Episode Notes

In this episode, Zack talks with lawyer and tech expert, Martin Clausen, about managing the rights and obligations of agreements in real-time with computational contracts. They also touch on how bringing this technology to your clients could help set you apart from the rest of the pack.

  • 6:21. Smart contracts vs. computational contracts
  • 11:12. Benefits of computational contracts
  • 18:59. The HyperContracts platform
  • 27:11. Digitizing Contracts

Transcript

Announcer (00:00):

Welcome to the Lawyerist podcast, a series of discussions with entrepreneurs and innovators about building a successful law practice in today’s challenging and constantly changing legal market. Lawyerist supports attorneys, building client-centered and future-oriented law firms through community content and coaching both online and through the Lawyerist Lab. And now here are the co-authors of the Small Firm Roadmap and your podcast hosts.

Jennifer (00:36):

Hi, I’m Jennifer Wigham

Stephanie (00:37):

And I’m Stephanie Everett. And this is episode 371 of the Lawyerist Podcast. Part of the Legal Talk Network today, Zack is talking with Martin Clausen about managing contracts with technology

Jennifer (00:49):

Today’s podcast is brought to you by LawPay, Postali and Posh Virtual Receptionists. We wouldn’t be able to do this show without their support. So stay tuned. We’ll tell you a little bit more about them later on.

Stephanie (00:58):

So Jennifer, one of the things we have coming up in our community is the opportunity to do what we call a strategy intensive.

Jennifer (01:06):

Why did we name it? That I was just thinking that like, it just kind of stuck and I like it, but it’s not going away. It sounds very extreme. Strategy intensive.

Stephanie (01:17):

Maybe we could just call it quarterly planning session.

Jennifer (01:21):

Yeah, cuz it is more a work retreat. We always encourage people in our Lab, paid coaching community to have retreats with their leadership team or their whole team and you know, go offsite to do that. So they can plan for the quarter. And that’s what this is. It’s really offering them the chance to have a guided retreat by a Lawyerist team member. But we have set it on strategy intensive, which sounds like it’s sports something.

Stephanie (01:46):

Well, you can still change it. Quarterly planning session,

Jennifer (01:48):

Quarterly planning session,

Stephanie (01:50):

Which is what everybody needs to be doing. Right? So the whole idea is that we think a lot of teams have found a lot of success with quarterly planning. Although I know people who experiment with six week sprints are eight week sprints or what have you. But most people instead of setting out at the beginning of the year and saying, here are the 30 things we wanna do this year. Yeah, it works much better. If you just say here are the four or five or two or whatever the number is priorities for this quarter. And so if we can be really intentional and very clear about what it is, we need to get done this quarter. What we find is people have significantly more success. You know, then they actually end up doing 12 or 15 or 20 things throughout the year because they’ve planned it by quarter. Instead of starting the year strong saying we’re gonna do 30 and then you do one and a half.

Jennifer (02:40):

And I like that. It’s iterative that we have these every quarter because then we do a retrospective too. When we get to the next one to, to figure out, you know, what worked did you set your goals too high? Do you need to adjust your action steps? So we’re able to build on it each time, which I think is really important because sometimes you can have these meetings or retreats and if you never look back on them, then you’re just gonna make the same mistakes over and over again.

Stephanie (03:04):

Yeah. So this is an opportunity. We actually open this up to people who are not yet in our Lab community and you can come as a special guest and participate and do your planning for the quarter and see what it’s like. See what we’re like. And it’s, I think it’s a great way to kind of put your toe in the water if you’re thinking about working with us and you’re not sure. And it’s just really a great way to kind of set for the quarter. We hear our people who do this with us, who engage in this work really love it. They feel like they come out with such clarity and,

Jennifer (03:38):

And it’s fun.

Stephanie (03:39):

Yeah,

Jennifer (03:40):

That’s fun. But I mean, they also get to be around other people, you know, that are not in their firm, but are in the same position that they are, you know, small firm owners. And I think that’s extremely helpful because often you’ll hear other ideas from other places that you never thought about or you’re able to, you know, bounce things off of them. And I think that’s, that’s pretty cool to, I mean, it’s a good time, but you really, we get a lot of stuff done and it’s not just that we make these plans and then send you off. You actually start to get into a little bit of implementation too, which we think is extremely important. You don’t just go to a meeting, hear an idea and then go off into the sunset. You actually start working on that idea in that moment.

