European Union and British Union Jack flag flying in front of the Bank of England.

 

In advance of the EU's upcoming General Data Protection Regulation (GDPR), many legal technology and managed services providers are moving to offer clients regulatory solutions.  But the GDPR isn't the only EU event driving demand for compliance-focused offerings.

Thomson Reuters Legal Managed Services, for example, has announced a new “Financial Trade Documentation” service to help financial clients renegotiate contracts ahead of the UK's March 29, 2019, “Brexit” from the EU. The new service leverages two distinct technologies—Thomson Reuters' Contract Express and Logical Construct's Lync contract review platform—in a multi-step consultancy and remediation program.

Initially, Thomson Reuters Legal Managed Service teams will develop a contract remediation plan with clients to understand which contracts need to be updated because of Brexit. “The first step is understanding what is in that portfolio of contracts … and understanding what relevant fields need to change and what is in those fields today,” said Eric Laughlin, managing director of legal managed services at Thomson Reuters.

Laughlin explained the “Brexit contracts” include those with jurisdictional clauses that need to be updated, given that UK-based companies, vendors, subsidiaries and partners will be under a different regulatory and legal scheme than the 27 EU nations.

As an example, he pointed to a situation where a bank has a trading agreement in place between its UK subsidiary and a Germany-based company. The bank may want to renegotiate the agreement so that one of its other subsidiaries based in EU will trade with the German company instead, because the UK will be under different financial and trade regulations.

Laughlin also noted that issues like tax liabilities and any new costs because of the UK's new regulatory regime may also have to be addressed within such contracts because of Brexit.

Once clients identify such contracts, Thomson Reuters will then turn to Lync, the artificial intelligence-powered contract review platform from software company Logical Construct, to find and extract the contract clauses that need to be updated. The company will also use Lync to elicit datainsights into what clauses and common language the contracts contain. Laughlin explained this is done to help the client develop an instructional playbook for renegotiation.

“It's important to know what's in your current contracts, what the variation of terms is, and  then decide on a go forward basis, based on what's been most accepted and what you think is most effective,” he said.

If clients choose to, Thomson Reuters will renegotiate contracts on their behalf using the playbook, and once finished, will start redrafting the contracts as well. For drafting low complexity, high volume contracts where there are few variables, the company will use Thomson Reuters' Contract Express solution, Laughlin said. More complex contracts will require Thomson Reuters' teams to draft contracts manually.

Thomson Reuters launched its “Financial Trade Documentation” service less than a year after it announced its partnership with Logical Construct to deploy the company's Lync platform. In March 2018, the Thomas Reuters also partnered with AI contract analytics platform provider eBrevia to similarly use for its clients' contract remediation projects.

When asked why Thomson Reuters chose Lync instead of eBrevia or other similar solutions for its Brexit service, Laughlin explained that it was because the Lync was “was originally purpose built for ISDA [master service agreement] documentation” and other financial documents.

“It was purpose built around that specific use case, and as a result those kind of data models and variables it is looking for don't require any additional training. It is actually very precise and effective for this task,” Laughlin explained.

Still, Laughlin noted that because eBreva is “well suited” to handle commercial contracts, Thomson Reuters could opt to use that platform instead or alongside Lync, depending on its clients' needs.

Indeed, Thomson Reuters designed its Brexit offering to be flexible and “modular,” meaning it can use different technologies and start at different places in the process, whether in the remediation phase, the renegotiation phase, or the drafting phase.

There are several companies, including FTI Consulting and Elevate Services, that offer consulting and AI contract review technology to meet client contract needs, whether that's identifying or drafting Brexit-related clauses or other types of contract information.

But Thomson Reuters believes it has an upper hand because of its long-term relationship with many of its financial clients. “Global banks trust Thomson Reuters for this type of solution because they have experience working with Thomson Reuters in other similar projects,” Laughlin said.