Charles Brecque speaks with Andrew Knight from RICS about the application of LawTech to contract automation across property management and employment agreements. In the webinar, Charles shares how data and technology can help smaller, unlawyered firms draw up contracts. Charles also discussed the benefits of using knowledge graph logic to ensure contracts are consistent and enforceable. Another benefit of this approach is it can unlock the data that is normally embedded within pdfs and other electronic documents. The webinar recording can be watched below and on the RICS website.
Andrew Knight: Hello everyone and welcome to this next episode in the video discussion series from the RICS tech partner programme. My name is Andrew Knight and I've been with RICS for nearly eleven years now, I work within the standards, regulatory and thought leadership part of the organisation, and my role is to look at the impact of data and technology right across the and natural environment. We have over 130,000 members worldwide, working widely across the property lifecycle, working with land, residential, commercial, alternative property and infrastructure. So data and technology has a huge impact in a positive sense to the way our surveyors can work right across the world. And today I'm really pleased to have Charles joining me from Legislate to talk about his particular solutions, so Charles please do join me.
Charles: Thank you Andrew for having me.
Andrew Knight: Great to have you on the discussion today. Now whilst we ultimately will be talking a little bit about data and technology unsurprisingly, it's always nice to perhaps get the human element there and I'd love to start off by hearing a bit of a background about you, your backstory and the origin story for Legislate.
Charles: So I'm Charles, I'm with Legislate, I have a background in engineering, and straight out of uni I joined a spin out from the University of Oxford automating machine learning. So quite technical, quite data focused but I was on the business development side of the business, and during my three years there I realised that I was, you know, frustrated by how long contract negotiations would take, or how long it would take for me to generate a contract, or for me to receive a contract from the client and have it processed internally. And one of the key issues I found was a lot of the waste of time was basically spent waiting for legal to review the agreement, and because our agreements were never quite of a high enough priority, the agreements would always get reviewed later. And in two occasions it didn't up working out, we ended up losing the opportunities despite the contracts being negotiated just because too much time had been spent in processing these agreements. So ultimately with Legislate what I wanted to do was create a software platform that me, a non-lawyer business user could use to create contracts without needing legal to get involved, that's the first problem that we're solving.
So how do we, you know, make it easy for non-lawyers to create lawyer approved contracts? Because obviously, you know, there are plenty of template providers but we want to offer a safe environment for creating your agreements and tailoring them to your specific requirements. The next problem that we're solving is post-signature, how do we make that data in the contract easily accessible and usable to the business user? Because with the typical PDF, or paper, format of an agreement, it's really difficult to answer simple questions like, 'How many of my employees are on a three month notice period? Or on a 30 day notice period? Are there any employees that have special terms?' It's really difficult without having to manually go through your contracts, whether you're in property or business, it's a real challenge, and so ultimately, you know, we're using knowledge graph technology, which is patented, to represent terms in a contract and how they interlink. And we've been at it now for two years, we've got just over 2,000 users, there's a 50% split between property and business, we have a lot of landlords and letting agents using us for their tenancy, or terms of business types of agreements. And then we also on the other side of the business help startups and small businesses with their employment contracts, and all the employment related documents. So that's quite a long background, so sorry if I rambled.
Andrew Knight: No a very good explanation. Now in terms of the bits and bites side of things, I think you talked about a knowledge graph, but could you, without perhaps releasing the secret sauce as it were, tell us how technology is being used to solve this problem? Because as you say, and it certainly brought to my experiences I've had in previous lives of trying to get a document through the legal team and there almost being a bottleneck around getting documents through. So in that sense, and I know talked particularly about that issue of getting structured data out because that's a particular thing that I have talked with a number of partners around with in terms the fact that the world is still locked into these paper documents essentially, PDFs. Where you have a lease agreement, or some other contractual agreement, where there's a lot of data in there but it's simply in a PDF, and yes you can use natural language processing to some degree but you don't get that ability to analyse or derive those kind of data points. So what kind of technology are you using to actually help both produce these, as you say, in a safe environment to make sure they're legally fit for purpose, but also that data piece? So talk us through the technology under the hood as it were.
Charles: So I'll just share my screen, it's not a super animated but I'd say there are several challenges that we have to face. The first is not many non-lawyers actually create agreements, or dive deep into agreements. So we had to make the user experience extremely easy for non-lawyers to understand what it is they're creating, what they're getting into because although we have a chief legal officer and a legal team, Legislate is not giving legal advice, but what we're doing is we're giving our users the tools and we're empowering them to create their own lawyer proof agreement. So we simplify the user experience and creating a contract on Legislate is effectively a set of questions and answers, as you can see on the phone on the left, but the key thing about these questions and answers is they are all interconnected, meaning if you, for example, are creating an employment contract and you say that the notice period for terminating the agreement is only one month, then Legislate will not suggest a six month restriction period because that will be unreasonable. Because the other key thing is when you're building a contract, the clauses are all interdependent, and we model those interdependencies with our knowledge graph. So what we're effectively doing is we capture the data from the user, and that data then goes into the knowledge graph, rules guarantee that the answers are consistent with each other, that they're consistent logically, and then that they're also consistent legally, and that was the example that I gave about, you know, the restriction period and not suggesting unreasonable restriction periods based on previous answers. Once we capture all that information and it's validated, we then generate an agreement, which is what you can see on the phone on the right, and that's pretty much the two main views that a Legislate user will see. But then afterwards, once you've created your contract and signed it etc. that agreement then goes to a dashboard, which if I'll change page, and so this is a preview of what are the typical insights that we can produce.