Stephanie (04:19):

Yeah. So I mean, if you’re listening to this, when the show drops, it’s the beginning of March, which means that guess what? You’re two thirds through the quarter. So yes. You know, the quarter’s ending at the end of the month. And so that’s when we’re gonna do our next strategy intensive. So now is a great time if you’re thinking where did first quarter go? I had all these ideas when the year started. I thought I was gonna move my business forward this year. And I’m sitting here realizing I actually didn’t do so much of that. Implementing this would be a great time to reset. Like you don’t have to wait until next January. You could start. Now we’re gonna put a link in the show notes. If you’re interested in learning more about what this day looks like and how you can work with us and we’d be happy to connect and answer any questions. And we’d really love to see you there because it would be a great time for you. Like we said, to kind of take stock of what, where you are, what you’ve done, what’s going well, what’s not. And then what you wanna do next to move your business forward.

Jennifer (05:13):

Yeah. Come hang out.

Stephanie (05:14):

So now we’ll have Zach’s conversation with Martin.

Martin Clausen (05:17):

Hi, I’m Martin Clausen. I’m the CEO of small legal tech startup called Hyper Contracts. It’s a two person company at the moment and we built the Hyper Contracts platform, which if I’m to sort of sum it up very briefly as a computational contract life cycle management platform,

Zack Glaser (05:38):

Martin, thanks for, thanks for joining us today. I really appreciate you coming in talking to, to our audience about this stuff. And I guess really, I’d kind of like to jump in because I, I think some of the phrasing that you used there with computational contracts and then contract lifecycle management or some things I think you guys Hyper Contracts does that differently than what the words, you know, what, what the, those phrases kind of come to mind with. And so I’d like to first start off with kind of smart contracts versus computational contracts. And I think that’s a good division to make there. What, how do we define both of those things and what makes computational contracts different than smart contracts?

Martin Clausen (06:21):

So one, one could argue that smart contracts are a very constrained small subset of a wider term called computational contracts. So smart contracts are essentially not contracts. And I think even the inventor of the term and blockchain technology would just say, say that it maybe wasn’t the best choice of of words. Right? Right. Maybe I think he’s said that maybe it should have been called smart scripts or maybe blockchain scripts or something like that because that’s is what it is, right. It is the ability to execute small programs on the blockchain that typically manipulate tokens on the blockchain somehow. And people talk about them as contracts because they have the ability to transfer a value tokens between parties under certain conditions. Certain parties can decide to move the tokens and, and so on, or they can in accordance with a pre sort of scripted, preconceived script. Computational contract is a much broader term that sort of defines real contracts. What you would think of as a real contract implemented in code. It doesn’t have to run on a on a blockchain. It’s not constrained by the blockchains, the constraints that apply to, to most of the blockchains, right? And it’s basically just a matter of taking the logic of a contract and implementing any code. And that can then be used for many, many different things. The fact that you now have a contract represented as computer code,

Zack Glaser (07:58):

Right. It, and I think for me, that’s what I think of when I think of smart contracts or that’s what I think I want quote, unquote smart contracts to be is this thing that is, if this been this, you know, we’ve represented all of the clauses in the contract that we wrote, let’s take a lease. For example, we, we represent all the clauses lease and those are just coded essentially, and built in and put into some sort of application or something like that. Whereas a smart contract, I kind of think of as, as just, we call them contracts because it’s a handshake event. It’s where, where something is, is passed off, but it it’s not contracts in the, in the legal sense of the, of the term contract.

Martin Clausen (08:42):

No, some people try to write small, smart contracts that emulate fairly closely contract types that you find in, in, in the real world in tracing marks like different types of exchange of value and, and, and so on. But they have the number of properties that might or not might or might not be interesting to you or what you want, for instance smart contracts. They execute a specified, no matter what, right? Right. That’s one of the properties that you want. You want them to be in mutable and you want them to, to just execute, never, no matter what. So you, you don’t have to rely on a court to enforce them or anything, for instance, now in certain scenarios, that might be exactly what you want, but for certain scenarios that might not be a really desirable property, right? Might you might want to have the of having a computational conctract, but if something goes haywire and it then unfold,uin an unpredicted manner, or,umaybe there’s a bug in your contract, it is reversible somehow.

