Challenge: Reduce Contract Volume and Legal Spend
Solution: Convert to Artificial Intelligence (AI) with Contract Playbooks and Employ a Different Staffing Model
“There was no way we could continue to operate the legal procurement department status quo given the increased run rate of contracts” says Debbie Hoffman, who was Western Union’s (WU) managing associate general counsel, now Albany Law co-director, Financial Compliance & Risk Management Graduate Program, and adjunct professor.
“Meanwhile, we had to hire quickly because a key lawyer quit — she was overwhelmed as a result of the overload.”
Due to internal policy changes and tech initiatives, contract reviews needed by WU’s legal department had spiked by 46 percent from 2019 to 2020 and by more than 40 percent from 2020 to 2021, with similar growth forecasted for 2021.
The contract review spike, coupled with a process dependent upon email communications, caused a backup that slowed down contract delivery times to WU business units. Because of WU’s legacy outdated processes dependent email, the increased contract flow multiplied the cost of outside counsel and the spend per contract in this area was becoming too high. The global sourcing and procurement department, procurement legal’s major internal stakeholder and partner, was suffering and frustrated.
Western Union’s legal procurement team determined that major chunks of time were being spent recreating contracts that could be automated and easily reviewed by stakeholders by using a sophisticated AI contract lifecycle management (CLM) system. Additionally, a lawyer could be hired from outside the United States for less than a paralegal allowing WU to strengthen one of the company’s overseas offices to review foreign language procurement contracts.
Getting the Business on Board
“Everybody agreed change was needed but when we started talking about a contract management platform, the cost, and hiring from outside the US, it caused a little bit of anxiety,” says Hoffman.
“Other legal teams at Western Union had looked at contract lifecycle management (CLM) systems and determined it was cost prohibitive, so they thought our less expensive proposal might not be good.
“Global sourcing and procurement agreed to pay for the new platform. David Hurtado, chief procurement officer — said, ‘We've just got to do this,’” Hoffman notes. “Global sourcing and procurement leaned on legal because they agreed we needed a more efficient way of reviewing all of the provisions of our vendor contracts. More importantly, we all wanted a process that would allow legal to review only the provisions that that needed an additional review, and not always the entire contract.”
Everyone wanted to reduce the cost incurred in using outside counsel and to streamline the overall contacting and contract review process.
“Morale was exceptionally low. I walked into a big transformation challenge,” Hoffman says, “that thankfully was recognized from the top down.”
New Way of Connected Contracting
Legal procurement set out with the global sourcing and procurement team to develop a multi-stakeholder CLM contracting along with:
- Evisort, to integrate its artificial intelligence (AI) system with software already in place at WU, Workday Strategic Sourcing.
- Evisort was among three demos WU saw. “Evisort offered the best price and had the workflow, intake, as well as immediate AI review of all our contracts. Evisort’s platform was exactly what our teams at Western Union needed. Even better, we really liked the people we were collaborating with on this transformation project,” Hoffman says.
- “We think of ourselves as a research facility developing new artificial intelligence (AI),” says Jerry Ting, Evisort’s CEO and co-founder, a former lawyer who now lectures at the Harvard Law School in addition to leading Evisort.|
- And law firm Husch Blackwell (HB), whom WU already had been working with, to write the contract playbooks.
- “They were super motivated and knew what they wanted to do, which was exciting and helpful,” says Peggy Barlett, Husch Blackwell, senior counsel. “Husch Blackwell provided the playbook details and identified legacy processes and concerns for WU to discuss and ultimately resolve.”
A lawyer in Lithuania was hired by WU at a lower salary than a US-based paralegal,“ which also allowed us to build our international office and legal team there,” she says.
“It was encouraging to us to see that we could build such a talented legal procurement team in Lithuania which could also handle all types of international contracts,” Hoffman notes.
“People first, technology, process mapping — and of course how you roll out the transformational changes is the key to success. It certainly always helps to be creative.”
Contract Transformation Playbook
“Our detailed collaboration with WU and the time invested by both parties in the initial project planning phase allowed us to plan collectively as we learned what WU needed, which, in turn, allowed for clear process development along with needs assessment,” says HB’s Barlett.
WU and Husch Blackwell comprehensively analyzed certain WU contracts to identify and classify high-risk exposure and primary areas to create the different playbooks. Husch assisted with developing eight templates and five playbooks. The playbooks contain detailed plans for specific contracts (SaaS (software as a service), foreign, licensing, marketing, etc.).
The playbook plans incorporated WU business activities for better budget tracking and reporting, goals, guidelines and reporting.
“A key component in the project was listening," says Bartlett. “We needed to learn how to help WU while providing transparency and predictability around our pricing. Only listening and continued dialogue allow for the in-depth analysis and support clients like WU need to get the job done.”
Within the contract analysis done to write the playbooks, key contract terms and clauses were identified that were critical to use or required in many contracts allowing WU to eliminate the repetition and get them standardized within AI contracting platform. These contract terms were essential procurement and other areas of the business, such as privacy and data security, intellectual property, litigation, insurance, and communications.
Contract Process Protocols
Process protocols for WU’s contracts were put into place to direct business stakeholders, legal and operations on handling procedures for repeatable tasks on contracts, including intake, risk assessment, review, and approval.
