"The Insider by DFIN" is a series of video interviews featuring the latest trends, topics and key perspectives on the global capital markets.
Join DFIN’s President of eBrevia, Ned Gannon, as he shares the latest trends on contract analysis and the latest tips on the successful adoption of AI in this special podcast edition of The Insider by DFIN.
Dana Barrett - Welcome to the Insider by DFIN. I'm Dana Barrett and joining me today is Ned Gannon. He is the President of eBrevia and he's joining me today to talk about AI in legal. So first of all, Ned welcome.
Ned Gannon - Thank you. Thanks for having me, , excited to be here.
Dana Barrett - I want to get into the topic, but before we do that, I want to talk a little bit about you and your background. So can you just sort of share what your background is and how you got to where you are right now?
Ned Gannon - Yeah, sure. So, I started my career as a corporate attorney. I spent a lot of time as a junior associate conducting due diligence and mergers and acquisitions. So going through a target company's contracts, looking for problematic provisions, summarizing their content, and really as part of that process just saw how inefficient it was, sometimes how inaccurate it was, and how costly it was for our clients. So I got together with a good friend from law school who had had a similar experience and we co-founded, eBrevia, partnered with Columbia University's Data Science Institute, where some of their machine learning technology, and essentially kind of spun the company out from there. Grew it over time. We partnered with DFIN in 2015 and, then we're required by DFIN in December of 2018. So I had served as CEO from inception through, the acquisition.
Dana Barrett - And now you're the president now.
Ned Gannon - Yeah. It's a very similar role. Yeah. But I do have boss now.
Dana Barrett - Yeah. Oh, well, that's how that goes. Yeah. So I, you gave a little bit about kind of the background of why you founded eBrevia, but talk a little bit more specifically about what eBrevia does.
Ned Gannon - Sure. So eBrevia is a contract analytics company. We use machine learning technology to analyze and extract data from contracts. I'd say the key to it is, is it's the software is able to identify legal provisions really, regardless of how they're expressed or where they might be buried in a document. We work with some of the world's largest law firms, audit consulting firms, and corporate legal departments to help accelerate that contract review.
Dana Barrett - I mean, I sort of want to dig into that. I know we don't have a ton of time, but how can it know all the different iterations of a particular clause that seems like kind of magical.
Ned Gannon - Yeah. So it's super interesting. And if you think about some of the important clauses in a contract in an M&A situation, you might have a change of control clause, which could be expressed using language like change of control or assignment by operation of law, maybe sale or all, or substantially all the company's assets. So the system learns by examples. It's reviewed, you know, thousands and thousands of examples of publicly and privately available documents and created algorithms based off that to identify these types of clauses.
Dana Barrett - Well, so, and that's that machine learning where it continues to learn as that finds new ways.
Ned Gannon - That's the machine learning piece. And, and I think one of the things that's most exciting for us is, non-technical users that a lot of clients can use their own domain expertise to train the system, for provisions that meet their specific needs for their company or industry.
Dana Barrett - That's cool. Well, that kind of leads me right into my next question was, which is who uses eBrevia, where in the organization does it get used and how does it get used?
Ned Gannon - Yeah, so I think it really depends on the type of organization. If you look at law firms we're heavily used in the M&A department, for example, it could be used on the by side of deals to conduct due diligence on the sell side to help populate disclosure schedules. And a lot of consulting firms were used for a lot of regulatory driven reviews. Increasingly we see data privacy type use cases. And then in corporations a lot of corporations don't know what's in their routine contracts. So they're missing out on revenue opportunities. They're paying for things they no longer use, they're sometimes out of compliance. So the software helps extract that information and then track it over time.
Dana Barrett - Interesting. I feel like I could have used that several times in the course of my life.
Ned Gannon - Yeah.
Dana Barrett - Well, we won't talk about that.
Ned Gannon - We'll get you a discounted license.
Dana Barrett - There you go. So obviously this is not taking the place of lawyers, but they still have to write the documents. Right. But, how do lawyers feel about artificial intelligence for contracts? You know, not just eBrevia, but across the board.
Ned Gannon - Yeah. So, and it's interesting eBrevia and when you see AI deployed, for lawyers, there are tools specifically focused on kind of the contract drafting piece and eBrevia typically comes in kind of post execution after the document's been negotiated and signed. But I think where our sweet spot is large scale contract review projects. So this is very rotework. It’s work, a lot of attorneys don't like doing it can be an accurate work. If you think about a junior associate up at two in the morning, going through these documents, it's easy for things to fall through the cracks. I saw that a little bit myself, you know, when doing it.