Martin Clausen (09:48):

It is not reversible. If the tokens have moved on the blockchain to somebody else, then they have to decide to give them back to you, right. They, the goodness of their heart. But if this is an unknown person and so on, maybe that’s really not what you want. Right. If your contract party is known to you and you just want some other benefits of having your contract implemented in code, maybe a smart contract is not the way to go. There are certain, there are multiple other weaknesses around smart contracts that I could talk about, but maybe it’s more interesting to talk about the benefits of computational contracts more. Yeah. Generally, right?

Zack Glaser (10:26):

Yeah, I think so. Because, you know, we, we talk about in a smart contract, obviously you have gas or, or there’s some sort of expense to each transaction and the benefit of a smart contract is that it is imutable. And so we, we don’t really need to, to worry about that. There are, there is a place for that, but when I think about this broad world of let’s kind of automate contracts yeah. And I have my, my hands up in, in air quotes, let’s kind of automate contracts or make contracts, have a computer help us do kind of the mundane in that. I think we’re really talking about computational documents, computational contracts. And so, yeah. What are, what are your thoughts on kind of the benefits of that and where we can go with those? Cause it, it is a, a broad horizon.

Martin Clausen (11:12):

It is very broad and there are many directions you can take it. And, and it been, at least in theory, taken in, in many different directions. One benefit is that you can get a tremendous amount of support for your contract management process, the life cycle maintenance and management of the contract. If your contract is represented in software. So let me just give you a few examples. If you have your contract as a program and you have access to in a structured manner as digital information, the events that are going to affect the state of the contract, and I’ll come back to some examples of that you can, of course, pipe your event stream, sort of all these things that happened that the contract knows about into the program and have it compute the state of the contract. So what is the state of the contract that could be, for instance, has an obligation been complied with, or has it not been, or you can reverse it and say what needs to happen the next two weeks for the contract, not to be breached by one of the parties, for instance. So those are questions that you could ask of your program. You could also, you could also ask your contract, if you will which kind of event are you sensitive to, if you are some type of financial contract, for instance, what, what is the value of your con is that you as a contract, is that affected by the fact that the interest rate goes up or down, for instance? So that’s another question you can ask, if you have your computational contract.

Zack Glaser (12:53):

So I, I, I’d like to kind of tease out two thoughts in that one is contract lifecycle management and this type of contract lifecycle management is different than what we think of when we think of a CLM piece of software, which is the creation, the building of the contract, the keeping of the clauses, the knowing where, where things go, we, we’re not talking about the management of the creation of that contract necessarily. We’re talking about the management of the actual life of that contract from, you know, it’s signed, what are the obligations that need to be done? What makes a breach? And we’re thinking about tracking those things.

Martin Clausen (13:35):

Yeah. So those are just examples about the obligation. It could be discretions too, of course, right, right. The rights to do something, but not the duty. It could be the policies of the contract. So the mechanics of the contract that decides when it might be terminated, for instance, and so on. So you could look at a policy to see the mechanisms that says either it needs, then six months needs to pass, or the buyer might not have made its minimum quota. Then it might be terminable or, or whatever, all those things you can because they’re mechanical now. And you know, which events that they depend on, you can ask some, all these kinds of interesting questions that are interesting to you if you need to manage the contract. Right. Right. Am I in breach? Am I, what rights do I have at this, this point in time, all these kinds of things are certain mechanisms in the contract have they been triggered or have they not been triggered? They might not even have, have managed to have any effects, discretions on obligations yet, but they might be sort of building up if you will, if there’s like a, a mechanism that’s about to trigger an obligation or a discretion. So you can imagine sort of the cup filling up with things that needs to happen before something happens. You might wanna monitor that to say, what is the, what is the level that we are right now, right. Even if something hasn’t happened yet.

Zack Glaser (14:59):

Right. Right.

