People who work with contracts have available to them an increasing number of information-technology tools that seek to improve your contracts or speed the contract process, or both. I recently became aware of a new entrant, Ridacto. To find out more, I had a conversation with Max Mednik, Ridacto’s founder and CEO; you’ll find it below.
Ken: What’s your background?
Max: My background is actually on the technology and business side, not on the legal side. I think that’s one of Ridacto’s strengths: our team approaches problems with the legal process from a fresh perspective and in a way that really challenges the status quo. We have a great advisory board of attorneys giving us the necessary legal background, supporting our cause, and reality-testing a lot of our ideas.
I studied computer science at Stanford and created an algorithmic trading hedge fund a few years ago. Through that process, I was responsible for negotiating hundreds of legal contracts between the fund and all the banks and brokers we traded with. I worked with many attorneys and organizations and felt a lot of the pain points involved in contract drafting and the negotiation process.
That’s what led to the vision for Ridacto: a suite of products aiming to use technology to make the process of drafting and negotiating contracts simpler, smarter, and more secure. Our long-term goal is to be a cloud-based platform dedicated to facilitating contract negotiation through technology and helping attorneys and business professionals create better contracts faster.
Ken: What does Ridacto do?
Max: We want to provide technology that empowers our users to be more effective at their work and more efficient at providing the best possible service. We want to only create what people want and need rather than simply what we think is cool—this drives the usability studies on which we base our business. We want to use technology to prevent needless lawsuits and help ensure that any given contract in fact articulates what the parties had in mind.
Our first flagship Ridacto product is our proprietary contract-analysis tool. It’s a patent-pending technology that is based on artificial intelligence (natural language processing) and customized for analyzing contracts.
It is really easy to use. Anyone can upload a contract to our website, and Ridacto will create an analysis report within seconds. You can also email a document to email@example.com, and Ridacto will send you the report by email. Either way, Ridacto doesn’t store copies of the contract or the report, and we use bank-level SSL encryption across our site, so the service is fully secure and private and meets all requirements for attorney-client confidentiality.
There are two components to Ridacto’s analysis report.
First, there’s a “dashboard” of all the key business terms, such as prices, dates, party names, locations, and defined legal terms. This allows the user to quickly scan that information for potential inconsistencies, such as a wrong date or inconsistent pricing. There’s also a section that displays provisions addressing standard hot-button issues, including guarantees, indemnification, and provisions relating to attorney’s fees. And just as important, we list issues not addressed in the contract, so users can consider whether anything should be added.
Second, we display a list of potential errors Ridacto found in the contract. We currently search for seven categories of errors, mainly involving how defined terms are used, as well as inconsistency in use of numbers and faulty syntax. By faulty syntax, I mean issues like unmatched parentheses, brackets, and quotation marks.
We’re continuously adding to the kinds of errors Ridacto searches for and are always open to input from our users. We’re currently conducting a case study with ten organizations using Ridacto, and I meet with attorneys and professionals every day to observe how they work, hear their frustrations, and explore how we might adjust Ridacto to help address blockage points in the system.
We want our error-checking functionality to be like a “compiler” (in the software-engineering sense of the word) for legal contracts. Legal contracts will never be as easily checked as source code, as they consist of natural language instead of following a rigid source-code grammar. But we believe that computers can help people avoid many embarrassing mistakes and produce contracts that are more effective. The idea isn’t to replace attorneys or do their work for them; we simply want to complement their work and help them do a great job and provide quality service to their clients.
Ken: Why is there a need for it?
Max: There is a need for Ridacto because people regularly make mistakes while drafting and revising legal contracts, and these mistakes can often be very dangerous.
It’s routine for complex contracts to be revised multiple times in negotiations, and the attorneys and clients working on a given deal are pressed for time and don’t have time to read closely each version a contract. The result is small mistakes that can have serious consequences, such as a defined term that isn’t capitalized, or dollar amounts that aren’t consistent. There has also been a lot of press recently about stupid contract mistakes creating huge lawsuits, for example here and here. Ridacto wants to help its users avoid those kinds of problems.
Another important reason why people make such mistakes is erratic use of templates. (I know that’s something Koncision is helping to address.) Attorneys routinely copy and paste from precedent contracts without making appropriate adjustments. Often the result is a contract that includes terms that aren’t defined, incorrect party names, and other extraneous information.
Such mistakes have the potential to be not only costly but also embarrassing, and people can lose their jobs as a result. Ridacto can help avoid this problem.
Ken: Who do you expect to be your users?
Max: Our target users are people who work on lots of legal contracts—transactional attorneys and in-house counsel, particularly in fields such as finance, venture capital, real estate, entertainment, and estate planning. Because Ridacto is so flexible, any contract could benefit from a Ridacto analysis. But we are also developing customized checks for enhanced checking of particular kinds of contracts.
Others who could benefit from using Ridacto are business people who manage their own contracts, contract administrators, and the non-attorney legal professionals, primarily paralegals and secretaries, to whom much contract-related work is delegated. Ridacto would allow them all to do a better job at verifying contracts and producing the best possible work for their organizations and clients.
Max: Ridacto is most similar to Deal Proof and Lexicon, though we differ in a few critical ways. First of all, our analysis is not just limited to defined terms but aims to capture key business information that is useful for attorneys and business professionals. Second, we’re cloud-based, so we don’t require users to install Ridacto on their machines or get their IT department involved—you can use Ridacto through a web browser from anywhere in the world. Finally, our subscription pricing allows you to use Ridacto for free for a limited number of contracts and then pay an affordable monthly fee—less than what broadly comparable services charge—for unlimited use. So Ridacto will keep innovating and improving its functionality and continuing to offer new services without requiring users to buy new versions of software. And Ridacto can work with any version of Microsoft Word.
GreenLine is an interesting product and could be an interesting complement to Ridacto, as GreenLine doesn’t check internal consistency but rather how a contract varies from a benchmark.
Ken: Thank you, Max, for telling me about Ridacto.
Max: Thank you!