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LegaSifter

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Contract review in a minute or two.

Aug 30

Podcast: Does BigLaw care about contract drafting? Our conversation with Michael Woronoff

LegalSifter's blog on contract review & negotiation, legal technology, and artificial intelligence.

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Feb 13

Sifter Insights: The Obligation Not to Disclose Versus the Obligation to Keep Confidential

I recently found myself once more poking around the entrails of confidentiality agreements. The issue related to one of the core obligations, namely the obligation not to disclose confidential information. (The other is the obligation not to use confidential information except as specified.) The issue is that the obligation not to disclose can be expressed in two ways. One way is, well, by means of an obligation not to disclose. Here’s a random example from EDGAR (emphasis added): Mr. Hawk agrees that he will not, during his service on the Board, or at any time thereafter, make any disclosure or use of any Confidential Information, except as may be reasonably necessary in performing his duties for the benefit of the Company or as part of a good faith report or related disclosures to any governmental agency or entity regarding potential violations of applicable federal, state or local law or to take other actions protected as whistleblower activity under applicable law. The other way is by means of an obligation to keep information confidential: In consideration of the furnishing of Confidential Information by the Discloser, Recipient agrees that it will hold the Confidential Information in strict confidence and will use the Confidential Information only in connection with the negotiation and consummation of the Transaction. Many confidentiality agreements contain both kinds of obligation. The problem lies with the second obligation. If I agree to keep information confidential, that could mean that I won’t disclose it, but it could also mean that I’ll protect it against becoming public by some other means, for example by being hacked. I did a highly unscientific poll on Twitter. More than half of those participating said they thought this kind of obligation is indeed confusing. So here’s what I recommend you do: include the obligation not to disclose but omit the obligation to keep information confidential and instead include a standard the recipient must comply with in protecting confidential information: The Recipient shall take precautions to prevent disclosure or use of Confidential Information other than as authorized in this agreement. Those precautions must be at least as effective as those taken by the Recipient to protect its own Confidential Information or those that would be taken by a reasonable person in the position of the Recipient, whichever are more effective. That would make it clearer that the concern isn’t the recipient electing to disclose. Why am I thinking about this? Because I’m retooling some sifters from the time before I became a LegalSifter advisor. As part of that I’ve created a new sifter called, at least for now, Confidential Information: Standard for Protecting. It will look for this sort of provision, flag if it’s present or missing, and offer help text, either LegalSifter’s or yours. Progress isn’t arrived at through AI smoke-and-mirrors. Instead, it involves specialists (in this case, me) and data scientists doggedly plugging away.

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Feb 13

Sifter Insights: The Obligation Not to Disclose Versus the Obligation to Keep Confidential

I recently found myself once more poking around the entrails of confidentiality agreements. The issue related to one of the core obligations, namely the obligation not to disclose confidential information. (The other is the obligation not to use confidential information except as specified.) The issue is that the obligation not to disclose can be expressed in two ways. One way is, well, by means of an obligation not to disclose. Here’s a random example from EDGAR (emphasis added): Mr. Hawk agrees that he will not, during his service on the Board, or at any time thereafter, make any disclosure or use of any Confidential Information, except as may be reasonably necessary in performing his duties for the benefit of the Company or as part of a good faith report or related disclosures to any governmental agency or entity regarding potential violations of applicable federal, state or local law or to take other actions protected as whistleblower activity under applicable law. The other way is by means of an obligation to keep information confidential: In consideration of the furnishing of Confidential Information by the Discloser, Recipient agrees that it will hold the Confidential Information in strict confidence and will use the Confidential Information only in connection with the negotiation and consummation of the Transaction. Many confidentiality agreements contain both kinds of obligation. The problem lies with the second obligation. If I agree to keep information confidential, that could mean that I won’t disclose it, but it could also mean that I’ll protect it against becoming public by some other means, for example by being hacked. I did a highly unscientific poll on Twitter. More than half of those participating said they thought this kind of obligation is indeed confusing. So here’s what I recommend you do: include the obligation not to disclose but omit the obligation to keep information confidential and instead include a standard the recipient must comply with in protecting confidential information: The Recipient shall take precautions to prevent disclosure or use of Confidential Information other than as authorized in this agreement. Those precautions must be at least as effective as those taken by the Recipient to protect its own Confidential Information or those that would be taken by a reasonable person in the position of the Recipient, whichever are more effective. That would make it clearer that the concern isn’t the recipient electing to disclose. Why am I thinking about this? Because I’m retooling some sifters from the time before I became a LegalSifter advisor. As part of that I’ve created a new sifter called, at least for now, Confidential Information: Standard for Protecting. It will look for this sort of provision, flag if it’s present or missing, and offer help text, either LegalSifter’s or yours. Progress isn’t arrived at through AI smoke-and-mirrors. Instead, it involves specialists (in this case, me) and data scientists doggedly plugging away.

