Ep 246: How The Contract Network Is 'Changing Contracts for Good,' with Founder and CEO Jim Wagner

This episode discusses the innovations and impacts of The Contract Network in the field of legal technology, particularly in streamlining and enhancing the efficiency of contract negotiations.

1. Innovative Approach to Contracts: The Contract Network is pioneering in speeding up contract negotiations through technology.
2. Use of Generative AI: The company employs generative AI to analyze and streamline negotiations, setting a new standard in the legal field.
3. Impact on Legal Industry: Wagner's career illustrates a significant shift towards technology-driven solutions in legal practices.
4. Focus on Real Issues: The Contract Network focuses on eliminating unnecessary haggling in contracts, highlighting the most crucial aspects for faster resolution.
5. Community and Collaboration: Wagner emphasizes the importance of community within the legal tech industry and the role of collaboration in advancing contract negotiations.

1: Introduction and Background

Overview of Jim Wagner's career and the inception of The Contract Network. Bob Ambrogi: "Today on LawNext, Jim Wagner, founder of The Contract Network, talks about revolutionizing contract negotiations."

2: The Role of Technology in Contracts

Discussion on the integration of technology like AI in contracts and its impact on the legal industry. Jim Wagner: "We're leveraging technology to turn the traditional contract process on its head."

3: Challenges and Solutions in Contract Negotiations

Exploration of specific challenges in contract negotiations and how The Contract Network addresses these issues. Jim Wagner: "Our platform reduces the time spent on negotiations by focusing on key disagreements instead of minor details."

4: Future Directions and Industry Impact

Insights into the future of The Contract Network and its potential industry-wide impact. Jim Wagner: "We are not just changing how contracts are negotiated; we are setting the stage for the future of legal tech."

1. Embrace Technology: Incorporate AI and machine learning tools to streamline contract processes.
2. Focus on Key Issues: Identify and prioritize critical elements in contract negotiations to reduce time and complexity.
3. Leverage Data Insights: Use data-driven insights to understand market standards and adjust strategies accordingly.
4. Promote Transparency: Foster an environment of transparency to enhance trust and efficiency in negotiations.
5. Build Collaborative Networks: Engage with legal tech communities to share knowledge and improve solutions.

Almost exactly one year ago, a new legal tech startup, The Contract Network, came out of stealth, with a mission to “radically accelerate the time for contract negotiations'' through an AI-powered contract collaboration platform where all parties to a deal engage in a secure and neutral environment.

The company’s cofounder and CEO, Jim Wagner, is a legal tech veteran with a track record of starting and leading successful companies in contracting and e-discovery, including having cofounded the e-discovery company DiscoverReady, having been president of the contract management and analytics company Seal Software, and, after Seal was acquired by DocuSign, having been vice president of agreement cloud strategy there.

With The Contract Network, Wagner aims to “change contracts for good” by solving the problem of contract negotiations taking too long and lacking tools for real-time collaboration, communication and transparency among all parties. On today’s LawNext, Wagner is our guest, to talk about what he sees as broken with the traditional contract negotiation process and how The Contract Network offers a better option. Given his 30-year career in this industry, he also shares his thoughts on how it has evolved and where we are today.

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Jim Wagner

The way I like to describe it is if you took a heat map, dollars spent, time pressure, risk, opportunity, all those different things around contracts. If you did a heat map around what's the risk, what's the dollar, what dollars are being spent, etcetera. That heat map just has this massive concentration. It's all around the dollars spent to actually negotiate the agreement and the time pressures, the risks attended to it. And it was a great opportunity to really, really do something that could potentially change, you know, change the game in terms of can we help two parties get to an agreement much faster?

Bob Ambrogi

Today on law next almost exactly one year ago, a new company, the contract network, came out of stealth with a mission to, quote, radically accelerate the time for contract negotiations. Its founder and CEO, Jim Wagner, is a legal tech veteran with a track record of starting and leading successful companies in the contracting and ediscovery worlds, including having co founded the ediscovery company discoverready, having been president of the contract management and analytics company Seal Software and after Seal was acquired by Docusign, having been vice president of agreement cloud strategy there with the contract network, Wagner aims to solve the problem of contract negotiations taking too long and lacking tools for real time collaboration, communication, and transparency among all parties. Wagner is my guest today to talk about what he sees as broken with the traditional contract negotiation process and how the contract network offers a better option. Given his 30 year career in this industry, couldn't let him go without also getting his thoughts on how it has evolved and where we are today. This is Bob Ambrosi, and you're listening to Law next, the podcast that features the innovators and entrepreneurs who are driving what's next in law.

Before we get to that conversation, let's take this moment to learn about the sponsors whose generosity supports this podcast.

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Now on to today's conversation. Jim Wagner, so happy to have you on Lawnext. I'm delighted to be here. I really only first met you about a year ago, not that long ago, before just around the time you actually brought the contract network out of stealth. I know you'd been developing it for a period of time before that, but as we speak today, we're just about up to a year since you made the public announcement of this company.

