Canadian Lawyer InHouse

MAY/JUNE 2019 18 INHOUSE ticated contract review technology and pro- cesses to extract the data. "I think a lot of that is driven by recog- nition that a lot of deals don't achieve their synergy targets," says Friedman. "What we're seeing is deal teams trying to get bet- ter at analyzing the contract data they are acquiring prior to close but also deploying the value of that data or the information from that data to make the integration pro- cess that much more seamless." There is also more sharing of that infor- mation across business teams. New providers and tools are allowing bidders to do their own diligence much more quickly. In an auction environment where a seller is putting up a piece of busi - ness and wants to acquire as many bidders as possible, the diligence phase often be- comes a time suck. "As the saying goes, time kills all deals, so deal teams are starting to say, 'Hey, we can give you a quicker and more sophisticated overview so you can finish your review in a fraction of the time'," says Friedman. "If you can create one database that has all the pertinent information and then cre - ate reports or analytics around that infor- mation, it's much more digestible and you can then distribute the information across your business units and they can see at a glance the provisions they need to deal with or opportunity embedded within them — that's allowing businesses to get smarter and better on the integration phase." There is also more attention being paid to the contracts being acquired, and the com - bination of processes and technology are al- lowing that to happen more quickly. That is also making things more cost effective. "Historically, you couldn't reasonably ex- pect to analyze 10,000 to 15,000 contracts in advance of a deal. Now that dynamic is starting to change," says Friedman. And that's a good thing since clients want more information about what they are buy - ing and there is the desire to expedite the sale process and to make sure the integra- tion experience is better for the business. Blakes and many other large firms now use tools such as Kira to run documents through, and although the software isn't al- ways 100-per-cent right, it can flag things you wouldn't have had a chance to look at doing it the old way. "I had an example of client who said they had a deal and at the last minute thousands of documents came through and they had to say they'd take the risk because there wasn't the time to look at it all, but if they had the tools being used now they would have put the doc - uments in even at the last hour at least to see if the technology could say there was an issue rather than saying 'we don't know what's in the documents,'" says Glover. The approach many now take is using a combination of people and technology to reduce risk. "That's how we've been using artificial intelligence with respect to contract review in due diligence. It's a combination of the people and the technology and the technol - ogy helps get you there. I honestly don't know how we would be able to do it with- out it," she says. "The computer will pick up things human eyes would glaze over." In a test pilot, Blakes found it was 50-per- cent faster in the process without having re- ally used the program before. The firm is saving even more time now because the law- yers are trained on it. "Like anything you get better at it as you use it, so you start to find the tricks of the software and how to be more efficient, which means half the hours in cost," says Glover. Historically, you couldn't reasonably expect to analyze 10,000 to 15,000 contracts in advance of a deal. Now that dynamic is starting to change. BRYAN FRIEDMAN, Axiom Canada tion and divestiture side for the serial play- ers to do that because the traditional soup- to-nuts law firm model starts to make less and less sense when these things can get into a rote transactional nature," he says. Companies are also starting to use their own contract management tools to try and understand the situation — especially if they are selling contracts — to better understand what they are selling and, therefore, spend - ing less time reviewing contracts. "On larger transactions, I think you're seeing a big push to disaggregation, which is about relying on a mix of external provid- ers to leverage against different deal com- ponents — part of which leverages tech in order to extract, analyze and get value from contract data that wasn't possible before," says Friedman. Traditional law firms are still running point on the primary deal documents and negotiations such as sales and purchase agreements, asset purchase agreements and major representations and warranties and indemnity provisions, but more and more diligence around the deal is either being done in-house or farmed out to external providers who are leveraging more sophis -

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