Pactumize Negotiation Room

Vinnova has implemented in the framework of the Service Innovation Program, in the autumn of 2018, the announcement “From Analog to Digital – Legaltech and Retailtech”. Vinnova has received a total of 47 applications. These have been assessed in competition with each other by an expert panel.

Vinnova has decided to grant and support the project Pactumize Negotiation Room, based on the following assessments:

– The project is based on an innovation with great potential, furthermore, is the reason for the future growth potential credible.

– The project plan is well-developed and describes a clearly focused project with high level feasibility.

– The company’s resources in terms of past experience, skills and equipment provide good conditions for achieving set goals.

Summary of the project

Pactumize Negotiation Room will be the standard SaaS platform for contract negotiations between large and medium-sized companies. In addition to the commercial advantages, the platform will also promote dispute resolution out of court, with the benefits of the whole society with falling costs.

Pactumize has previously developed a contract automation platform, Pactumize Contract Builder, enabling non-lawyers (buyers, sellers and other business users) in a user-friendly interface to draft individual agreements without the involvement of lawyers. The next step is to develop a negotiation room, Pactumize Negotiation Room, where business users also can negotiate the deal with a counterparty with the help of configured and pre-approved legal clauses. Both parties’ negotiating teams are given access to the negotiating room for the purpose of performing the negotiation more efficient, cheaper, safer and at the same time encapsulating all negotiation data, to avoid future disputes. Pactumize Contract Builder together with Pactumize Negotiation Room, will create the ultimate digital contract management system for large and midsized companies.

The project starts with a study, which aims of creating a better understanding of how contract management and negotiations are ongoing today, and use this knowledge to develop
the optimal SaaS platform for contract management and negotiation. A thorough research
of how the companies design, draft and negotiate agreements has never been done before
in Sweden – in any case not for the purpose of comparing the traditional methods with the benefits of how a digitized contract management could create efficiency gains. Such a study would itself be unique and primarily help the individual companies to change to a more efficient digital contract management, resulting in less bottle necks, entering into more business deals, limiting business risks, costs decrease and better control over the agreements (compliance) within a corporate group. The companies that participate in the study are expected to provide factual information about, among other things, the number of types of contracts, the number of total contracts per year, time spent for drafting and negotiating contracts. The companies will participate in surveys and interviews. After compilation of
the information, this will be communicated to the participating companies with an additional offer to participate in agile development and testing of Pactumize Negotiation Room. Pactumize already has Swedish and German companies wishing to participate.

The study will also be presented in an academic article.

At the end of the project, Pactumize Negotiation Room will contain all the functionality that the participants of the project together with the participant companies, have found necessary. In addition, the user-friendliness must be so high that no legal knowledge is required at all, in order for the user to negotiate a contract. The user interface shall be self-explanatory as soon as the user commenced the use, why no special training will be necessary. The use of Pactumize existing module, Pactumize Contract Builder, where the customer’s contracts are configured and drafted will be combined with Pactumize Negotiation Room, enabling companies to leave the analogue and very uncertain “old school” contract management with sending contracts over mail etc. and instead, accept and embrace the future contract management, where legal matters and contracts can be digitized and that contract negotiations can be streamlined in a safe and encrypted negotiation room – in order to make better and more efficient business.

The contractual counter parties, which are granted access to the negotiation room by Pactumize customer, will after conclusion of the negotiation, most likely become customers of Pactumize. This way, the platform becomes self-selling, without the need for traditional and comprehensive marketing measures. Because both Swedish and German companies
will participate in the project, the product will at the end of the project be adapted for both markets and therefore ready to be sold both in Sweden and in Germany. In addition to considering some business cultural differences, the product will almost be identical to different markets, why scalability is great. Insofar as business cultural differences cause adaptations, these will be done by simple configuration – not programming. All configuration could be handled by the customer itself – as now in the existing module.

Since the functionality and user interface are being developed along with
potential customers in an agile process and that the product will continuously be demonstrated and discussed with other companies parallel with the project, sales will be able to speed up quickly. 12 months into the project, Pactumize will begin to build a sales and deployment organization with the ability to quickly establish the product in Sweden as well as in Germany and implement necessary AI tools for contract and risk analysis. As said, Pactumize Negotiation Room shall become the standardized platform for contract management and negotiation.

Project potential

• Most experts conclude that Legal Tech will explode the coming years and the legal sector will be heavily repulsed.

This is usually referred to as the digital disruption within the legal industry. This includes, in particular, that legal problems and contracts will be handled using more or less advanced digital tools. This is a must when companies are forced to handle more and more cross-border regulations and complex legal challenges. The first step all companies need to take, is creating automation of the design and drafting of standard contracts. It is a must to leave manual handling and use of static / incorrect templates. The second step is to be able to handle the business deals in a structured way, where data points are saved for storage, search, statistics and analysis. This can also occur automatically, without manual handling.

• The market offers a number of products for these purposes, but most have chosen to create tools for lawyers in law firms or legal departments.