And obviously a lot I want to talk about with regard to that and the work that you're doing. But before we get to any of that, you know, I think it's kind of fair to say that your entire career has been focused on contracts and documents, starting from the time you were an m and a lawyer way back when, and through a series of companies, both that you, that you founded and led as an executive. So I wonder, because I think it's relevant to what you're doing today, if you kind of just kind of walk through a little bit your career and how you got from there to here. Great question. And I were focused with it too long.

Jim Wagner

I graduated from law school in the early nineties, and I was an m and a private equity commercial lawyer, and I practiced sort of big law, traditional big law background throughout the nineties. And I actually really enjoyed the practice of law. I was not one of those folks who said, this is not for me, anything like that. But you're also always, I did leave. I did leave, but I didn't really go far, did I?

I mean, I been doing things with the legal community, you know, my entire career, to your point. But on a parallel path, there were two other things that kind of stood out. One was I did see in closing rooms over and over again partners that I worked with who said, in the next life, I'm coming back as a client. And I'm like, you're 60 years old. You're incredibly successful by every account, and yet you're still sitting at this table saying, in the next life, I want to come back as a client.

And I heard that come up over and over again. I was like, maybe there's something to that. And then the other thing that stood out to me was as I was, you know, as I was learning my way around, was just how many things that were taking place in the practice of law that you, if you looked at with a critical eye, you would say, why do we do it this way? Like, there's a better way, right? And by the way, now there's such an incredible community of people who all take up that mantra who are building businesses, building technology.

You were saying, there's got to be a bigger, a better way. But that's what struck me, Bob, you know, in my career, and it wasn't. As common back then for somebody to step away from law practice, to embark on a career as an entrepreneur or whatever else. Well, there was no, you know, there was no safety net for us. Like, where do we go?

There weren't that many law technology companies. I mean, you had Westlaw and Lexus, but there weren't a lot of law technology companies, little companies like summation and concordance that were really driven by founders, not really scaled businesses. There was no venture money for us, so it wasn't easy. And I put down a couple of business plans in the nineties around different ideas, around outsourcing technology and things like that to law firms. But at the end of the day, what made it easy for me, Bob, was that the company that's now epic, it was DTI at the time.

The founders came to me because they knew a little bit about my background, and I also led the technology initiatives for my law firm. They said, hey, why don't you come over here? We want to become a technology company. We're kind of a photocopy company now, but we want to become a technology company. And can you come over here and build that for us and be our chief operating officer?

And that was sort of the transition where I. Where I never looked back. I gave up my license to practice because I didn't want to be perceived as the company's lawyer. I wanted to be a principal. And so I became chief operating officer.

What's now epic, that business, we grew tremendously. We grew over five times in size and most of organic and most of it attributable to the introduction of the technology services, litigation support, scanning and coding, electronic discovery, hosting those things. And then I saw an opportunity where we were delivering services, Bob, to law firms like really, really great law firms, very talented people. And we were sort of in between corporations and law firms where we were making these deliveries, because the law firms were really the ones who would consume the data, manage the data, they would manage the discovery process. And I saw this gap and said, you know what?

Most law firms are actually not well equipped today. They don't have significant investments in technology. They don't have significant investment in project management. The business model itself doesn't necessarily lend itself well. And so I founded a company, along with my business partner, Steve Harbour, called Discover ready.

And we went out to the market and said, you know what? You've been sending your documents to big law, A, B or C for them to review for discovery purposes, for investigation purposes. And we think that you're paying roughly 15 to 20 times more than you ought to be paying because there's not a lot of technology. You're paying premium rates for associates who really aren't even working on the matters. And we'll do this for you.

And just to show you, like, where we were, this was in 2005, we were like, we'll review every email you got for a dollar document. And we went out and we told that story and people thought we were crazy, and we banged our heads against walls. And really to make ends meet, I did consulting. I had a handful of people around me who we did consulting, but we would always do so in a way that was designed to develop a deeper relationship and hopefully create an opportunity to ultimately deliver a managed service, which now the default, as you know, is managed document reviewed for everyone. So it's really us.

And then Bob Rowe was doing it, and before he sold his company to Huron. So Bob Rowe and us, we were out there telling this story. Bob was doing it for Nexon Pruitt in South Carolina, we were doing it in New York City, and we were telling the story. Bob sold this company to Huron. Huron put a lot of energy behind it.

All of a sudden, they were out pitching to everyone and it's like, well, they need at least one competitor to include in the RFP. Maybe we'll get our fair share of work. And sure enough, we did. So we grew a pretty good sized company at Discover ready, and I served as CEO there. Then Steve and I formed another little company called Apogee.

And we said, we're going to take everything that we learned about doing document review and using predictive coding and all those things. We had done a lot on that front, and we said, let's do the same things and let's do that in the contract world. We did that in 2015. We grew a little business to about 30 professionals, and we adopted a software called Seal Software. There were really two big players.