Martin Clausen (15:01):

These are manual jobs today that, that you, as a contract manager, you need to keep all these events that have happened or potentially will happen inside your brain. And, and you need to understand all the rules that apply in the contract and sort of run this computation on the fly yourself to figure these things out, to manage, to react in a timely manner. And we just feel that that’s just a waste of brainn power and time. Because if you have the con as a program, it can actually do it for, for you and add until you what you need to know and not the other way around.

Zack Glaser (15:39):

Well, Martin, let, let’s take a quick break for a word from our sponsors, and then we’ll come back and kind of talk about a little bit more of what this contract can do for us. What, what it can take over from us, the lawyers’ podcast is brought to you by Posh Virtual Receptionists as an attorney. Do you ever wish you could be in two places at once? You could take a call while you’re in court, capture a lead during a meeting, or schedule an appointment with a client while you’re elbowed deep in an important case? Well, that’s where Posh comes in. Posh is a team of professional us based live virtual receptionist who are available 24 7, 365, the answer and transfer your calls. So you never miss an opportunity with Posh handling your calls. You can devote more time to billable hours and building your law firm.

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Zack Glaser (17:54):

Well we’re back Martin. One of the things you were talking about before the break was, you know, having the ability for this contract to give us information instead of us having to keep it all in our, our head, cuz I I’ve had many, many, many days of having a spreadsheet open and the contract open and then all the events that have happened in the life of this contract and trying to note, was there a breach? And I think one of the important things here is that a, a computational contract will not only keep track of that, but I, I think the thing that we’ve been hinting at is the idea of being able to go into the future with this contract, the idea of being able to say, okay, well, what if these events happen? What events would it take in order to create a breach according to the constraints of this contract? And I think that’s fascinating here as well, because we’re not just talking about out. Okay. Let’s just see what happens. We’re talking about let’s let’s test this thing. Let’s do some, some quality control on this. Let’s put it out there.

Martin Clausen (18:59):

Yeah. So, so the Hyper Contracts platform that we built, it, it not only sort of actively tells you, well, there’s this obligation you need to fulfill within two weeks or there’s this discretion that’s going to expire in three days whereby you are entitled to maybe some service credits, some liquidated damages. You need to make that claim within three days. Do you want to do that? So it not only does that, it also has the ability to do speculative stuff, right? So what it, if these three, four things were to happen in the next three months, what would that mean? Right? Or if these things do not happen, what would it mean? So we can feed events that haven’t occurred yet into the contract and say, what, what is the result of that? Or we can sort of just roll the clock forward, nothing happens. When is it that something, when does the contract change state into being breached or whatever. So that’s certainly a possibility. Another interesting possibility is to say, well, we are renegotiating this contract, right? So now we are trying to, we are, we are, we are changing the logic of the contract because maybe we are not happy with the way liquidated damages have been calculated or let’s tune these things. And let’s pretend that this contract existed for the last year. Pipe all the events that did occur through the contract and enter into this alternate reality where, okay, now these liquidated damages have materialized instead of the other ones that actually materialized. But so it’s a very good way of sort of pressure testing your, your changes in saying if this thing had existed, what if it would be the result you could, of course also come up with a speculative scenario, right?

Martin Clausen (20:50):

For the next year saying, we think this next year is going to be like last year, except we are going to spend maybe 20% more with the vendor and they’re going to improve their performance within this area by 10%. Right? So we, we manipulate the, the older events like that. We feed it into the contract and we see what’s then gonna happen. Well, it turns out that in November we are going to be entitled to terminate the contract because at that point they had will have reached the service labels enough that that’s an entitlement that we have. Right.

Zack Glaser (21:23):

Well, and, and this is talking about making better contracts between two parties, because we can look at that and we can say what, yes, this is how it happened this year. And we’re both satisfied with that, but we could actually both benefit from this happening this next year. And then we can, you can kind of kick the tires and say, what, what would we both anticipate this? What would that look like? And in, are we happy with this? One of the things specifically about a smart contract or, or a something that is imutable is we have one shot at doing it. And a lot of times, even when we get away from smart contracts, we get away from, we go to just written contracts. Yeah. It is gonna take a long time for us to sit there and say, well, what are all the different manifestations of what could happen? And what, what would, you know, what would the effects of this be? If you’ve written it into code, you can go through and really pressure tests based on, on all the things you want and say, is this actually what we want this contract to say is this is this representative of our relationship with the vendor.