Both American, British and Continental European Suppliers seem to continue on this track. Pactumize existing module, Pactumize Contract Builder, is unique in that the user interface is adapted for non-lawyers. The company’s contracts have been configured and approved by lawyers, but the tool is used by people in the business with all the benefits regarding cost and efficiency that this provides.
Pactumize Negotiation Room, continues to focus on the interface user-friendliness, where non-lawyers can use the tool in one continued contract negotiations. Such a tool is missing on the market and will be unique. This follows the tradition from Avtal24 (founded 2004) & Agreement24 (founded 2013), where the platform is adapted private individuals and small business owners, who lack knowledge of law.

• All digital and commercial SaaS platforms are by nature scalable, but may contain restrictions due to laws and business culture and thus differ in different markets.

In Pactumize existing module, Pactumize Contract Builder, there are no technical limitations to scale the model on lots of different markets. Today, the product is used by both German and Swedish companies. The companies´ agreement can be configured with a questionnaire (where the user makes the choices) in any language and the individualized contractual texts can be created in any language. The contractual text can also be created in several different language versions. The only thing required, is that the configurator on each market is configuring the agreement (questionnaire + generated contract) in accordance with the applicable rules and regulations of the relevant market. Thus, a global master contract with English languages could, after local compliance check, be deployed directly in all countries of the world. Further, a SaaS contract platform is available from all corners of the world, regardless of where the servers are actual located. Concerning Data Privacy Protection, European customers’ information will always be available within Europe and on servers controlled by European companies.

• Digitization of contract management can help the climate.

Digitization is a powerful tool that bounces around the world and turns all kinds of business model upside down. It can be crucial to meeting the climate goals set up. Even though IT companies succeed in contributing to streamlining, it is important to ensure that the efficiency gains really are as expected. More control is needed to provide the right effects. Otherwise, digitization can have rebound effects, such as transport solutions where space released on the roads leads to more people getting out to drive etc. One way to apply exponential thinking on the climate issue is – also inspired by digitization – to use the same model as Moore’s law, the number of transistors on a chip doubles every two years. It is called “carbon law” and is about halving emissions every 10 years at global level to allow the 1.5-degree limit to be maintained.

Digitalization with technologies such as cloud, big data, mobile communications, IoT and AI can enable large and rapid reductions of impressions in all industries while increasing business value and customer benefit, which is an unbeatable combination.
To date, however, digitalization has not been particularly helpful in achieving the climate goals – primarily the 1.5-degree target that humanity has in a short period of time. The efficiency gains achieved by digitization are not worth anything in themselves, unless they are also used to reduce resource consumption.

At full use of a digital contract management platform, where no paper is used, where no resource-intensive trips to a large number of meetings are necessary, significantly less hours are spent on the business deals – there is also a reduction in resource consumption. Thus, digitization of contract management can help the climate.

• Consortium consists of Pactumize (Coordinator), Örebro University (project partner) and the companies that declared willing to participate in the development of the Pactumize Negotiation Room.

Örebro University is a very impressive university with interesting plans to focus its legal science program against Legal Tech with a review of the legal program based on this perspective. In addition to this ambition, there are many well-known and technology-oriented lawyers at the university, which is a prerequisite for the successful completion of the Vinnova project. Furthermore, there is solid experience in interdisciplinary and coordination of major research projects. The university is currently investing heavily in research in AI.

Pactumize is a spin-off of AB Avtal24, which is the leader in contract automation for individuals and small businesses (www.avtal24.se). Avtal24 is a Proof of Concept, where the development of the Pactumize Negotiation Room will determine investors’ continued interest in supporting the company. The chief developer in Pactumize, Jakob Fireld, is the same person who previously was the architect and chief developer of Avtal24’s platform, so all experience and skills are “in the house”. Pactumize already has a German customer, Axel Springer, Europe’s largest media group, and an employed German lawyer in Berlin, Paul B. Kemmesiess, has experience and resources, both developing and selling products on the German market. During 2013-2016, Paul has configured all 40 agreements on the site www.agreement24.de, which is owned by Avtal24. Finally, close cooperation with UX consultants will be crucial for a successful project. Such cooperation has been established together with the consultancy company Cygni (www.cygni.se). Cygni has on five occasions won the award Sweden’s Best Workplace, awarded by the Great Place To Work Foundation. The award is based on the world’s largest employee survey covering 10 million people in 50 countries.

• The project manager is Anders Perméus; lawyer with 24 years of experience in IT business, negotiations, company law and dispute resolution in court and arbitration. For many years ranked as one of Sweden’s foremost in IT law (Legal 500) representing clients such as IBM, SAP, Telenor and Hitachi. Author of “IT Contracts – a Commentary to the IT Industry Standard Agreement”. Founder of AB Avtal24/Agreement24 in 2004 and Pactumize AB in 2017. Litigator in many major cases, including legal counsel of Lord Moyne in the “Trustor” case 1997-2001. Swedish jur. kand. (Stockholm uni.) and a master (LL.M.) in German law (Heidelberg, 1993) as well as European and Competition Law (Kiel, 1992). Great experience in German business.