There were three. There was igrevia, net, Gannon. There was Noah and Kira, and then there was Seal software analysis, that kind of thing. Yeah, yeah. And Noah and Noah and Ed and Ned, who I remained close with.

I mean, really, they're such great guys. They were a little bit more focused on the law firms, and Steve and I were all about going direct to corporate. And so Seal just made a lot of sense. And so we became ingrained in the Seal network. And anytime Seal had a project, we became sort of their go to partner for delivering it.

And ultimately, in 2018, we merged our company into Seal. And then in 2019, I became president of Seal. And then we sold the company to Docusign in May of 2020. Was it 182 million? Something like that?

Yeah. Yeah. Well, yeah, it's a trick number. They already own 15 million of it, so press release says 185. But the.

But Docusign already owned 15 million, so they took their 15 million back. So they can say it was 185 instead of 200. Forgive me, Dan and Scott. I gave it very little secret, but there you have it. But, yeah, so we sold that company to docusign.

That was a who's who clients, by the way, big banks, big telecom, big format, but seal and, you know, and, and, you know, tremendous credit to the, to the team of founders who started that business and the team that really made it come to life, but that had an incredible Husu appliance. Just everyone you can possibly imagine. I mean, folks who appeared at our conference and spoke on our behalf. So it's not a secret. Like Google and Meta both used our AI.

That was pretty cool to know that companies like that use our AI. And then I served as vice president of agreement cloud strategy at Docusign for about 18 months before we come to the present. So we come to the present. And based on that, based on that career, that history that you had, I guess it's fair to say that you decided that there was a problem with how contracts are being negotiated because you started a company to address that problem. So, I mean, what was the problem you saw that you set out to address?

Yeah, it's a great question. I would start with, the way I like to describe it is if you took a heat map, dollars spent, time pressure, risk, opportunity, all those different things around contracts. If you did a heat map around, what's the risk, what's the dollar, what dollars are being spent, et cetera, year three, year five, whatever. That heat map just has this massive concentration. It's all around the dollar spent to actually negotiate the agreements and the time pressures, the risks attended to it.

And it was the great opportunity to really, really do something that could potentially change the game in terms of can we help two parties get to an agreement much faster? That was the idea behind the business. What were the speed bumps? What were the obstacles to parties getting to agreements quickly? What was it that bogged down the process of negotiation?

Yeah, I think the dirty secret is that it's much simpler than people let on, and that the big thing is third party paper. It's third party paper. You are inflicting a contract on me that I don't know. I have to go through and read it and I have to analyze it for risk compliance, business terms, the whole deal. And that hurts.

You know that that hurts and it slows everything down. There are lots of other things in terms of unsophisticated parties over sophisticated parties, people presuming they have too much leverage, people not recognizing what market is. There are a lot of different things. And obviously, im sure were going to talk a little bit about some of that, particularly around the impact of market awareness. But at the end of the day, contracts slow down because we haggle over a lot of things that we all agree on or are not going to be that challenging.

But in order to get to the five things that we really do disagree about, we take too long to get there. Right. It just takes, it take, should take five drafts to get to the five things that matter in a contract. Yeah, I remember when I first talked to you a year ago. Well, I remember because I just reviewed my blog post that I wrote about it.

Bob Ambrogi

But one of the things you talked about then, and I know you see, you've talked about it on your website since then, is this idea of the red line rut. What's the red line rut now? Is that a problem? Well, yeah, the redline rut is we're just going to go back and forth and send each other red lines in a way that candidly, the business community doesn't appreciate. It doesn't value.

Jim Wagner

And I think we should, as professionals all look carefully at how much value we're delivering in the context of red lines. I had a scenario, I mean, I'll give you an example. I had, it was exchanging an agreement with, you know, with, with someone. The lawyer came back with comments that impose additional duties on his, on his party. And I went back to him, I said, do you really, like, do you really want to do this?

Because this, you know, he had imposed a duty for his party to return data and he just inserted the clause. And I'm like, under an NDA? And I'm like, do you really want to create an obligation on the part of your party that they have to send me things back in an era where no one sends something back. And the reason I give it as an example, Bob, is just because it's very, very common. We pick up our pen and away we go.

Right. And part of it is necessitated by the fact that, again, I'm looking at something unfamiliar, if I go through and something doesn't resonate with me. You know, there is a tendency to pick up that pit. So lots and lots of, there are a lot, a lot of reasons why contracting is inefficient. And also there are now, you know, you know, the other elephant in the room is since you and I spoke and, and, you know, every, every Joe, every Joe, you know, startup, you know, can have generative AI at their disposal.

The ability to use generative AI to help in the negotiation process is rapidly becoming ubiquitous, really, really happening very quickly. Whether you just use Microsoft copilot, whether you do business with my buddy Dan Hauk at Netdocs, everyone will have generative AI. And for us, one of the challenges is cutting through the story to say, well, why is it that what youre doing will be more helpful to me in terms of using generative AI to negotiate agreement than copilot or rv or net documents or anything else? Yeah. What's the answer to that?