Martin Clausen (22:28):

Yeah. And that’s actually how we test the contract with potential customers. Right. It’s saying that well, we, we of course need to satisfy ourselves that we have implemented what is in your contract correctly code. Right. Because that’s part of how we do things, right? We tell you which parts of your contract do you want implement in code, which ones are valuable, which ones are the ones that you so want. You want to get a better handle on from a management perspective. So we pick those together with the client and we implement them. And then we draw up a set of test cases saying that if these things happen at this point in time, how, what would your expectation the client around what the state of the contract be? Right. Right. And of course you can, if you can share that with the other party to the contract and say we agreed that if you fail to deliver like three months in a row like this, with these dates and so on, this is the consequence that we both expect.

Martin Clausen (23:30):

Right. But it’s a way of testing the contract and making sure that it reflects the intention of the parties upfront, that lawyers are not used to having at their disposal at all. Right. Right. And it’s something developers are completely used to when they test their software. Yes. And if you ask them, they simply cannot understand how lawyers can sleep a night without having a facility like that. Right. For good reason. Right? No saying developer would ever deploy sort of mission critical software with the ability to shift fortunes between parties, without having test cases and, and rigorous test cases at that. But lawyers are apparently happy with deploying contract vehicles out into the world without having any ability to test

Zack Glaser (24:16):

Well. And I, I think we kind of hit, hit on something there that I think of when I think of kind of antiquated contracts and antiquated clauses in those contracts many times, when you say, why is this here? Why is this clause here? It’s because it has been used so many times and that’s our way of testing it. We say, yeah. Ah, well, it has, it hasn’t broken yet. It has stood the test of time. And it’s been good for me in court so far.

Martin Clausen (24:45):

Yeah. Okay. And, and then, so that my dear friend, Ken Adams, who’s written the book on contract drafting would say, if your wording ended up in cold, maybe it’s not the best wording in the first place. And maybe it’s not exactly the stuff that you want to learn from. Right. Right. And, and he is absolutely right. It’s not, it’s not a way of building up sound, contract wording, and, and so on is, is to look at what the courts had said about this stuff, because it, if it ended up in court, it was the definition proof.

Zack Glaser (25:20):

Right. Right. And you have done your client, a disservice. I I’ve told many clients that if we go to court or I’ve, I’ve lost, like we we’ve lost because you now have to spend money in court.

Martin Clausen (25:31):

Exactly. Orderly failed. Right. It’s, it’s the last result. It’s the stuff. That’s what you absolutely do not want. And I can’t recommend Ken’s work enough by the way, when we are speaking of contracts. Oh yeah. An annual of style for contract drafting is, is the, the book on contract offer and actually the way our language, because there’s a language underneath here that we built to build. These computational contracts is actually heavily inspired by the way, Ken sort of structures, the different parts of contracts and the types of contract language that it talks about in this book. So we, we, more or less directly adopted his way of breaking down contract language.

Zack Glaser (26:15):

I think you could certainly do worse than, than adopting, you know, Ken Adam’s way of doing that. And, and just so just in case people live under a rock somewhere and, and, and haven’t, haven’t heard of, of Ken Adams, you can find on him on Twitter to see all that he, that does, but he’s got multiple, I believe books on manuals of style for contract drafting. And, and he is, he is very, very well respected and very, and in his own, right. Very thoughtful about these, these sorts of things.

Martin Clausen (26:45):

So not, not un-controversial he doesn’t share shy away from an argument, but in my book, he has the most well researched, well, most well grounded opinions on, on matters of drafting that of anybody that I know. And I think his, his opinion on contract, I think, are, are quoted increasingly by the courts. Also so

Zack Glaser (27:11):

Well, so let’s step away from the, the drafting of the contract and, and kind of the, the kicking the tires and get into something a little bit more technical of when, when we’re dealing with computational documents or computational contracts, the necessity is getting information into the system in a digital way. Yeah. You know, because if we’re not getting it in from an actual system that can kind of put it in there, then we have to put it in ourselves. And yeah. Although that is still faster, once you get into the comp the computation portion, we still want to be too tracking something that is almost digitized, you know, not analog.