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Dec 18

Meet One of Our New Sifters

Every week we “kick off” new sifters—bits of software trained to spot a particular issue in contracts. Those sifters then go down the production line and are ultimately released to users. What sifters are kicked off in a given week can vary greatly. Maybe a dozen sifters targeting a particular type of contract. Or just a handful addressing a mix of issues. It depends on what’s going on at the time. In this post I’d like to consider one of the sifters kicked recently. It has something to say about our process. The sifter in question is “Jurisdiction: Exclusive.” It wasn’t selected at one of our weekly meetings to consider new sifters. Instead, one of our advisors, Ken Adams, cheerfully announced that he had decided it should be one of our new sifters. Ken is in charge of creating the specifications for each new sifter. The specs explain what the sifter is looking for, and they provide a bunch of examples of relevant provisions. They tell us what types of language the sifter should find, what types of language the sifter should ignore, and why. The specs are incredibly important, because they define the scope of the sifter, and ultimately, its behavior when we use it on new contracts. Ken is better equipped for this task than pretty much anyone. He’s a transcendent figure in the world of contract drafting. Among other things, he’s author of the bestselling A Manual of Style for Contract Drafting, published by the American Bar Association. His services are in demand internationally. If you’re not familiar with Ken and his work, you can find information at www.adamsdrafting.com. Anyway, back to “Jurisdiction: Exclusive.” Ken laid this new sifter on us because he had just done some research relating to jurisdiction provisions (also known as forum-selection provisions). Jurisdiction provisions say where a party may file a lawsuit against the other party. Ken had just read a new article on jurisdiction provisions, and that article helped him realize that exclusive jurisdiction can be expressed not only in jurisdiction provisions but also in consent-to-jurisdiction provisions. (If you want to understand what all that means, check out this blog post Ken did about it.) Equipped with that bit of intelligence, Ken realized that users would likely find it helpful to have a sifter that flags presence or absence of contract language providing for exclusive jurisdiction. And the help text would offer advice on how best to express the concept. In particular, in his blog post Ken points out that consent-to-jurisdiction provisions are utterly standard, but they’re not the best way to address jurisdiction. And when a contract features both a jurisdiction provision and a consent-to-jurisdiction provision, the consent-to-jurisdiction provision is redundant. In addition to being able to identify this issue and say something not only useful but also novel about it, Ken was also able to identify the various different ways that the concept of exclusive jurisdiction is expressed in contracts. For example, one of the verbs used in consent-to-jurisdiction provisions is attorn. It’s a peculiarity of Canadian drafting. We can count on Ken to know that sort of thing. Why am I telling you this? For two reasons. First, although we’re an artificial intelligence company, you shouldn’t assume that we’re all about technological sleight-of-hand. Instead, our technology serves to make old-fashioned expertise accessible to our users. They way Ken was able to quickly infuse a new sifter with his cutting-edge research on jurisdiction is a good example of how our product is driven by serious expertise. And second, it’s important you know where our expertise comes from. Relying on the expertise of others requires a leap of faith. Because we want you to be comfortable about making that leap of faith, we want you to know where we get our expertise, what’s involved, and how far along we are. Not all “experts” are created equal. If someone doesn’t tell you where they get their expertise—if, for example, they just refer airily to “expert lawyers” or some such—you can assume their “experts” aren’t so expert. We plan on continuing to tell you about our expertise and our experts. If you have any questions, let us know. Meanwhile, we suggest you have a look at the entry for “Jurisdiction: Exclusive” in our sifter library.

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