Oh, it's a great question. I think, you know, you're asking lots of good stuff. Yeah. I mean, we confront this on a regular basis. Part of it is, part of what the value that we deliver is that we invest a lot in data models and we invest a lot in providing clients the ability to do things much more.

If you watch the demos out there and you've seen them and you've actually, you've engaged with these folks, they'll do a demo that says, hey, make the agreement mutual instead of unilateral. And they'll show that, and it's kind of a card trick where they'll show, they'll say, our payment terms are 45 days. So when you see the agreement, fix it or whatever, what we've seen is that there's not, relative to the sophistication that people who do this every day need in terms of really understanding the nuances of what they're looking at and what they need changed, that level of that level of execution. We have not seen many folks who have really dialed in what they're doing to the point where they know each and every nuance of how to negotiate a particular contract. Instead, they kind of have these general tools that they're bringing forward, and they're valuable.

And I applaud it. It's great. But when we turn a document into data, for example, let's say that we're analyzing a clinical trial, read. When we analyze a clinical trial agreement for a large pharma or for a large healthcare concern, one of the things that's most important to them is they want the same analysis every single time. So they don't want subject injury, patient subject injury to show up as patient subject injury one time, and then another one the next time for it to show up as patient injury, and then the next time for it to show up as, you know, subject damage or whatever.

They need it to come out exactly the same way every time. Most of the applications that are being built aren't really being built with an eye toward, wait a minute. I want to be able to run the same KPI's, I want to run the same dashboards, I want to be able to surface the same insights according to the same data model every time we've taken that approach. You saw our platform from the word go. It's very structured.

We turn documents into data, very, very repeatable. When you turn documents into data in the same way, it really opens up the possibilities in terms of how granular you can be as to each subject, as to what it is preferred, permitted, not permitted, etcetera. So what that allows us to do is have our clients deploy very, very intricate playbooks that then lead to downstream better negotiations. Those would sort of be the two big ones. There's really great data model and allowing for a more sophisticated approach rather than just a thin implementation.

The third thing that I also hope we're going to get a chance to talk about today is the opportunity to surface market insights. I think we're pretty unique in that regard. There have been some folks who have platforms that are dedicated exclusively to market insights. Most of those have been about public documents rather than negotiated agreements. And what we're doing is we're surfacing market insights to all participants for certain use cases where we can tell them, listen, you're issuing a document to, you're an investment bank, you're issuing a document to a private equity fund.

You're saying that the private equity fund will cause its representatives to do x, y and z, and down to the word bob, we can say it's not cause what's market is. You will direct or advise your representatives. And if you go to market with the word cause, you're out of market, it's gonna get marked up 80% of the time and so on. And so those market insights can become very valuable, hopefully not only in the midst of negotiations, but actually helping the party who's originating the agreement to make their agreement better before they send it. And that is probably where we have them the most.

Where we have the most traction in the market is our ability to tell folks in advance, this is what's going to happen with your negotiations? Do you want to, you want to do something about it? And how are you providing those market insights? Where are you getting that data? And are you effectively benchmarking agreements against that data?

So last question first. Yes, we do benchmark the agreements. So if you give us an agreement, we can benchmark it against your standards. So you can have a playbook and we can benchmark it against that, or we can also benchmark it against market. Your standards and market may not be the same, but we'll give you both benchmarks.

The second is, how do we get it? There are really two pieces to how we get it. One is let's talk first about how we source the data. We source the data only from parties who are specifically opting in and participating in our market data studies because they want to have access to it, they want to participate, and then the data is aggregated, anonymized. There's no way that you read our study and said, oh, I know exactly where that came from.

We just don't do that. And it will be possible to do that. But we get the data from sources who are negotiating relevant agreements in the community, who are contributing those documents, and they're being anonymized and aggregated. The next piece of it, which is kind of fun, but probably a little bit too, maybe a session for another day, is how do we use generative AI? And this is the thing that I'm in many respects most excited about, when people say, well, how do you distinguish yourself between something that's a drafting tool, this, that the other.

From a generative AI perspective, what we say is just like, we're super ambitious about it. I put it on LinkedIn, like, what happens when one company and its partners want to eliminate 80% of the negotiation for an entire industry? And that's what we aspire to. Now, obviously, you know, time will tell whether we're able to accomplish that and how many use cases. But we're digging deep in the clinical trials community, we're digging deep in the investment banking and private markets community, and we've already shown, at least we've already demonstrated that we will be able to have a massive impact on negotiations if folks sort of, you know, play the game with us.

Bob Ambrogi

Shortly before Jim Wagner and I spoke, his company, the contract network, in partnership with the global law firm Eversheds Sutherland and the global managed services company Integrion, partnered on a study of NDA negotiations in M and a matters analyzing over 20,000 anonymized negotiation points points to better understand the power dynamics in those negotiations. What did they find? Well, stay tuned, because in a moment ill ask Jim about that study and what it revealed. But first, please take a moment to learn about the sponsors who so generously support this podcast.

