intelligence tooling, doing this was a logical next step. So, we defined what would be necessary and started looking for a customer to develop it with.”
From this came the joint development with three customers of a full contract lifecycle management solution or CMS. “Currently, Weagree captures the full contract cycle, from the creation of a term sheet or letter of intent to expiry of the definitive agreement resulting from it, and organises and manages all contract data. Now, when we were developing this, we discovered that although our contract automation application wasn’t written for contract management, we actually knew an exceptional amount about managing contracts and contract data, without knowing it.”
Leveraging ‘unknown knowns’
Wiggers realised that automating a contract entails an exercise in collecting data and managing it into a contract. If they could extend that data collection and add manageability options, like email alerts for deadlines, renewal dates, a repository and so on, Weagree would extend document automation into true contract management. “And that’s the interesting thing, because if you don’t come from the contract creation side, you have to set up a database and create something called a contract management tool.” You’re starting with a blank sheet and having to guess at the inputs you will need.
“In our case, we already work with flexible templates. And so, to set up your contract management system, you only have to tick those contract data that you want to manage. We already know that you want to manage on payment terms, termination date, notice period, and our users can add whatever other types of contract data, based on their contract automation templates. They maximise the value in their contracts more easily and to a greater degree than a traditional CMS can possibly achieve. And this is why, if you have already automated your core contract templates in Weagree, it takes us only a few minutes to implement contract management. We’re also disrupting this market. One-click access to their contracts and data is something our users like.”
Ambitions to disrupt
Disruption comes up time and again in conversation with Wiggers, and it’s firmly at the heart of the firm’s roadmap – including upending Weagree’s own business model. Central to his vision is what Wiggers calls ‘collaborative contract creation’. Recent features include making Weagree contract questionnaires ‘shareable’ with a customer’s guests and offering a user-friendly API so customers can embed Weagree in their own IT landscape. This allows two-way connections with SharePoint or other document management systems.
The big disruption, though, is the development of smart, contextual functionalities that will make it possible to automate a huge chunk of a law firm’s work. “Imagine a financing transaction with a shareholder resolution, board resolution and a deed of pledge,” Wiggers explains. “Now, where do law firms earn their money? First, in drafting the initial complex agreement and negotiating it. Second, by running the closing of the legal entities that are being financed or acquired. If you have 100 legal entities with three documents each, that gives you 300 documents that all need to be correct.”
Now imagine that you automate that closing process. You answer three questionnaires, replicate each 100 times, finetune the desired variables and automatically add the correct entity name to each one. And when you hit print, 300 Word documents roll out at a rate of 4 seconds each… Whatever happens next, there is clearly no going back for the legal profession.
Besides collaborative content creation, it’s Weagree’s strategy to team up with other legal-industry challengers. Legadex is one of them. The two firms have already done projects together and there are more in the pipeline. Legadex provides Weagree with expert hands and know-how to help it build templates and fill Weagree’s application with model automated contracts. Working with Legadex increases Weagree’s speed and flexibility, allowing it to grow its existing business while also focusing on new functionalities.
Pick a contract:There is no right approach to implementing contract automation. The general advice is to start small, often with an NDA tool or strategic purchasing. Or determine where your legal requirements hurt your business the most. Or ask which three types of contract keep your business afloat (risk factors). Or determine which three contracts you use the most (efficiency drivers).
Pick people:Identify implementation ambassadors (your contract innovation leaders). Choose a mix of senior and junior, leaders and foot soldiers, and avoid people with a ‘not invented here’ mindset.
Lay out a vision:Formulate a vision of what you want to achieve in one year or three years’ time. Something motivational that people will get behind with their hearts and minds. “More fun”, “nicer work”, “less routine” and “business advisor” beat “operational efficiency” and “shareholder value” every time.
Get going: Start using your automated templates.
Weagree and Legadex offer a special summer innovation bonus for new clients who decide on implementation of Weagree before July 31 2019 (for Weagree) and before August 30 2019 (for Legadex services). For details on the summer bonus, have a look at https://weagree.com/nl/we-zijn/innovatiebonus/