Martin Clausen (27:47):

Exactly. So there’s, there’s two pieces to it, right? There’s the contract we need there in a digital phone as a computer program. So we need to build that. We have the facilities to do that in the platform and language made specifically for that purpose, which means that we can very rapidly and, and secure really built these, this contractual logic up. And the second part is of course, these events, this information that the contract program needs to know to figure out where am I at with this thing. Right. And we can source that from many different system. And it all depends on which contract we are talking about. Right. So for instance an example that we use a lot it operations contracts, you know, so, so service contracts for the, for the operation of an it system. And in that case we would source the events from it service management systems and monitoring systems and all of that, because that contains the data that is relevant to figure out what is going on in this contract.

Martin Clausen (28:48):

But we could also look into IP systems that would have orders and payments. And so on all these things, of course, things in a contract that you, that you, that you need to know payments flows of money, that kind of thing receipts on, we could look into logistic systems to see has this order physically been fulfilled, these types of things. And for the, for other contracts, it could be something completely different, but that’s just an example right. Of where we source it. And the way we do it is that we either talk to APIs. So application programming interfaces from these systems and say, please give me all the, the response time measurements for this systems, for the layer, for this system for the last month. And I’ll figure out what that means contractually, or we just upload an Excel sheet with all the data into the system and get it in that way. So we, we, we are, we are aware that not everybody will have access to APIs, so be able to make a vendor or whatever deliver or put it their disposal and API. So we of course support the most well known and, and prevalent integration technology known demand, which is Excel,

Zack Glaser (30:02):

Right. Uploading a CSV. Yeah.

Martin Clausen (30:04):

Yeah, exactly. Everybody can ask somebody to fill in an spreadsheet somehow. Right, right. So we make it as easy as that, as long as you have the relevant data events in an Excel sheet will ingest that and, and will, will be up and running

Zack Glaser (30:21):

Well. And, and I imagine that you can have some events coming in through, through an API. And so you don’t have to worry about it. And then other events, let, let’s say something that somebody actually had to do, you know? Yes. Yeah. That comes in through an Excel spreadsheet or through probably some sort of checkbox or ticker or something inside the, the platform. But we’re talking about,

Martin Clausen (30:40):

You would make it manually you of, we try to avoid that as much as possible of course, because that’s where things can go wrong and it’s a chore and everything, but yes, it is of course also possible to enter events into the system manually. In many cases, we would actually prefer that you just fill out the Excel sheet manually, and then we test that. But yeah.

Zack Glaser (31:02):

Right. But we can, what we’re talking about is getting rid of 80% yes. You know, or, or a substantial portion of, of what you can do. And the more important thing in my mind is, and I, you and I talked a couple months ago and I’ve been kind of welling this over since then, because I, I thought, okay, well, most real world contracts for some small to medium size law firms, aren’t gonna have a lot of APIs that they can, you know, pump the information into, through or they’re gonna have actual actions that a human has to take or something like that. But then I started thinking about a, being able to use something like plaid that is bank connector, to be able to see whether or not something was paid well, that’s a pretty simple way of doing that. Well, now we’ve got that in.

Zack Glaser (31:46):

And then we can quote unquote, manually put other information in, through a CSV. But the important part is the computational element. Yes. Is the part where, where I don’t have to go through and say, is this contract still valid? Has there been a breach? I don’t have to worry about that. And I can, I, as the lawyer can kind of pass that off to my client. Yep. I can say you, you keep track of these things and put it into that system. And I mean, let’s just say this system could send me as the lawyer a message that says, Hey, it looks like this. Thing’s gonna gonna have a breach. You may wanna contact the client, you know, exactly. We is that computational aspect of it. And we’ll get the, the digitized information. We’re, we’re more and more information is being tracked digitally, you know, as we go. And it’s just going to keep getting, we’re gonna keep having a bigger and bigger bucket of information that is automatically put into those sorts of contracts.

