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LawGeex, a startup that automates the contract review process, has patented its artificial intelligence technology — a milestone that signals growing comfort with machine learning in law and could accelerate growth for the business.
The AI analyzes documents based on the contract’s context with “the mind of a human lawyer,” according to Noory Bechor, the company’s co-founder and CEO. This contextual approach takes into account surrounding factors like company policies, the document type, and whether the client is the buyer or seller.
Risk-averse lawyers and their clients can have millions of dollars hinging on specific wording or a single clause in a contract, so accuracy is top of mind. However, humans can actually only reach about 85% accuracy, according to Ilan Admon, co-founder and CTO of LawGeex.
“If you put ten lawyers in a room, they often don’t agree on everything,” added Bechor. These differences in interpretation prolong contract negotiations, leading to time and money wasted.
Founded in Tel Aviv in 2014, LawGeex is used by large investment banks like UBS and law firms like Simpson Thacher to automate contract review. It’s since raised a total of $45 million in funding from investors like Aleph, Corner Ventures, and Lool Ventures.
LawGeex’s patented technology boosts the accuracy of contract review — anywhere from a 90% to 100% accuracy rate, depending on how common the contract type is — speeding up the closing deal time by threefold. This translates to 80% time saved reviewing and approving contracts and 90% cost saved compared to manual processes, per the company.
The patent not only serves as a “proof point” for the AI’s prowess but also advances LawGeex along its broader plan for growth in the contracts space, said Bechor.
The five-year brainchild
It took five years for LawGeex to have its patent approved. The initial resistance came from the fact that the United States Patent and Trademark Office said that the tech mimicked human behavior.
“The reviewer decided that it’s a force of nature, that we’re building a brain. And you can’t patent thought,” said Ilan Admon, co-founder and CTO of LawGeex. “We initially had trouble explaining that it’s not a brain, it’s an algorithm — it just works the same way.”
LawGeex’s AI is pre-trained by screening thousands of documents of different types, from non-disclosure agreements to sales contracts. The technology mimics what a lawyer would do by looking at the document at a high-level and deciding what the context is. It’ll then use the algorithm best suited for that context to drill down into each provision of the contract.
“Think of the algorithms as different glasses: You have one for near-sightedness, another for reading, and so on. Each algorithm switches depending on the context of that particular contract,” explained Admon.
Over the course of the five years it took for the patent to be approved, LawGeex continued to hone its technology and improve its accuracy.
Differentiating from other tech
Although there are open-source tools for language analysis, like Google Cloud’s AI, LawGeex’s patented contextual tech is tailored to the specific way lawyers think.
“We originally thought it should be an easy problem to solve because it’s natural language processing,” said Admon. “But there’s nothing natural about legalese. You can change the entire meaning of the contract by adding one word.”
By folding the contract’s context into the algorithm, LawGeex is able to drill down into the minutia of each document with greater accuracy.
LawGeex also developed its AI further to the document markup aspect of the contracts process, so that it could not only locate any mistakes, but also correct them with the right context in mind — saving lawyers even more time.
Patents and partnerships: LawGeex’s strategy for growth
The patent is part of LawGeex’s big-picture strategy for growth: Bechor said that it wants to triple its revenue growth and customer base this year. The company declined to share the figures.
The legal tech company’s ultimate goal is to have legal professionals delegate the low-level contract work to Lawgeex, whose client roster includes Fortune 500 and Global 2000 companies like HP, eBay, and General Electric Power. The new patent is a “vote of confidence” for its AI, and Bechor hopes that it will allow potential clients to become more comfortable with using tech.
LawGeex still has “fuel in the tank” from its $20 million Series C round in May, and plans to use the capital to advance its AI to apply to other aspects of contracting like automated negotiation, said Bechor. It also will grow its AI and research team, and is eyeing the beginning of next year for its next round of fundraising.
While it doesn’t have any immediate plans for mergers or acquisitions, LawGeex is establishing a partnership program, where its patented technology can be integrated with other contract and business systems like Ironclad and Salesforce.
“We want to be the brain that connects to every workflow and makes it better and smarter,” Bechor said.
SEE ALSO: AI-powered contracting platform Ironclad just snapped up $100 million in its Series D. Here’s how it plans on using its funding — and a strategic partnership with Google — to boost its tech.
Originally published at https://www.businessinsider.com/lawgeex-legal-tech-patent-contracts-strategy-growth-artificial-intelligence-2021-2 on .