Contracting at Warp Speed with “Legal Entry Grafted On (LEGO)”

Note: This post by author Leigh Frederick originally appeared on the Bitmovin blog on Sept. 15, 2020. Leigh is a J.D. candidate at Loyola University Chicago School of Law. Prior to beginning law school, she worked as a Sales Development Representative at Bitmovin.

For more information, learn how Bitmovin achieved a three-hour sales contract cycle with Ironclad.

At Bitmovin, we like fast. In fact, speed and efficiency is a bit of an obsession for us. In a previous post, “The ‘Minimum Viable’ NDA”, we highlighted that Bitmovin’s commitment to efficiency extends all the way to the legal team. That commitment is as strong as ever with our legal team continually working to develop new, faster ways of approaching the contracting process.

There is no business without contracting

Contracts are the way business gets done. They are the basis of business partnerships and how companies generate revenue through the sale of goods or services. While that may sound like a modern platitude, it is a historic fact. For over 4,000 years, every significant business transaction has been underpinned by some form of a contract, dating back to clay tablets. Then, as now, companies rely on contracts to generate revenue through the sale of goods or services or to minimize risk by protecting the rights of both parties involved in a business agreement. Because contracts create or limit the rights of the parties to the contract and govern the relationship between them, negotiations are an important part of the contracting process. Unfortunately, contract negotiations have traditionally been time- and labor-intensive.

As a company that values speed and efficiency, we wanted to streamline the contracting process and shift away from a legal-driven, “mother-may-I” approach to one which empowers business. We also wanted to simplify the negotiation process to improve our customers’ and partners’ experience working with us, affording the simplicity of repeatable processes while allowing for differences where the customer’s circumstances warrant it. When we set out to overhaul our contract negotiation processes, our goal was to reduce time and labor costs by managing the complexity in our business, without exposing Bitmovin to greater legal risk. To achieve our goal, we leveraged two different technologies: the digital contracting platform, Ironclad, and the instant messaging platform, Slack.

Customizable and digitized contracts with Ironclad

Ironclad, also a YC S15 company, allows us to build numerous customizable workflows to handle different types of legal requests. The software enables users to upload a standardized contract to workflow and then tag places within the contract where customer-specific information is needed. Users can also build out conditional statements with simple Boolean Logic. We have been using Ironclad for the past year-and-a-half to maximize the efficiency of our small legal team, which deals with hundreds of contract requests from our globally dispersed sales team annually.

On top of this system of workflows, Bitmovin maintains standard legal clauses to accommodate various requests for contract variances which can be seamlessly dropped into our basic agreements. We call these phrases LEGOs (or “Legal Entry Grafted On”). To use an analogy for this system, you can think of workflows as “vehicles” and LEGOs as “pallets” to be transported by those vehicles. Any individual business partner can select the right vehicle and the right pallet to carry the cargo for a particular business mission, without direct involvement from the legal team. The resultant system is, we think, superb. With more than 25 sales-facing workflows and the better part of 100 different LEGOs, we are able to generate thousands of highly customized permutations on our “standard” contracts with the push of a button. However, this introduced a new issue. With so many different, customizable workflows, the system is so complex that no one would be able to understand or navigate it.

To solve the complexity problem, we built a legal app on top of Ironclad to facilitate the use of the LEGO system. Bitmovin attracted two interns (Courtney Chew and Claudia Ren) from the Startup Legal Garage at the University of California, Hastings College of Law. Their assignment was to layout and codify the business and legal logic underlying the use of each workflow. From this, they devised a structured list of questions that would point a business partner to the right workflow. We then leveraged Slack to build out a Slackbot (think of it as an automated directory) to ask these questions and guide the sales team to the correct agreements and workflows in Ironclad. This work solved the contract selection problem, but still left the opacity of which LEGO to use.

I picked up where my predecessors left off, creating a list of commonly requested terms and conditions that are not included within the boilerplate language of our contracts. I then drafted questions to identify any non-standard contractual language and the corresponding LEGOs available to customize those agreements. Now, if a salesperson is working with a customer who decides it would be in their best interest to publish a case study with us, the salesperson can generate the contract without the help of the legal team. The salesperson simply pings the Slackbot and chooses the appropriate agreement. When asked about adding LEGOs, the salesperson chooses a broader section, say “Marketing,” to access the LEGOs within that category. After all the information is entered, Ironclad will automatically generate a contract customized with the customer’s information and the Case Study LEGO. No lawyer required.

By using this process, we hope to strike the perfect balance between standardization and customization (“mass customization”). Additionally, we anticipate that the sales team will be enabled to work freely without having to wait for the legal team to draft language for simple and commonly requested terms. Now, Bitmovin Encoding isn’t the only thing that works at 100x realtime, and our contracts load almost as quickly as our Bitmovin Player.