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Welcome back to Lawnext. I'm speaking with Jim Wagner, the co founder of the Contract Network, a year old startup that has developed a platform to, quote, radically accelerate contract negotiations. In the second part of our discussion, we'll hear about a study the company just completed looking at the power dynamics in NDA negotiations. We'll also talk about the company's work with the Mayo Clinic to streamline clinical trial agreements. And here are Jim's thoughts on the state of the contracts market and the impact of AI.

Let's get back to the conversation.

I know that you just finished, or just recently completed a study, I guess, that you did on analyzing NDA negotiations and M and a matters which, fair to say, it validates, or at least you find that it validates that kind of market based approach that you were just talking about. Can you kind of describe that and what you found? Yeah, sure. Sure. So we worked with Evershed Sutherland.

Jim Wagner

We worked with the Sutherland part of the equation here in Atlanta. We worked with Integrion, and then we worked with a number of folks in the investment banking community who have, who work sort of quietly behind the scenes, and we analyze over 20,000 m and a NDA negotiation points. And we use generative AI to do so and use some really, really fun techniques to get there. I think we're sort of reflecting a little bit of the experience that we have in this arena to be able to actually pull something like that off from that if we sort of take step by step. First we had to go in and create a data model because, as you know, one person will say it's injunctive relief, the next person will say it's remedies.

The next person, like, we have to cut through the noise, and we have to identify every, basically every subject that's addressed in these agreements. So we developed a data model. Then we use what's called a rag implementation, and it's a very common form of implementation for folks who are playing at a big scale. And that is basically using a sophisticated AI pipeline. You create, in essence, a fingerprint for, for every sentence that comes in.

That's called an embedding, and you marry together each sentence that basically closely matches one another. So we put all the injunctive relief clauses together, all of the return or destroy clauses, all of the publicity clauses, whatever they are. So we use those techniques to group together all of the sentences in these NDAs that sort of belong together, no matter how they were structured. That was the first piece of it where things got exciting with the generative AI was then to analyze the original version of the template, the revised version of the template, and the final version of the template to really understand the intricacies of the negotiations. I'm going to pause for 1 second, because there's a myth that NDAs don't get negotiated or shouldn't get negotiated.

And by the way, I think 90% of all NDAs should not get negotiated. We use common terms. Common paper. Jake Stein we use bond terms. Todd we've done some.

We've used one NDA. Electra. So I'm a big believer in the NDA standardization world. In the M and a community, the NDA is really getting negotiated, and the issues are way, way more intricate than what any of those NDAs are designed to accomplish. So the standard standardization movement in NDAs isn't really relevant to the m and a world is what you're saying.

It could be. And by the way, like, I'm fully supportive of that as well. It could be. Just recognize that there have been efforts on that front and they've not taken hold. And there are a lot of different movie pieces in the market.

It could be, and we're all in for it. And I think hopefully, actually can play a role in driving toward market standards and actually making it clear you should be taking a more formulaic approach. But there is a myth that NDAs don't get negotiated and they don't matter. Say what you will on M and a NDA, you are citing a non solicit clause, period, like you're signing up not to hire someone else's employees. That becomes slightly more real.

You're signing up to say you won't go out and conduct due diligence in a way that even if you don't use the counterparties information might make it clear to the entire market that actually you're about to buy that company. There are things called standstills, there are lockups on lenders. I mean, there's a bunch of moving pieces. So NDAs in the m and a context are not the same as the rest of the NDAs. Let's just make that clear.

And I could show you markup after markup around that. But doesn't your study kind of counter that in the sense that your study concludes that, in fact, there is a large amount of consistency among the NDAs once they're finalized and agreed on? That's exactly right. That's exactly right. So what I would suggest to you is that 80% of the issues that are encountered in NDA negotiations don't have to really be issues.

They can be, they can be solved in advance. And that it's that last 20% that says, do you have a lockup on lenders? Do you have a standstill? Do you know who are the covered persons for non solicits? Those things get negotiated.

And that was really, my point was, actually, there are real issues that get negotiated. The flip side of that is that, again, 80% of the document does not have to be negotiated. I'm just, you know, and I can give you example after example. Investment banks will send out agreements that say that the private equity firm will certify in writing that they destroy the information. And not only will they certify, but they'll have an authorized officer of the, you know, of.

And every time counsel for the private equity firm is going to say, I will confirm to you, I won't certify to you, I will not have an authorized officer of the company do that. And you're going to take an email as being sufficient recognition of the fact that we've done this. They're going to make that markup and every investment bank is going to accept that, change whole cloth. They are not going to push back on that whatsoever. And so it's like, well, wait a minute.

If you know the buyer is going to make this comment and you, this seller, are going to accept this comment, what is the logical behavior that you should engage in? Let's fix it before you send it. And there's about 80% of every markup in the m and a NDA community that does not need to be marked because it's not controversial. Let's just fix it up front. Then you can haggle over governing law.

