Contract Is Code!

Abstract

To many lawyers, the notion ‘contract is code’ may seem far-fetched and unrealistic. Indeed, business contracts contain legal terminology, yet almost all are written in human language and not in software code. It is hard to imagine a world in which contracts are not the outcome of human activities, and especially of lawyers’ activities. Meeting with clients and opposing counsel, assessing the matter, drafting and negotiating documents, shaking hands and signing papers—how could machines ever do all of these things? And yet, this digital contracting world already exists! Smart Contracts and Blockchains no longer require intermediators like law firms and banks to execute and record business transactions; Artificial Intelligence (AI) systems assemble contracts and predict the likelihood of winning legal cases in court; and the Internet of Things (IoT) enforces contractual rights and obligations directly via the product itself: if used illegally, the product does not function. These intelligent technologies change both what lawyers do and how they do it. They will not, however, replace lawyers or render the legal profession obsolete. On the contrary: As the digital world and innovative business models become regulated by material law, new practice areas for lawyers emerge. Automating repetitive tasks leaves more time for core legal deliverables such as compliance; moreover, technology provides better insights into legal and contractual data and enables innovative services for internal and external clients. In this article, we refer to the automation of the contracting process as Smart Contracting. Smart Contracting manages traditional legal language contracts as digital assets in a central repository along a lifecycle. Analyzing the content of these legacy contracts reveals business opportunities and reduces legal risks. The whole contracting process becomes smart through simplification and digitalization. This article first presents a Contract Lifecycle Management (CLM) process model which was jointly agreed on March 13, 2019 at the SAP CLM Process Forum in NYC by representatives of Airbus, Arcadis, Boeing, Lockheed Martin, Meggitt, Microsoft and SAP, and with input from IACCM. On the basis of this previous work, we now here analyze which activities within this CLM process can be automated using intelligent technologies. Finally, we outline how a Common Legal Platform may facilitate Smart Contracting.