Clause Reference and Creation Tool Exemplify

I met with George May, Bill Bice, Rob Anderson*, and Shannon Brown Janicki of legal technology start-up Exemplify on August 29th at the ILTA 2012 conference (see other coverage of Exemplify's launch here).  Exemplify is a large firm solution that leverages the massive "EDGAR" database of corporate filings in order to improve the speed and effectiveness of attorneys drafting transactional documents.  This post is based on a demonstration of the product. I should note by way of disclaimer that I have not practiced as a transactional lawyer, although I work on systems and precedent collections on negotiated litigation documents such as stipulated protective orders and settlement agreements. 

*I thought I had met Geoff Petrie but I was mistaken. 

Overview

Exemplify is, I believe,  a new entry in the set of legal technologies intended to assist transactional document generation.  It is a browser-based clause reference and creation tool that compares clauses you provide with clustered iterations of standard clauses created by dynamic reference to the agreements contained in EDGAR.  Its admirable stated goals are to allow a more junior associate to develop a better draft of a transactional document faster, and to allow quick comparison and evaluation of clause language against market and against language from particular firms, financial institutions, or industries. It works at the clause level, a design that matches the way I understand corporate attorneys approach most drafting tasks.

How It Works

Exemplify starts with an empty box in a browser.  You paste in a clause or multiple clauses from your proposed agreement.  It then compares each clause you provided against the model from EDGAR most similar to the one you provide, and provides a redline against your agreement for each clause.

To get to the next closest iteration of that clause you click an arrow, the application constantly showing a redline against your original clause.

It works against a huge database developed by reference to EDGAR documents that aligns thousands of similar clauses from a huge variety of documents.  It has an initially clean and simple interface, that gets only a little more complex as the attorney digs into clause development.

As you work through clauses you can save them and so by the end of clause development work have a complete document ready to be pulled into a document management system and developed into a very good first draft.

Once you are working on a clause you can filter on metadata about the hundreds or even thousands of agreements from which the clause iteration appears. The law firm filter may be most significant for negotiators, but drafters can also filter on financial institution, date, parties, and industry.

Implications For Traditional Drafting Process

An associate creating an initial draft of a transactional document might typically do the work by finding four or five samples; tracking down the particular clause at issue in each; comparing the langage between each; and then copying and modifying the language that best suits the particular deal context.

In my view, Exemplify ought to eliminate time associates normally take to find matching agreements and the matching clauses within them, and ought to also greatly reduce the time spent in reviewing and comparing clauses.

It also should greatly reduce the time taken to find a version of a clause that meets your circumstance (for instance, does the agreement address a Letter of Credit). 

Comparison with Existing Approaches

Substantive KM Resources 

Firms with knowledge management programs have developed libraries of transactional documents and related resources.  Laboriously created annotated forms show associates what the "firm standard" clause is for specific circumstances such as buyer-favorable, seller-favorable, and neutral; memos and articles may provide more information about the context of language changes; and meetings and trainings provide additional opportunities for associates to learn directly from skilled practitioners.  In addition to information about clause language, KM resources often provide practical and strategic advice in context, as on negotiation or proper redline provision.   

These KM resources provide more context and depth than Exemplify can. They have two limitations that Exemplify does not:  they do not necessarily reflect what is "market," and they are not updated without additional input of senior attorney time.   Because of the necessary investment, they are typically  targeted at a particular categories of common documents, where Exemplify will pull in whatever documents are publicly filed regardless of their frequency. I can imagine that Exemplify might help a transactional KM attorney work faster, by putting common clause variants at the attorney's fingertips, with the attorney supplying experience-based understanding of the reasons for the different variations.  

Document Assembly 

Traditional document assembly products help attorneys quickly draft one or more legal documents (typically transactional documents) through automated questionnaires that "fill in the blanks" or provide options leading to the program incorporating or excluding specific clauses from the finished document (for a publicly available example, visit my firm's Founder's Workbench site, which will assemble papers for incorporating a Delaware corporation).  As with Exemplify, what results is a much more advanced draft than what is possible with "mere" reference to a single sample.

Development of the document assembly "template" that contains the language options and the like, however, is very challenging and time-intensive, requiring high-level legal knowledge about a document's logical structure and some ability to handle the complex software involved.  Templates are developed through laborious reference to existing firm and individual lawyer standards,  and may also refer to clause language from outside the firm.  Document assembly templates do not dynamically refer to the set of documents out in the market.

kiiac

Kingsley Martin's kiiac application reportedly greatly improves the speed of developing document templates, but kiiac must be "fed" a large corpus of documents and itself is a complex piece of software not as easily accessed and leveraged by practicing attorneys (I have seen several demos but have no hands-on experience with this tool). Generating a comparison against a given clause requires many more steps. kiiac is complementary with document assembly in that it can show template compilers the standard variations within a subset of a firm's documents.

kiiac is also not tied into EDGAR, which means that it must be fed a document set or corpus and that it can cover all transactional document types, not just those addressed through publicly filed EDGAR documents

kiiac does, however, provide statistical analysis of all variations at once and a "checklist" of all possible clauses, two features Exemplify largely lacks.  It clusters clause options by the degree of frequency rather than by their similarity to presented language.

West KM Transactional

This Thompson Reuters product automates the breakdown of internal transactional documents into clauses and provides some level of profiling of transactional document type as well.  It allows quick location of sample language, but does not conduct the type of comparison of clauses that is found in KIIAC or Exemplify.  West KM Transactional relies on a firm's own documents. 

My firm has West KM for litigation.  This tool is in a way parallel to Exemplify in that it shows the validity of cases and statutes referenced in a firm's internal briefs by drawing on the massive and frequently updated Westlaw KeyCite system, (showing, for instance, red, yellow or "citing reference" flags) where Exemplify assesses a given clause by comparing it to  the massive and frequently updated EDGAR database of transactional documents.

Summary Chart

If you compare the transactional document source with the primary function of these tools, you might get a summary chart that looks like this.  

External Agreements	EDGAR	Exemplify
Internal Agreements	West KM	Document Assembly	KIIAC
	Shows Clauses / Documents	Creates Documents	Show & Compare Clauses