Martin Clausen (32:43):

For sure. The difference is also that because we can ask the contract. So what kind of events do you understand contract? Well, I understand the fact that something can be delivered. I understand what a payment is. I underst than some kind of quality measurement on the deliverable or whatever, but I can actively now ask the user to provide me with that information. Right. You know, I don’t have to guess as a contract manager, or maybe not even a contract manager, if the company isn’t large enough to have that kind of a role, but, but finance per person, and so on, I can actively sort of poke that person and say, did something, did any of these events concerning this contract happen this month? And if they did please put in when it happened and some other piece of information around it. Right, right.

Martin Clausen (33:35):

So I can sort of actively go out and source that information because I know what the contract understands. And then I can push back and say, well, in that case, now the vendor is late for three months in a row. And you make, if you are sufficiently tired of this vendor, you can actually terminate the contract with a shortened termination notice because that’s this obscure clause somewhere inside the contract that your lawyer has put in in place, right. Has now been triggered, right. It would never, ever occur to somebody. And, and, and the thing is that you actually paid the lawyer to implement it because it’s good practice. And you also potentially paid at the negotiation table for the privilege of being able to do so. Right. So that cost you some kind of negotiation capital that you will. Yeah. You will now not have gotten a, the turn on if you failed to use that. Right. Or at least if you failed to know that that right exists, because one thing is knowing that it exists, you are not forced to do it, of course, just because the contract is computational, but now you are aware and maybe you can use that when you really go or whatever, or you can get some other benefit from it. Right. But at least now, you know, what the contract entitles you. Right.

Zack Glaser (34:51):

Well, and I think with that, it makes me think a, that you, as a lawyer be a little bit more sticky. It’s a little bit more just from a cynical standpoint, as a, as a lawyer trying to, to make a living. I want my clients to a, want to stay with me. So I want to provide them with, with the best service I can. But B if this is something that’s a little bit difficult for them to kind of get out of, you know, they say, well, I, this platform is so good. You

Martin Clausen (35:21):

Exactly, well, there’s nothing wrong. It sticky, isn’t a dirty word. If it’s based on the fact that you’re providing a superior service, right. That you become dependent on as, as a, as a client, that’s perfectly legitimate. I think there’s other kinds of stickiness that are maybe less sort of savory. Yeah. But, but, but this, this kind of stickiness is I, I, I have no issue with right. And, and, and it’s true if you provide your contracts for your clients in a, in a set up like this in a Hyper Contracts set up and you tell the client, well, just need to feed this information in, or here is the way you, what you need to ask the vendor to provide to the system. Then you also get the added benefits of, of this automatic contract management that hyper of contracts provides or similar from would, would provide.

Martin Clausen (36:14):

And, and, and that’s certainly a, of differentiating yourself as a lawyer. It’s certainly a way of, of doing a completely different kind of highly valuable work product for your client. I mean, compare this to, okay, here’s this PDF, right? You can copy it, or, and you can, you can do some changes to it. Or maybe if I’m kind, I’m gonna give you a word document that you can then change every time you enter into a contract. And then then that’s a place compare and contrast that with a platform that actually gives you a fighting chance of actively managing and understanding your contracts on a continuous basis. I mean, that’s a, that’s a different class of work product that you’re talking about right there.

Zack Glaser (36:57):

Right. And this makes me think of this is nothing against legal zoom. I think they, they provide you know, a thing that people obviously want a lot of times lawyers will say, I provide a better service than going to Legal Zoom. Okay. Well, a do you advertise that you provide a better service than going to legal zoom and B how do people know that at? And so, so this would be one of those things where you say, this is the type of stuff that I’m doing and automated online contracts, likely at least at this point, couldn’t stand up to that. Couldn’t, couldn’t compete with that. And so that’s how you compete in that area. As you don’t compete in that area, you go and do the, that you’re better at even, you know? Yeah. And that’s one of the things I, I like about this is kind of making that platform for your clients.

Martin Clausen (37:46):

Exactly. And we, I think there’s two, there’s a lot of interesting legal take out there. Right. I, I, we really admire a lot of the access to this, but actually there isn’t that many types of legal take that, that sort of drastically improves the work product. Right,

Zack Glaser (38:05):

Right.

