(b) Legal tech and contract negotiations

Once a first-draft contract has been created (see section (a)), the document will be exchanged between the parties, until agreement is reached on an acceptable contract.

Content collaboration and collaborative contracting. Joint creation of contracts and co-ordinated review of contract versions. Once a first-draft contract is sent to the other party, comments may come back in the form of a ‘mark up’ (tracked changes, marking modifications proposed by the other party). Usually, this process is done by versioning the document in a document management system (see under 3.). There are online legal tech applications in which proposed changes can be traced back automatically to a person (of either party) and accepted-as-proposed or further changed (counter-proposal) in an online tool to which all parties involved are granted access.

Document management vs. contract negotiation tooling. Once a contract is drafted, the comments from the other party can be saved together with the first-draft contract version in a ‘document management system’ (DMS). Advanced systems keep track of changes automatically (otherwise, compare versions must be created upon ‘checking in’ a new contract version. All e-mails and underlying documents will be saved and stored in one central place, making sure that all data are stored together – just in case. Once a contract is finalised among the negotiating persons, it will be put through to an e-signature or contract lifecycle management solution (see below).

Contract analysis tooling. In contracting, big data, artificial intelligence (‘AI’) and machine learning are terms used to signify the possibility (a) of automatically analysing a contract drafted by the other party for any ‘red flags’ (issues contrary to the contract recipient’s contracting policies), and (b) of generating a report summarising the contract (in a format defined by the recipient, which is not necessarily the contract structure provided by the draftsperson).

E-signature applications. In order to ascertain that a contract is signed by the persons authorised to represent the respective contracting party, and in order to ascertain which is the final and agreed version of the contract (and any related contracts), e-signature or e-signing applications have been developed. These solutions often contain workflow approval functionality enabling the ‘e-signing representative’ to check whether all stakeholders in their organisation have approved the contract for their part. If all approvals are given, the application ascertains that the e-signing representative is actually the person who e-signs, and secures the e-signed version of the contract (preventing inadvertent or fraudulent modifications after signing).

The legal merits of e-signing seem to be acceptable, in that the failure of a ‘pencilled’ (truly written) signature does not invalidate a contract in most modern legal systems. But while the certainty suggested by providers of e-signature solutions may seem high, the effectiveness of such e-signing is rather to be found in the compliance aspects of contract approval: the workflow connected to the e-signing process. E-signing as such justifies itself where the validity or precise contents are disputed, and this is mostly in question in business-to-consumer (B2C) transactions. And workflow solutions are normally part of contract automation (see section (a)) or contract lifecycle management or ERP (see section (c)).

Workflow. Such workflow check can be invoked at any moment during the precontractual stage (and therefore not necessarily as part of the e-signature application) and may involve many stakeholders: the procurement department confirming that the contract fulfils a defined business need and is strategically the best option available in the market, a financial controller for financial viability and appropriate checks-and-balances on creditworthiness, including approval of the agreed payment term, tax and treasury department for the correct fiscal unity and financial feasibility of obligations, the patent or trademark attorney or other IP lawyer for proper allocation of IP rights in the contracted work or research or development results, the in-house lawyer approving that internal processes had been followed and compliance with legal requirements and ascertaining that the correct version will be signed, and the responsible business manager reconfirming that they need the contract and take it in their budget.