Join us once again at the WorldCC event in Phoenix as we chat with TermScout CEO Otto Hanson. Otto told us all about his journey into legal tech and the inspiration behind the creation of TermScout, an indispensable and one-of-a-kind tool in the legal space right now. Read on to learn how Otto and his team are helping companies cut down their negotiation times while allowing customers to make informed contract decisions using this revolutionary platform.
Q: Tell us about TermScout.
TermScout is all about making contracts simple and useful from both sides. For buyers, the platform helps them analyze incoming third party contracts and make smarter, faster decisions about whether those contracts meet their requirements. It also allows them to see how a particular company’s contract compares to others on the market.
From the sell side, the benchmark that TermScout provides gives companies an understanding of where they stand within the market in terms of customer-friendly contracting. Using the market data that TermScout supplies, businesses can put in the work to make their contracts reasonable. Once the platform deems their contracts customer-friendly, they receive a certification badge, letting clients feel at ease signing without all the usual back and forth.
Otto sees a ton of value in getting relationships off on the right foot. Sending out an egregious contract usually results in an equally egregious counter offer. Instead, showing customers that you’re working hard to take care of them from the start makes them want to stick around longer or even recommend your company to their peers.
Otto went on to explain that the “holy grail of contracting is frictionless contracting.” Click-accept contracting already exists with apps and iPhones. Part of his goal with TermScout is to create an informed version of click-accept contracting that works in the business world. Their certification gives customers the information they need immediately without having to pick through each clause of the contract. They can click accept with the knowledge that the contract meets their requirements and fits the market. In this way, he hopes that the platform can help organizations, particularly software and IT companies, reach a point where business happens on a click-accept basis.
Q: Can you tell us about a high level case study from a company you’ve helped? What benefit have they seen from working with your team?
About 2 years ago, Otto and his team began working with Freshworks, a large CRM vendor. Upon reviewing their contract at the time, TermScout delivered a less than favorable rating from the perspective of Freshwork’s customers with the market data to back up the finding. Needless to say, Freshworks wasn’t exactly thrilled with their rating, so they started benchmarking their contract against other CRM vendors and top companies in their field.
As a result of the work they put into renovating their contract, Freshworks turned their rating from unfavorable to the most customer friendly CRM contract in TermScout. Outside of CRM companies, it even ranks as one of the most customer friendly contracts in the entirety of the platform, among the top 6-7% of contracts they ever reviewed. TermScout certified Freshworks’ contract as “Customer Favorable,” a badge offered only to elite contracts that are exceptionally friendly for customers.
An example of the type of data TermScout publishes to illustrate to potential clients why Freshworks’ contract could be deemed favorable in relation to others on the market is that the contract offers a secondary cap on liability covering data security claims. This is a feature available only among 3% of other vendors in the space, setting Freshworks apart from the crowd.
Sales teams can point to TermScout certifications like these when closing deals with customers. Freshworks observed between 30-40% reductions in the number of counterparties pushing their own paper or redlining the original contract. This cuts out a huge amount of back and forth and negotiation and allows companies to do business on their own paper, which is often more favorable for software and IT organizations.
Q: How did you get into the legal tech space?
Many of our guests have wound up in legal tech almost by accident, but Otto jumped into the space with a mission. He was working as a corporate attorney in Denver when a client came to him and said, “Make our contract as aggressive as possible. Gouge customers’ eyes out.” Otto explained that the client had noticed a pattern where customers blindly accepted contracts without actually reading the terms. They wanted to use that fact to their advantage by creating terms that highly favored the seller while exploiting the buyers.
But doing that didn’t feel right to Otto. He explained that the absence of market data surrounding contracts and the shared understanding of what fit the market and what didn’t incentivized that type of opportunism he saw in his client. So, he decided to create what he viewed as the natural solution to that problem: a neutral independent arbiter of contracts. He designed a way to present market data about how a particular contract stacks up against others so clients and companies alike would be able to make more informed decisions about contracting. And thus, TermScout was born!
Q: How do you see TermScout integrating with CLM vendors?
TermScout is looking to provide their offering to CLM vendors as well. In fact, their first AI-only contract review product came out this January. Otto thinks it will be a great solution for CLM vendors to be able to bring third party AI capabilities into their existing platforms.
He also added that they’re not looking to turn TermScout itself into a CLM. They don’t want to touch workflow, contract repositories, or anything of the sort. Instead, their goal is to be a point solution for CLM users within the platforms.
Q: Tell us about your alliance with WorldCC.
TermScout partnered with WorldCC to offer members a free upgraded account on the TermScout platform. At the moment, anyone can log into TermScout and access the public database, which contains contracts that have gone through AI review and have also been verified by humans on their team. The database has over 1,000 contracts, including most standard online contracts like those from Microsoft and Google, as well as deep data and analytics about them.
The Scout Plan, being offered exclusively to WorldCC members as part of the partnership, includes an upgraded plan (normally $99/month) free for 12 months. According to the TermScout website, the plan covers the following features:
- Market data access.
- Unlimited contract benchmarking.
- Unlimited access to clause insights.
- Unlimited AI contract analysis.
- Discounted Verified™ contract reviews.
WorldCC members definitely won’t want to miss out on such a killer offer!
To connect with Otto, head over to his LinkedIn page. To hear more exclusive chats with expert guests offering valuable legal tech advice, check out the Contract Heroes podcast and be sure to subscribe so you don’t miss an episode!