What's the term of the NDA? Who's the covered persons from? Not solicits? Is there some type of lockup for lenders? And are your representatives and affiliates covered by these different clauses like those are the real issues.

You know, I rattled them off really quickly. But if we had people who were really, really experts in the area, they would say, yep, he got that right. So the lesson then, in part, is that it, one way to accelerate the negotiation process is to not spend a whole lot of time on the stuff that is pretty much market standard and focus on the stuff that's really meaty to the deal at hand. And the problem is two things. One is that what's the transparency as to what's market standard?

And the answer is nil. There is. It's all word of mouth as to what standard. You go to your lawyer, and that's why you pay Kirkland and Ellis over $1,000 an hour, because they're going to tell you what's marketing. Kudos to them.

But there are certain areas where, there are certain areas where some of the data is so common, should be available. Let's just make it available to everyone who's negotiating. But the other piece of it is that when you say, let's not waste too much time on it, I'm an advocate of not wasting too much time on it. But that does mean that drafters have to fix the agreements before they go out. Like, they just have to acknowledge the other party as a legitimate concern.

They'll send out an agreement that says you cannot contact the target company except directly through the investment bank. And like this might be one of your suppliers or might be one of your core customers or one of your core business partners. They make the buyers make the comment every time, except otherwise, in the order, ordinary course of business, you're not related to the transaction, you won't contact them. Lean in, fellas. The water's fine.

Just fix your forms. Yeah. When you guys blanking on the name of your co founder. I'm sorry. Bill Murphy.

Bob Ambrogi

Bill Murphy, who is a former chief technology officer at Blackstone. And when you started this company, well, you started the company more than a year ago, but when you launched the company last year, again, one of the real kind of missions that you were focused on was this idea of accelerating contract negotiations. And you started initially with this partnership with Mayo Clinic, focused on clinical trial agreements. Why that focus? Why that partnership?

How did that make sense for what you're doing? Yeah. Yeah. And by the way, I just got back, I just spent three and a half days with a team from Mayo Clinic at a large conference about negotiating clinical trial agreements. It was fantastic.

Jim Wagner

We're really, really excited, just piggybacking off of what we did earlier. We talked about the market study on M and a NDA, we're doing it in the clinical trial. Agree in the political trial context now. So we're literally kicking off that study. We were in New Orleans and we got a bunch of folks in a room who said, actually, we really like what you're doing and we want to participate global, you know, pharma, lots of folks, you know, household names in terms of hospitals and state, you know, state academic medical centers is really, really exciting.

We haven't walked away from the clinical trial use case at all. As a matter of fact, we're really excited about the impact that we can have and how many folks appear. You know, they haven't sent us their agreements yet. We got one batch this morning. It's amazing.

We already got a batch of agreements from an absolute top tier, like, wow, thank you. That happened fast. So in terms of tackling clinical trials, those agreements are ubiquitous. And if you think about what happened in the rush to discover cure, preventative medicine, et cetera, it really showed, we think about the elasticity of our supply chain. One of the things that really, really came out was how inelastic we were in terms of starting and executing clinical trials.

The average clinical trial takes well over three months to initiate, or the average clinical trial agreement takes over three months to negotiate. And it's the same players, it's the same parties doing this thing over and over and over again. And we have the belief that as the community as a whole understands more about what's market. And also if the community as a whole can be given tools like generative AI, collaboration tools, etcetera, that we can help them get to agreements much, much faster. And we're really excited to properly kick off that business later this summer.

Bob Ambrogi

And where else are you expanding into? Are you doing more m and a at this point? You're still, I mean, what's actually the status of the company at this point? Because you're still, I think it still says, sign up for early access on your website. Yeah.

So where are you right now? And what are you doing right now? Yeah, so we have, we do have clients who are using the platform negotiating every day. I love it when I get a total that says how many agreements got negotiated, how many signatures, but it's a small number. It's still a small number.

Jim Wagner

We're still doing a lot in terms of making the platform. Right. The biggest challenge that we have being completely transparent is if we're lucky enough that Mayo clinic issues an agreement to a counterparty on our platform. That's great. But what's the counterparties going to experience going to be?

And they're going to say, who are these people? Why should we trust an agreement that arrived here, even if they promise us data and market insights? Like, that's a neat trick, but can we really do this? So we're just getting started in that regard. But we do have people using the platform every day, and our core use cases haven't changed.

We're really focused on private markets, M and A, NDA, and extending from there into some related agreements and then on the clinical trial use case. Clinical trials, by the way, is clinical trial agreement, NDA related to that? A materials transfer agreement and a data use agreement. And sometimes people will negotiate their informed consent. So it's actually a lot of different agreement types that, that have to be negotiated on the platform where we go from here.

Part of it is putting the product in sort of out there where people can build their own use cases that they don't require us to participate. And I think we're making really good strides on that. We do have other areas that we see as being potentially very, very valuable. So we've got a fairly robust roadmap in terms of other use cases that have built in networks, built in communities, that everyone is stuck in a rut. So I'll give you an example, and I'm not saying that this is a priority use case for us, but think about construction companies.

