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LEGAL TECHNOLOGY: ARTIFICIAL INTELLIGENCE IN CONTRACT INTERPRETATION

Soumita Mukherjee & Roopsa Lahiri


I. INTRODUCTION TO LEGAL TECHNOLOGY & LAW AND TECHNOLOGY:


Law and technology refer to the Law that regulates and supports the Information technology of the country. Whereas Legal Technology provides technical support and improves the working of legal aspects and law firms.


In this article, the focus has been on Legal Technology, also termed as LegalTech. Technology has been powering every aspect of our lives including all the possible fields, and the “legal” is not left behind. Switching to technology or technical assistance for a particular work to be done makes it quick and easy. As Bill Gates said, “Intersection of law, technology and politics is going to force a lot of good thinking.


“Legal” is a very conservative market that is both moving and stagnant at the same time. LegalTech develops software and technical support to the functioning of various aspects of law boosting its pace. This includes accounting, data keeping, client management, and also bigger tasks such as contract drafting and interpretation, argument building, automation of judgments, etc. All of this is possible with the help of Artificial Intelligence (AI)[1] and Machine Learning (ML) [2]. As Lawrence Lessig says, “Law and technology produce, together, a kind of regulation of creativity we have not seen before”.


II. AMALGAMATION OF LAW WITH TECHNOLOGY & SCIENCES:


CodeX- Programs and Centre- the Stanford Law School, is a partnership between the law school and the department of Computer Science by Stanford University. Similarly, The Cambridge Centre for Law, Medicine and Life Sciences (LML), University of Cambridge, is researching and teaching the legal ethical challenge on the forefront of medicine and life sciences. In August 2018, The Global Legal Blockchain Consortium[3] was formed. It drove the adoption and standardization of blockchain in the legal industry. Likewise, there are other major development and contribution of technology in the legal industry.


III. FOUR STEP PROCESS OF CONTRACT INTERPRETATION:


Contracts are statistically made catering to the rights and obligations of the parties to one another. According to a scholarly research by Ryan Catterwell [4], Professor at the University of Queensland approaches to study the various steps in contract interpretation. Further he has specified the steps that can be automated through Machine Learning and Artificial Intelligence.


The process of contract interpretation is a typical task that requires apprehension and awareness. It cannot be completely automated. Anything that happens in a loop of cycle one after the other is termed to be a Process. And by developing a set of logical codes through Machine Learning, the process of interpretation of a contract can be automated either completely or partially.


THE FOUR STAGES -


First, the question that comes up is how we can automate the process of contract interpretation [5] which is actually a cognitive process. It needs the human intellect and thinking to construe the idea and motive behind the different clauses that are set out in a particular contract. It includes the intention of the parties to come together to form a legal bond between them, which further identifies the relevant question that is put forth considering as to why or what is the need for the contract to be interpreted or reviewed.


Secondly, after the question is identified, various sets of competing answers that will be relevant to the question in concern can be formulated. Taking into consideration the main text put out in the contract, and the literal meaning of the words involved, a supporting legally balanced argument is made for each interpretation and the selection of the best option among the set of arguments put forth gives the end result of the contract interpretation.


Thus, the interpretations of the contract can be executed in four-fold steps:

(a) identifying the intention and relevant question,

(b) curating multiple competing answers as the desired interpretation,

(c) making supportive legal arguments to each competent answer, and finally

(d) select the best possible choice.

Here comes the role of machine learning.


Thirdly, the step which deals with legal reasoning can be logically coded through machine learning. To know how the given program can be made to think like a human, we can first identify the main behavior behind determining the process of human thinking.


Fourthly, the step which is choosing the most appropriate answer can be done by artificial intelligence taking into consideration how interpretation results have been in the past. Discussing a similar business idea to standard software developers will lead to the development of technical support for the process of contract interpretation.


Example:

For e.g.: A (the buyer) contracts with B (the seller) to buy 100 dolls for his exclusive retail store. The price of each doll was 10$. B sends A the dolls, but they were of different colors for which the payment was made in advance. A, after receiving the dolls says he only wanted the pink Barbie dolls. B says there was nothing mentioned in the contract about the color or brand of the dolls. Also, he has sent good quality dolls. To this, A contends, that it was understood that dolls are generally more attractive they are pink, and universally pink Barbie dolls were the best fit for his exclusive retail stores. [6]

Thus, if going by the simple language of the contract, B would win, knowing that the type and the color of the doll were not mentioned. On the other hand, A will have chances to succeed when the cognitive approach of critical thinking is applied. Thus, the minor mistakes that happen in manual contract interpretation can be avoided when done with the help of AI and ML.


IV. MARKET WHERE AUTOMATED CONTRACT MANAGEMENT IS ALREADY IN PLACE: HOW AND WHY?


In today’s competitive world, there are companies/institutions/organizations which have already adopted the advanced working of contract management. Evisort, PandaDocs, GetAccept, DealHub.io are the companies to name a few. The automated technique of contract interpretation is an evolved version of manual interpretation. Currently, there are various software companies, who enforce, promote, and assist in legal technologies, wherein one of the most hyped and commonly used software is the contract management software. This software is such that no legal expert should have to spend more time on administrative tasks than actual contract review and analysis. It offers a suite of contract workflow and management capabilities to improve efficiency reduce risk and gain visibility to any contract. It automatically aggregates contracts from across the business, creates streamlined approval processes, and applies advanced artificial intelligence (AI) to provide real-time analysis so the legal, contract and procurement teams can accelerate the businesses.


What is Control Lifecycle Management?

It is the way to centralize contract storage, strengthen compliance, and, automate the creation, execution and management of any type of contractual agreement.

Contract lifecycle management (CLM),[7] automates and streamlines contract processes during key stages. These stages include initiation, authoring, process and workflow, negotiation and approval, execution, ongoing management and compliance (within the repository), and contract renewal. By creating a common language, core templates, unified terms, and repeatable, consistent conditions buyers and suppliers save time and reduce errors. Most contract management software is designed to provide greater visibility into corporate spending; create greater efficiencies in the contract process and lower administrative costs.

According to SAP Ariba CLM [8] speed up contract cycles by 50% and reduce administrative and legal costs up to 30%.


V. CONCLUSION:

The pace at which our universe is advancing, and sciences and technology being at the peak to constantly change and improve every aspect of lifestyle, we have undeniably given in to this change. Law is a very significant part of our lives providing regulation and discipline to our day to day actions. And catering to the billion world population, manual working of attorney will be challenging both administratively and economically. The automation of contract interpretation will ease it out. It will only bring in more productivity and efficiency in the working of law firms and other companies.

[1] https://www.investopedia.com/terms/a/artificial-intelligence

[2] https://expertsystem.com/machine-learning-definition/

[3] https://legalconsortium.org/

[4] https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3542549

[5] https://www.legalmatch.com/law-library/article/contract-interpretation.html

[6] Bisset v. Wilkkinson, https://www.lawteacher.net/cases/bisset-v-wilkinson.php

[7] https://www.lawteacher.net/cases/bisset-v-wilkinson.php

[8] https://www.ariba.com/solutions/business-needs/what-is-contract-lifecycle-management

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