The Evisort Platform
“Evisort’s AI-powered platform helps with the drafting of contracts, analysis of terms and agreements, like expiration dates, reporting against critical contract areas, and more. It helps teams quickly analyze and take action on a high volume of contracts,” says Evisort’s Ting.
“Even with different languages being used, customers can upload a 35-plus page contract and in seconds, Evisort’s AI pulls out more than 70 data fields automatically,” he notes.
For most companies, “contract reviews are traditionally done one by one, by manually entering the customer or vendor information, and this means they may have blind spots in their contracts because there are too many data points in any business’ contracts to fully comprehend,” says Ting.
“It is a terrible time waste to go through page by page when solutions are available. In the past 6 – 12 months, though, I’ve been seeing a transformative change in the field.”
Does the AI ever err? “For Evisort’s AI-powered analysis, we’ve worked hard to train the AI on millions of contracts, so the vast majority of results don't need double-checking or corrections,” he says. When they do, Ting says, it’s often physical contracts that pose a handwriting legibility issue or have a blemish on the document.
“Out of necessity, the pandemic clearly shifted how companies and individuals view technology,” notes Bartlett. “We have seen how technology, including AI, can help create efficiencies, provide processes, and produce work product for in-house legal teams. We will continue to see more as technology evolves. In-house legal teams will drive the utilization of technology based on company and department needs, arguably creating a partnership between the lawyers and the technology that allows them to do their legal work while supporting business needs.”
“The burden on the procurement team was particularly heavy,” notes Ting, “because of the level of scrutiny required for the variety of contracts they had internationally. Now, the team can handle the contracts all in one place, and AI takes care of some of the previously manual work.”
Assignment Maps and Work Streams
The global sourcing and procurement team is able now to independently handle numerous contracts and seamlessly send those needing review to the legal procurement team. And each team can track who is accountable for reviewing and approving contracts.
Online Collaboration Portal
All contract details are now accessible to relevant members of the teams.
Upskilling
Implementation and training was “quite a process,” Hoffman says. There was griping and, she heard, reluctance, so, they decided, the best approach was step by step. Global sourcing and procurement rolled it out with multiple trainings and the team wasn’t mandated to use everything right away. “What helped was how collaborative they were,” she says.
“We held office hours every week, varying Lithuanian and Mountain Time,” she says. We sometimes had themes like insurance, privacy, or they could come to ask questions. Sometimes no one came but we kept it up because often they did.”
Triumphs
Despite the 46 percent increase in contracts from 2019 to 2020, and by more than 40 percent from 2020 to 2021, WU achieved a faster, timelier contract turnaround and a sharp decrease in associated outside legal spend. In particular:
- From 2020 to 2021, they cut associated outside legal spend by approximately 18 percent.
- Then, in 2021 to 2022, they were able to slash associated outside legal spend by approximately 70 percent.
- The average life cycle of a contract subject to legal review dropped by 65 percent from 40 days in the first quarter of 2021 to 14 days in the first quarter of 2022.
- An Evisort repository for storage of all executed contracts and related documents is easily searchable for creating stakeholder reports and allows the procurement and legal teams to advise other departments on contract projects that arise.
What’s Next
“I think there are components that will stay,” says Hoffman. “Some will drop off. That's the natural evolution of the process.”
And, Evisort has “tremendous AI capability,” she says. “Hopefully more of that will be explored.”
Getting Skilled
“During the course of my career, I saw several times when lawyers would just approve outside counsel bills without reviewing them. This is just an example of how attorneys get overwhelmed by aspects of their jobs that could be made simpler by technology,” says Hoffman. “I never considered myself a legal operations leader, but I’ve seen over my career that if you don't take these types of initiatives, the process doesn't get better.”
Legal ops professionals need the drive and skills to enhance legal operations, notes Hoffman. “There are lawyers who are phenomenal in specialties, but not skilled in operations. You need to be able to dive into improving a process step by step and not get overwhelmed by a situation that some people see as unfixable. You have to be able to say, ‘this can be done.’ It might take a year, or year and a half, but you can come up with a roadmap and milestones.”
ACC's library of provisions helped WU too, particularly in reviewing everyday procurement contracts. And the networks helped. “I was pretty active. I talked to a lot of people at the beginning of this process — for example I was thinking about outsourcing a project manager and my peers helped me figure out what do.”
For Evisort’s Ting, ACC helps in figuring out how legal departments can avoid becoming a cost center. “Showing how the business can manage costs while delivering more impactful outcomes to stakeholders elevates the GC’s office at the executive level.
“And ACC is a unifying body,” says Ting. “ACC brings vendors, like Evisort, together with the lawyers, thought leaders, and legal enthusiasts.”
Balancing
Using the organizational skills of a legal professional, Hoffman plans her down time on a calendar. “I make exercise a priority and plan four days a week right into my calendar. I have trouble turning off —I'm a check-the-box kind of a person so I plan it and it works for me.” she says.
“Being an entrepreneur,” says Ting, “like being a lawyer, is a 24/7 job. It’s important to make time for yourself and your family to recharge though, so when it’s time to get dinner, you get dinner and stay present in the moment. Of course, sometimes you do need to finish work later that night.
“Part of what drives me at Evisort is that we are providing a solution that helps lawyers get their precious time back so they can also spend it with the people they care about. At the end of the day, that’s really what matters most for all of us.”