Dana Barrett - So I'm sure you never did that.
Ned Gannon - Never. Yeah, no, we won't. We won't talk about some of those deals.
Dana Barrett - They're not worried about sort of losing those billable hours.
Ned Gannon - Well, it's interesting, you know, if you think about the types of billable hours this helps with, it's hours that they're already getting a lot of pushback from clients on. So clients are often more comfortable paying a thousand dollars an hour for that partner's expertise, but not the 4 to 500 for this junior associate rotework.
Dana Barrett - Right. Who's just sort of scanning a document now.
Ned Gannon - Yeah, exactly. And it can help them win more business as well.
Dana Barrett - So at the end of the day, it's a plus.
Ned Gannon - It is a plus and, and there's increased competition across the board between law firms and other service providers. So if you're not adopting this technology, one of your competitors probably is.
Dana Barrett - Right. Well, and at the end of the day, they may lose a few billable hours on it, but they're also getting it to their clients faster.
Ned Gannon - They're getting a better work product to their clients faster. And they're really being able to focus on what they went to law school for, which is the higher level, more sophisticated, legal work.
Dana Barrett - That makes sense. So what about trusting a system like eBrevia, if I'm a lawyer or a client, am I like, do I, you know, is there any like sort of concern that, well, maybe it's not going to catch at all because sometimes when I tell Alexa to do things, she doesn't do the right thing.
Ned Gannon - Yeah, sure. Yeah. I appreciate the question. Yeah. So I would say when you think about that analysis, it's not so much the human against the machine, but really that attorney using the software against the attorney without the software. And as I said, you know, it is easy for things to fall through the cracks. Humans make mistakes, the software never gets tired, but when it's used in tandem with the person, that's really where you get the optimal results.
Dana Barrett - Got it.
Ned Gannon - And we don't, you know, we don't recommend people just put their documents through the system and blast that work product out to a client. It's really a very kind of process used in tandem. The whole user interface is designed to have the human supplementing, what the machine is doing.
Dana Barrett - That makes a lot of sense. So if I'm a client who's never used this kind of software before, and I'm thinking about it and I'm looking at various contract analytic vendors.
Ned Gannon - Yeah.
Dana Barrett - What am I looking for?
Ned Gannon - So I think first of all, you want to understand your use case what the requirements, for, that are going to be. And then I think universally, there's a few points you'll touch on as part of your consideration. So one is thinking about the accuracy, the software to your earlier question,
Dana Barrett - Rright.
Ned Gannon - It’s helpful to either pilot the software of maybe a few different vendors to see which one is performing the best for you, or look for objective third party studies to see how they rank against each other.
Dana Barrett - Right.
Ned Gannon - The user interface is really critical. You want something that's going to fit naturally within the attorney's workflow. So it won't take them a long time to get up to speed. And then I think what's also very important is just the service and support you get from the vendor. So at eBrevia each, client is assigned a project manager, corporate attorney who's really walked in our client's shoes. They understand the processes and pain points, they practice law. And I think when you do encounter challenges, that's a helpful skill set to bring, for coming up with solutions and ways to navigate them.
Dana Barrett - Right. I mean, I think we've all been in that situation where you get a piece of software, you know, you've downloaded something, whether it's even just for your personal home finances or whatever, and then you're sitting there looking at it, like, okay, now what do I do?
Dana Barrett - How do I use this? Where's the whatever button where's the menu for this or that. Right. So let's talk about implementation and adoption. What is the best way for companies to start using this? You mentioned already that there's, you know, there are support people and to help get it all going, but, you know, what's the really the best way to get this into the company and get, you know, the employees, the lawyers, the users to want to keep using it?
Ned Gannon - Yeah. So what we see is typically you will engage with the group that originally brought us in, and that's kind of our beachhead within the organization. I think as that group starts to get up to speed and utilize the software, we look to those internal advocates to really celebrate some of the quick wins and promote the, the software organically. But I think the user trainings very important. So we'll have live training sessions, we have online tutorials as well, all to help facilitate that process. And then it's just, kind of spreading the word. We have a dedicated support team. We’re happy to do individual demos, group demos, really just to, to promote the clause.
Dana Barrett - Yeah. Is there, I mean, I understand that it's all part of DFIN now, right. And so I assume this sort of fits into sort of the overall suite of what DFIN has to offer from a SAS and software perspective. How do you see that fit?
Ned Gannon - Yeah. So there's, a number of products eBrevia is very closely aligned with. So if you're in an M&A transaction, for example, you might be using the Venue data room. eBrevia has a very tight, integration with that product.
Dana Barrett - Got it.