Construction companies deal with, they set up projects, they deal with the same subcontractors, they deal with the same issues over and over and over again. There are actually a lot of communities that are like that, that are possibilities for us as to where we go, but none of them are a priority candidly, relative to delivering the value that we need to deliver with respect to the clinical trial community and with respect to the m and a community. Yeah. We haven't explicitly talked about this so far in this interview, but what is it exactly that your platform does? Yeah.

Yeah. So first of all, one place, all parties come together. Right. And so, Bob, have you had a word file? You said, hey, Jim, you know, before you appear on my podcast, I've got a, you know, we have a license agreement.

We need to send it over. You could take that word file, you could upload it. We would immediately read it, we would abstract the agreement for you. So before you even send it, we would read it, we would abstract abstracted for you. We would align it to a data model for you.

And by the way, that would all take place in less than five minutes. You've uploaded your word file. You could say, I want to send this to my counterparty. Type in Jim Wagner at the contract network. Hit send and away it goes.

When I receive the agreement, when. When I receive the agreement from you and I say, who the heck is this? We try to give a warm welcome, but we also give an abstract of the agreement. So even though you haven't paid a penny, you don't know who we are. The first thing that you get the first link is see an AI abstract of the agreement.

We've gotten really good feedback on that. People like having that. Especially it's, you know, if they've never experienced AI before or they're like, this is really nice that, that someone is being thoughtful and helping us see what's in the agreement before we ever receive it. The second thing is that if the counterparty has negotiated on our platform before and for the same type of agreement, we will have saved for them what they did the last time. And we'll say, do you want to apply the same principles that you used in your last negotiation to compare to this agreement?

And so it will immediately compare the agreement that they just received to their principles. We call them profiles, and those profiles can either be explicit language that they've accepted in the past or maybe just some guidance.

We prefer 30 days, but we'll take 45 days to use that simple example that I described earlier. So we immediately allow a recipient to compare the agreement to their standards when they go in. And by the way, we also allow them to collaborate. So if you think about some of the beauty, and I'm sure you use Google it docs or word or both, if you think about the beauty of collaborating with others in contracts, people are pretty limited in terms of what they want to do. As a matter of fact, usually there's a metadata scrubber that says, whatever you do, don't include a comment, the counterparty, etcetera.

So what we do is we have channels, we have communication channels, and so I can comment to my counterparty and everyone can see, but I also have a private collaboration channel all in the same document that says privately, I want to communicate with Kyle counsel, I want to communicate with Fred Finance, I want to communicate with whomever I can go in, and I can do that once I've revised the agreement and sent it back to you. Bob, when you got it, when you receive the agreement, you're going to have another really positive moment. And that is that without even opening the red line, the first thing that you'll get is you'll get a summary of everything I changed in plain language, written, not in a technical way, that we literally write it up two ways. We write it up one way for the lawyer in you, if you're like, I want to see all the details, and we write it up the other way, which is what does a business principle want to see what they want to know. And we write it up in plain language so you'll get your red line.

You'll see in plain language what change. You'll have the ability to go in, accept or reject. You also can have profiles for your negotiations. It says on round two we accept this, on round three we accept that, et cetera. If you want to use negotiation strategies that are multi round, you have the ability to say, I know we get this comment a lot.

Yes, we will. You know, we'll make this aligned with our profile, or we get this comment a lot. We do not do this. Make sure it shows up as we have little color dashboard that says this does not align with your standards or it does align with your standards. So a lot of collaboration features, great summaries, plain language.

Plain language. And then very importantly, compare the agreement to my standards. We'll also be doing the redlining itself, entering in the red lines this summer as well. We've been working on that for a while. There is a fairly extensive contracts tech landscape out there right now of various different kinds of products, from initial drafting and negotiation tools, through tools, through contract lifecycle management software.

Bob Ambrogi

Where do you fit in on that landscape? Yeah, we are a collaboration platform, which I think puts us in a little bit of a unique position. I think the applications that you're seeing that are coming at the market fast and furious are compared to my standards and suggest revisions or create some type of summary. We're a collaboration platform, which is actually pretty different. Build my team, build a.

Jim Wagner

Build a distribution list where I know it goes to exactly. It's supposed to go to on my direct recipients. I know it's supposed to go to my BCC's. I have the ability to collaborate with my internal team on an ad hoc basis. So we really are a collaboration platform that's a little bit unique, which maybe we'll create a new category, or maybe this, maybe it'll try to.

Folks say this is a category that never should have existed. What were these guys thinking? It sounds like a new category. I can't think of anybody who's really doing exactly what you're doing. There's adjacent products out there, but not directly what you're doing.

Yeah, I think Jake Stein and Todd, common paper and bond terms, they have two sided platforms, but they are completely contingent on your using their forms. And they're building a great experience with those applications. It's. They're really impressive. So they definitely buy in.