So on the one hand we will display, you know, what your total payroll is and how it's distributed across your employees, or for example if you've got NDAs, what is your average confidentiality term and how that distributes. Those are high level metrics which would typically be stored in a spreadsheet if you are a highly organised person, but if you're not then you probably don't have those numbers on the top of your head. And so really what we're trying to do is we're trying to make that data accessible through these insights, but we're also making that data accessible through search where every single contract term that is used to tailor your agreement then becomes a filter that you can use to filter down your contracts. So that you can determine, for example, how many of your tenancy agreements or expiring in the next three months, or in the next two months, or, you know, how many properties have a rent greater than £2,000 per month? We can give you all that insight because we've been capturing that data at the start, and because we're using the knowledge graph, which is the same technology that, for example, Google or other search engines use to structure the internet and provide those highly accurate, or relevant, responses, we're using that to make contracts usable to contract managers or people who have contracts, if that makes sense?
Andrew Knight: Yes it does. And you alluded earlier to the range of people who are using it, and you mentioned particularly property management, you're obviously seen this being used for I presume rental agreements, lease agreements, that kind of thing from a property perspective. I know you mentioned you had an engineering background, are people using these for procurement, construction type contracts as well?
Charles: So I think we've got the vision to, you know, Legislate as the contract creation platform for any type of template. I think the type of agreements where we've had the most success right now are agreements where lawyers typically don't get involved, or at least if they might be involved to produce a template at the beginning but they won't necessarily assist with, you know, the post template negotiation or tailoring. So tenancy agreements is one where, you know, it's too value for a solicitor to get involved, and it's too expensive for a landlord or a letting agent to justify getting a solicitor involved each time. But there's a lot of tailoring that happens between tenancies, you know, some tenants might want a break clause, some tenancies are an HMO versus a sole occupancy. And there's a lot of tailoring which is required, and especially if, you know, a landlord or a letting agent does DIY those changes themselves, or they might, for example, read a blog article about a rogue tenant, or a rogue landlord, and they'll throw in an extra clause, they might not appreciate that actually what they're doing is they're creating liability by being too specific, or being too general and actually introducing something which is illegal. So, you know, as we're an early stage company, we're working with those types of users, so landlords, letting agents, helping them with their tenancy agreements, but all the tenancy related documents.
So the how to rent letter, rent increases, section notices, these are all documents which are highly connected and we make it easy to generate those, so that's the one case. And then on the business side, it's typically small business owners and helping them with their employment agreements, and then finally I'd say where we also help is with niche entrepreneurs, so for example early stage recruiters, or early stage letting agents, we do actually help them with their terms of business agreements so that they can onboard landlords or clients. So that's where we are today, but obviously as we mature and gain some more traction, we'd definitely love to partner with-, especially there are industry bodies that provide templates that aren't necessarily negotiated but construction, that's the case. And, you know, we'd love to partner with them so that we can host their templates on our platform so that those members can make those changes themselves without necessarily making mistakes, and then benefiting from the whole data capture and data analytics post signature.
Andrew Knight: Indeed, I mean I suppose that was my thought process, thinking about the number of existing contract forms, say in construction, whether that's any C3 or the various other contract types that are out there. It's interesting to think that could be a direction of travel where you get effectively those in-built templates that exist that once again would benefit from that kind of approach. I mean it sounds, and this is question I often ask our tech partners in terms of so many of our members being smaller practices, it feels like that's almost the direction you've started with in terms of helping those smaller businesses that (a) don't have a legal department, and (b) obviously want technology that's very accessible from a device perspective, and also from a cost perspective. So presumably that feels like almost the part of the market you've begun with?
Charles: Yes. So our target market today is the un-lawyered, so as you mentioned, you know, people who aren't lawyers or wouldn't have a lawyer. But we do also work with businesses that might have legal counsel, but again, you know, legal counsels don't enjoy restructuring employment contracts or reviewing NDAs, that's not the type of work that they enjoy doing because it's very time consuming and it's very low value. So really when we, kind of, work with a company with a legal team, it's all about helping them do that low value, high volume work in a controlled and safe environment where they have the visibility, where they can control the parameters. And it makes their life a lot easier, especially when it comes to reporting, you know, if they have to go through due diligence or if they're going through an audit, they can, just through the Legislate dashboard, give that 360 view of the state of their contracts, and because everything is standardised and the same, the due diligence is almost non-existent, it's just really quick when it comes to review those agreements. So we're not trying to replace lawyers or, you know, take them out of the chain, we're really trying to free time up for them so that they can focus on the high value, strategic legal questions around which contract should I use? Or what is the right strategy with this client? Should we even do a contract? So really those are just some examples of where we've worked with legal teams.
Andrew Knight: Indeed. I suppose to use the cliché phase, it must have been quite a journey starting a business like this. What's been your favourite moment?
Charles: Yes I mean I think the favourite moments are obviously meeting people and having them join our journey whether they're, you know, employees or clients. And I think especially in the past, you know, six months, we've managed to double our customer base every two months, it's really exciting to see that momentum. And especially I remember in the first year we were lucky to have some early pilot customers who trusted us and helped us learn about their problems, and how we should grow to address them, to know seeing this momentum, you know, we're still very early stage and it's still early on, to see that maybe whole year of things starting to fall in place, it's overall my favourite moment.