Ned Gannon - So in addition to polling documents out of Venue and processing them in eBrevia, eBrevia can also push information back into Venue. So folks can see that displayed within the data room.
Dana Barrett - So can you give me an example of where that sort of full suite of products and eBrevia in particular have been, you know, helpful to specific clients or where you've had some real successes?
Ned Gannon - Yeah, sure. In terms of, eBrevia integration with the product suite, so there's certainly plenty of examples of utilization of eBrevia within Venue data rooms as part of the diligence process. I would say, you know, as I think about just as an example of some of the ways the software adds value for clients generally, so we had a large corporate client in the UK, that had a need to review documents about 35,000 contracts. So massive contract review project. Yeah. And utilized eBrevia, they actually ended up saving 4,200 hours over the course of the project.
Dana Barrett - Wow.
Ned Gannon - And yeah, about 250,000 pounds. So it's really you know, really tangible in terms of the results. I'd say typically what we see is that the software accelerates contract review anywhere from 30 to 90%, most of our clients, finds it saves them about 50% of the time as part of the review. And then you had asked about accuracy a little earlier as well. I think that's really interesting. So when you compare let's say just an attorney doing contract review manually to an attorney doing contract review with eBrevia using eBrevia actually makes you 10 to 60% more accurate.
Dana Barrett - Wow.
Ned Gannon - And these are numbers coming out of major law firms who have done very granular studies on these types of measurements.
Dana Barrett - Well, and when you were talking about the number of contracts at the UK company, how many was It again?
Ned Gannon - So that was, that was 35,000.
Dana Barrett - Okay. So that is a way different concept when you're talking about it sort of one by one, you're thinking, oh, you know, you're saving a lawyer a few hours about 35,000 contracts and that's a lot of money and a lot of time, and I could see how you could easily miss something too.
Ned Gannon - Yeah. Yeah. It's a tremendous amount of tremendous amount of time, tremendous amount of money. We do have, we do have clients that are believe it or not putting through hundreds of thousands of contracts in a single project.
Dana Barrett - Wow.
Ned Gannon - That’s at the top end of what we see. Yeah. But, we've needed to scale the software accordingly to be able to accommodate those types of volumes.
Dana Barrett - I mean, I'm sure you have the numbers around, like on a basic M&A contract about how many hours it saves. Yeah. And you can just sort of do that multiplier when you're talking to a potential client, listen, you can save this many hours per document and you have 35,000 documents. Yeah.
Ned Gannon - It’s very easy to calculate the ROI.
Dana Barrett - Wow
Ned Gannon - And it makes the software steal in terms of pricing. Yeah.
Dana Barrett - Got it. That makes a lot of sense. All right. Let's get the crystal ball out. I feel like I'm going to be doing that a lot, on this show Talk to me about the future of AI for contract analytics.
Ned Gannon - Yeah, so it's, I, I think it's still early days, you know, we're really scratching the surface of what AI can do. So I would imagine and what I predict is you'll continue to see it move up the value chain, usurping more and more of the human tasks. I know eBrevia, for example, we recently released some functionality that is able to provide additional layers of analysis on top of what is extracted from the documents. And then just as importantly, I think you'll also start to see it move out horizontally. As I mentioned earlier, non-technical users, so these are not data scientists or software engineers, can just easily train the software themselves to extract very custom information and meet their specific needs. And it's a great way. It's always exciting for us when someone says, okay, I see a use case in this domain, teaches the software, and then it's adding value there as well.
Dana Barrett - Well, and I assume it could go beyond contracts too, and just any sort of documents that you want to review.
Ned Gannon - Yeah, yeah. So while we primarily focus on, on contracts initially, we have seen it utilized for SEC filings insurance policies, invoices. So there's a tremendous amount of potential generally.
Dana Barrett - Interesting, really fascinating stuff. I like that it all sort of stemmed from the fact that you were tired of doing grunt work.
Ned Gannon - Yeah, yeah, yeah. I've done grunt work. Yeah.
Dana Barrett - Yeah. And now you've got this robust product that, you know, is so useful across this large organization. And in, you know, in this industry,
Ned Gannon - It’s been tremendously fun to build it. And I think one of the things that's most satisfying is when I do hear from a junior associate and they're like, this saved my weekend or I wasn't there till two in the morning because I had this tool. , That's why I created, that's why we're always continuing to enhance it.
Dana Barrett - I love it. Ned, thank you so much for being here today and sharing the eBrevia story. I really appreciate it.
Ned Gannon - Yeah, my pleasure. Thank you so much for having me.
Dana Barrett - This has been the Insider by DFIN, we'll see you next time.