They're kind of doing the best of both worlds where they're saying the agreements ought to be standardized and we ought to have one place to come to get the deals done. And so they're building around that. I think. I think they're the ones a lot of where we probably fit in. I think Bob is always like an extension of the deal rooms, you know, that are out there, the Merrill data sites and intra links of the world really becoming sort of a next generation of how does everyone come together to get a deal done?

And we're excited about it. We think we can carve out a space for sure. Yeah, that's what it sounds to me like, that. It sounded to me like the most analogous to something like a deal room like that. I'd be curious on your thoughts on your perspective on where we are right now in this market.

Bob Ambrogi

With the benefit of that hindsight, I know your a big adopter and really interested in generative AI and how it's going to impact this market. What are your thoughts generally about where we are and what's going on in the market right now? One of the things that's most interesting is that legal gets the reputation as being laggards for lots of good reasons. Legal is actually leading with respect to technology and AI, and that's pretty fun, you know. Do you think that's something new or has it always been that way?

Jim Wagner

Well, let's be really clear. There are certain aspects of legal that where legal has been leading for years, and I kind of have my history of legal technology that's waiting the can. Bob, someday you and I will go through and we'll talk about the big moments, the seminal moments. And one of those was, one of those was around the discovery of the. Of the tobacco, the catalog of tobacco documents and baked tobacco, and the plaintiffs firms all recognizing that the better way to manage literally truckloads and 50 years, 50 years of documents was to scan those documents.

Steve Harvard, my business partner since 2004, he actually built one of the very first imaging businesses, giant, giant platters and so much horsepower that you had to have to scan the documents and to turn them into searchable text. So in that regard, legal has actually led on search and retrieval for a long time. They've really been heavy, heavy users outside of that not so much. Yeah, yeah, no, I agree with that assessment. And obviously the discovery area was a, was one area where there was some pioneering stuff done in the area of application of AI to legal practice.

Yeah, I mean, I really look at it. The tobacco litigation was massive. You know, Bill Gates email, Bill Gates Microsoft email was where he said, crush them all or whatever. He said that that really, you know, became very clear. That email was really where the action was forever indebted to Enron.

Bob Ambrogi

Right. Well, we're debited to Enron so that we're indebted to Enron because it gave every tech vendor a demo set. So we're all indebted in that way. Enron followed closely on the heels of the Microsoft antitrust. So those two kind of go hand in hand.

Jim Wagner

I think Enron, this is my, it's my absolute inside baseball. What does this guy know? I tend to think of Microsoft as actually being sort of seminal to where folks said, wait a minute, I need to get at the executive's email. And Enron proved that for sure. Enron proved that for sure.

Bob Ambrogi

Jim, I could talk to you all day, but we don't have all day to talk, at least not for this recording. But I'd like to ask you if there's anything else you wanted to point out about what you're doing about the contract network that we haven't talked about so far. Gosh, I think the biggest thing that I would talk about is community. And in that regard, I've given you kudos there. And I think what you've done, I think Richard Trowman's has really served as a contributor to the community.

Jim Wagner

I think, you know, I think what Zach and the legal tech fund have done in terms of the community, and. They'Re an investor in. We didn't talk about your investment, but they're an investor in your company. They are an investor. They are an investor in my company.

And so it's, you know, but, but really, you know, an answer to the question about, you know, is there anything else that I, that I want to say about my company? We're at a really, really great time in the legal community. There are voices, there are audiences. There are thoughtful contributors. And it's really, it's just very, very exciting.

I think for our initiative, for our company, we need people who want to be a part of a community, you know, who say, actually, we really like the notion. We like the idea of what they're doing. And so we're happy to be a part of that community. But I think the bigger message is just how exciting it is to be part of this community as a whole and to also to celebrate and thank the people who are really doing a lot to make that happen. And so I appreciate everything that you guys do.

Bob Ambrogi

Well, thank you. I appreciate what you do. I think it's really interesting what you're doing, and I hope it catches fire and changes the world of negotiations. Send me your next agreement. Come on, I know you negotiate every day.

I forgot to have you sign my highly complex agreement before you came on this podcast. You know, I mentioned my wife is a contracts lawyer. If she had her way, I probably would have an agreement for every podcast person, but not today. Well, thank you so much. I really appreciate your spending time with me, and it really has been great getting to spend time with you over the last year.

Yeah, well, thanks. Thanks as well and appreciate it. Appreciate your time.

My sincere thanks to Jim Wagner, co founder and CEO of the Contract Network, for joining me today. I enjoyed the conversation. I hope you did too. If you'd like to share your thoughts or comments on today's show, please do so by messaging us on LinkedIn or x or by emailing me directly, ambrogiomail.com. If you're a fan of Lon X, please leave us a review wherever you get your podcasts.

Lawnex is a production of LawNext Media. I'm your host, Bob Ambrogi. I hope you'll join us again next time for another episode of Law. Next.