In this episode of Contract Heroes, we were joined by a titan of the legal tech space, Zach Abramowitz. Zach has a long history with law, media, and technology. After working as an M&A attorney in NYC for a few years, he started collaborating with legal publishers, a gig that eventually led to him publishing conversations about legal tech in 2015.
Zach evolved into a legal tech columnist before starting up his own consulting company, Killer Whale Strategies, dedicated to helping legal teams capitalize on the disruption taking place in the legal space at the time. To this day, he continues to publish legal tech content while investing in startups and providing his clients with all the information they need to know about the current state of legal tech.
We had a great conversation with Zach about his perspective on the constant changes taking place in legal tech as well as his predictions for the future of rapidly developing tools like CLM. Read on to learn more!
Q: What trends are happening right now in the CLM space?
Zach did more than just lay out the trends he’s noticed in CLM. He even hit us with some forecasts of the future based on those trends and the potential impact of generative AI like ChatGPT on legal tech. Check it out!
1. CLM will specialize vertically to meet client customization needs.
Zach explained that, pre-ChatGPT, CLM has had an adoption problem rather than a marketing problem. Organizations know that they should be looking into CLM. The real issue lies in finding the right tool to suit the individual needs of the company and successfully implementing that tool in a way that drives user adoption.
Every organization is unique, so, naturally, every CLM implementation is unique too. Companies want to be able to customize their CLM experience. Though small changes are often quite easy for the vendor to incorporate, bigger customizations eventually require coding. Over time, it becomes more and more difficult to update the CLM system, especially if the vendor’s tech team has to ship out different types of code for every organization using the tool.
Due to this rising demand for customization, Zach predicts that there will be an equivalent spike in vertical specialization for CLM tools. If you’re such and such a company in the market for a CLM, you’ll end up going to a certain provider who specializes in CLM solutions designed specifically for companies like yours. That way, there will be less customization needed for the tool itself, as many of the features will already be steered in the right direction.
Companies can already begin to narrow down their search for the perfect CLM solution by looking for vendors and implementation specialists who can show them case studies of successful implementations they’ve done for companies in similar industries or with similar needs. For example, a fast food franchise might not want to use the same CLM tool as a pharmaceutical company. There may not always be a direct match between company and vendor, but it’s a good place to start.
2. Generative AI will help CLM reach product market fit.
Zach believes that CLM has not yet reached product market fit, but ChatGPT could be the catalyst that finally pushes it over the edge. The core features that make CLM implementation difficult are those that involve pulling structured data out of unstructured data like contracts. And without that data, it’s hard for the CLM to function properly.
Generative AI will make it much easier to get that structured data out of your contracts, even legacy contracts. This new and exciting form of AI can, at a certain level, read and understand what it’s reading. That means you can have much greater confidence in what it’s actually pulling from the contracts. Not to mention, it will take a lot of the hassle out of the contract drafting process.
In order for CLM to really achieve product market fit, something needs to happen on the product side and the market side. Zach explained that the market side of CLM is very aware of generative AI’s abilities, which will boost confidence in the power of AI-assisted CLM. On the product side, generative AI will be able to fix a lot of the things that currently make CLM implementation and adoption difficult, including data extraction, contract drafting, coding, and more. Developers may even be able to find bugs and write code using ChatGPT.
Q: Do you think we’ll see a rise in managed services like companies outsourcing the upkeep of their legal tools?
Zach does see a rise in managed contract services on the horizon, since that seems to be what happened in E-billing as well. However, whether or not a business decides to outsource its contract services will likely depend on the design of the company itself. Some CLM implementations involve creating a “contract center of excellence” that internally handles all things CLM-related. Organizations that choose not to create that center will probably continue to rely on outside consulting companies for a fair amount of their contract upkeep.
Zach went on to explain that, though his company makes investments all throughout the legal tech space, he found it difficult to choose a winner when it came to CLM. TermScout, the digital contract badge that verifies a company’s contracts are favorable to customers, is one contract tool that he highly recommends, but until recently, was unsure which CLM companies would be the ones that ended up with an edge. Once again, ChatGPT and other generative AI services may play a deciding role.
According to Zach, the generative AI trend could potentially give certain CLM solutions an advantage over others. Some companies focus on the AI and data extraction aspects of CLM while others prioritize workflows. The workflow companies may have gotten a leg up on their AI-focused competitors now that generative AI tools have become more easily accessible. As Zach put it, “Data extraction companies are at a disadvantage because they’ve been investing in building a boat, but someone came out and open-sourced airplanes.”
Of course, another tech trend could pop up in a few years that shifts the market yet again, but that seems to be the path CLM is currently taking.
To connect with Zach, head over to his LinkedIn page or the Killer Whale Strategies website. And to hear even more exclusive chats with expert guests offering valuable legal tech advice, check out the Contract Heroes podcast.