Martin Clausen (38:07):

It’s, it’s it might save some time when you do your due diligence. It might you can do sort of called case outcome prediction and so on. But if you look at the whole work product, how do you innovate that and how much legal tech actually manages to take the work product to a different level. Right. And I think this does, it’s different in, in, in that sense, it’s also a huge leap to many people, but in a world where people think they’re successful with contract management, if they’re able to find this, the correct signed PDF. Right. Right. Then this is, this sounds like something, oh, that’s very sophisticated. That’s like 10 steps ahead. Right. But the thing is, it might be that. And it, I actually think it is, it is 10 steps ahead, but it’s not of 10 steps to get there.

Martin Clausen (38:57):

Hmm. Usually the analogy that I I use is that when they had to sort of roll out telephony at scale in China, especially the rural areas of China, you know, of course they could have chosen just to do landlines as everybody had done in the past to every sort of small village in, in rural China. But when they came to that station in sort of in, in their technical evolution, actually 40 mobile telephony was available. Right. So why would you want to dig down landlines and take all the evolutionary step that everybody else did? If you can jump like five steps ahead and, and it’s going to be cheaper and it’s going to be less risky to implement that technology leap. Yeah. I think it’s, it’s perfectly feasible the system, the technology for it exists today. And it is so it’s very easy to get started. As you said, you know, you need to implement the parts of the contract that you want, and as a computational contract, and you need the event data, and that is literally as easy as filling in and Excel spreadsheet. But you can do part of it manually if you want, you want to avoid that, or you can automatically populate the sheet with the, the right event data from your, your IP systems or whatever. And you’re good to go. Yeah.

Zack Glaser (40:23):

Well, I, I think that’s a, that’s a good place to, to kind of end the, the idea that people may not be there right now. Well, the state of the art may not be there right now, but it’s where people to be, like, you’re saying, it’s the go ahead and skip over the, the old way of, of doing things and, and go ahead and get in there. People can deal with it. Yeah. People want this type, in my opinion, people want this type of thing. And yes, it does feel like it’s steps ahead of where we’re at right now, but why start behind.

Martin Clausen (40:57):

Exactly. Yeah. Yeah. Why, why implement like last seasons or two, the season, the approaches from two seasons ago when you can, at the same risk and price point and whatever implement sort of something that’s many steps ahead. Right. So it is an important question to ask. So if I understand the concerns, I understand the, the thinking around the, the, this, these things. Well, I can’t even find my contracts yet. How the hell am I going to be able to think about computational contracts and so on, but it’s, it’s actually much easier than it may sound and it, it is, it does exist. The technology does exist as opposed to maybe you know, artificial general intelligence and what, what people all talk about right. This, this thing is, is very real. And if you’re curious about it, we, of course, happy to show it to you.

Zack Glaser (41:57):

Absolutely. I think it’s Hypercontracts.com,

Martin Clausen (42:00):

Right? It is indeed.

Zack Glaser (42:02):

Yeah. So again, Martin, thank you for talking with me on this, I think this is really, really interesting, certainly to me. And if it’s interesting to, to our listeners, we’d love to hear from you on, you know, our LinkedIn page or on @Lawyerist on Twitter. And I, I know you can find Martin Clausen on LinkedIn as well. And so he’d be happy to, to join in the conversation also. Martin, thank you very much.

Martin Clausen (42:28):

You’re welcome.

Stephanie (42:29):

The Lawyerist Podcast is produced by Bailey tiller and edited by Ryan Croft. Are you ready to implement the ideas we discussed here into your practice? Wondering what to do next? Here are your first two steps. First, if you haven’t read the Small Firm Roadmap yet, grab the first chapter for free at lawyeristbackup.kinsta.cloud/book, looking for help beyond the book. Let’s chat about whether our coaching communities are right for you. Head to lawyeristbackup.kinsta.cloud/community/lab to schedule a 15 minute call with our community manager. The views expressed by the participants are their own and not endorsed by the legal talk network. Nothing said this podcast is legal advice for you.

Your Hosts

Zack Glaser

Zack Glaser is the Legal Tech Advisor at Lawyerist, where he assists the Lawyerist community in understanding and selecting appropriate technologies for their practices. He also writes product reviews and develops legal technology content helpful to lawyers and law firms. Zack is focused on helping Modern Lawyers find and create solutions to help assist their clients more effectively.

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Building and Using Computational Contracts, with Martin Clausen

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Last updated June 28th, 2022