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- Investments in legal tech are booming, especially as law firms and companies are looking to automate workflows to shed costs and boost efficiency.
- BlackBoiler, an automated contract markup software, announced a $3.2 million funding round this week. Investors included DocuSign and Am Law 50 attorneys.
- Its CEO and cofounder, Dan Broderick, walked Business Insider through its pitch deck, which maps out the market for contract lifecycle management tools and BlackBoiler’s visions for growth.
- Visit Business Insider’s homepage for more stories.
Investments in legal tech startups have surged in recent years after an initial slow start, as law firms, in-house general counsel, and clients are seeking greater efficiency across the industry.
Last year, legal tech investments surpassed $1 billion by the end of the third quarter, as reported by Bloomberg Law. This trend is only being accelerated this year by the coronavirus pandemic, which has forced more law firms and corporations to turn to automated solutions, from case management to e-discovery, to cut costs and streamline workflow.
BlackBoiler, an automated contract markup software that’s used by Am Law 25 firms and several Fortune 1000 companies, announced a $3.2 million funding round on Wednesday.
The software uses machine learning to automate the process of reviewing and revising documents in “track changes.” This saves attorneys the time they would typically spend marking up contracts that often use standard boilerplate language.
As a pre-execution software used in the negotiation and markup stage of the contracts process, BlackBoiler has carved out a unique space in the $35 billion contracts industry, said Dan Broderick, a lawyer who cofounded the company in 2015 and is now its CEO.
Broderick walked Business Insider through the pitch deck the company used to attract its funding from investors, including DocuSign, which manages e-signatures for documents, as well as 10 attorneys that run the gamut from Am Law 50 partners to general counsel at large corporations.
Here’s an exclusive look at the BlackBoiler’s pitch deck.
Frame the problem
Broderick began by presenting the scope of the problem, setting up a frame of reference for the ultimate solution that BlackBoiler presents. He did this by talking about the size of the global economy and describing how every good and service is subject to contracts — often multiple.
“A lot of what happens is high-volume and repetitive negotiation of these contracts by the Global 1000,” Broderick said.
He added that they reached the bottom-up figure of $35 billion by going to individual Global 1000 companies, asking them how many contracts they typically have and how much it costs to negotiate each contract.
Elaborate on the scope of the problem
“What happens in contracting is that these companies are given playbooks — essentially a rule set for how you’re supposed to negotiate contracts with the counterparty,” explained Broderick. “And so what we find is that people who are negotiating these contracts, they’re reviewing and marking up very similar language over and over again, and making very similar edits to that language over and over again.”
Broderick told Business Insider that BlackBoiler received funding from the National Science Foundation to conduct market research. They discovered two common denominators among the 150-plus people they surveyed: First, the contracts were in the form of a Word document, and second, they came attached to emails.
“So we decided to meet our clients where they are, and work with the tools they’re familiar with,” he said.
Because clients don’t have to learn yet another new platform — what Broderick describes as “platform fatigue” — it takes BlackBoiler just 30 to 40 minutes to onboard new users.
BlackBoiler’s technology flex and space for further investments
Broderick explained that all of BlackBoiler’s technology has been built internally from the ground-up. For example, Moneta, its custom-built natural language processing (NLP) tool, tackles how to find and edit the right text in a document — one of the most difficult parts of the automated contract markup process, according to Broderick.
“When we talk to VCs about this piece right here, their eyes glaze over,” he said with a laugh. “But when we talked to technologists about this piece, who’ve tried to solve this problem before, they’re like, ‘Oh my God, I can’t believe you solved that.'”
He added that their proprietary machine-learning software takes 100 to 200 examples of marked-up documents to create a training model. Part of BlackBoiler’s new $3.2 million funding will go to creating a platform that will allow clients to create a new training model themselves.
Pinpoint the space that BlackBoiler has carved out in the wider market
The contract lifecycle management (CLM) market is a big space, said Broderick, but it can be split into two broad categories: pre- and post-execution.
BlackBoiler sits in the pre-execution space. “We’re the only product on the market that automates the process of marking up these word documents without a human in the loop. We’re the first mover in the space. And we have a ton of IP protection here,” Broderick said. And, because lawyers are some of the most expensive people in an organization, BlackBoiler would save time and labor.
Show there’s lots of money to be made
Though the slides are outdated at this point — Seal was since acquired by DocuSign in February, for instance — their main point is that there’s a lot of money being put into this space. “There’s going to be a commodity consolidation in this market. We think that’s an opportunity,” said Broderick.
Explain what BlackBoiler will do with the funding — both short-term and long-term
Broderick wrapped up with explaining how much they’re asking for, and what the funding will be used for, both in the short- and long-term.
“There’s so many places we can go with this technology because it’s not specific to contracts. It can be used on any sort of repetitive editing,” he explained.
One of BlackBoiler’s long-term visions is to expand their technology to “map the higher genome of contract negotiation,” where they would automate not just contracts, but also the negotiation process itself.
“The negotiation process is repetitive and predictable,” said Broderick. “Almost all contract negotiation often ends up with four or five things the parties need to hash out. We’ll be able to figure out where they’re gonna skip the multiple rounds of negotiation that takes a bunch of time.”