I once worked for a software company that was pulled into a frivolous lawsuit. We prevailed. But it isn’t the suit that I want to talk to you about, it’s the surrounding and resulting contract management horror stories that ensued and which led me to found e-Agree.
Founding a tech start-up can be an alluring prospect. It can often drive one to burning the candle at both ends for years on end moving from business planning, to product development, to user-testing and, finally, the excitement of go-to-market.
But that wasn’t the case here. My entrepreneurialism, and eventually e-Agree, was born out of sheer frustration that comes with attempting to manage a contract environment manually.
Let’s step back a bit and I’ll explain.
A Flood of Contracts
I’m a CPA and I’ve been heavily involved in contract lifecycle management for the last two decades, working with both small and large tech companies. Back in 2007, I was CFO of an ad tech company. Venture-backed, we had about 35 employees and about two and half heads in the back office who handled accounting, finance, HR and other administrative matters. One of which was me.
Given the nature of the business, a heavy investment in sales and marketing saw us scale quickly, but our G&A budget was capped. Not a great situation when you’re dealing with a daily flood of contracts. Our monthly volume consisted of 25-30 NDAs, 15-20 new customer contracts, 30-40 change orders from existing clients, and 5-7 consulting and “buy type contracts”.
We were overwhelmed.
To make matters worse, we had zero budget for additional or dedicated contract administration personnel. Our attempt at contract management was a best-effort attempt to review a stack of agreements daily and record material items in a spreadsheet for future reference, while entering reminders in Outlook. We did our best. It didn’t work. Within three weeks the process was shot and things started falling through the cracks. Who has the time and wherewithal to record information – just in case you need it for future reference?
So, I looked for an alternative; a solution that would solve my problem. Google didn’t come up with anything. There wasn’t a single solution on the market that addressed our pain. So, I skulked back to the day-to-day, resigned to the fact that ours was the only way to handle contract management.
Ridiculous Ad Hoc Requests for Info
Over the next couple of years, the company went through a series of financings. During routine diligence processes we were required to make certain representations to the investors. Through each round, we were asked to provide assurances about all of the agreements we had entered into. The financier's counsel wanted to understand matters such as indemnification, non-competition, Intellectual Property (IP) ownership issues, special licensing, etc.
This left me continually searching for the matters at hand and reporting the findings. Contracts were all over the place and I could never be sure if my review and analysis were certain. It went like this:
Search network for a combination of key words
Figure out which ones were duplicates
Come up with a collection to review
For each document in the collection:
Open and search for terms
Review and confirm the matter is what I was looking for
Review and confirm again
Record my results
Go back to #1
Once, during the third round of diligence for an M&A transaction (by now we’d been in business for 13 years), I was asked to disclose all NDAs the company had ever entered into and to discuss how each NDA compares and contrasts to a standard NDA. Should I have laughed or cried?
Since launching the new business unit, we had amassed about four feet of six inch binders with loose leaf (mostly single page) NDAs in chronological order covering our recent six years of corporate history. Could I account for the previous seven years? You guessed it. Nothing was on file that could quickly be accesses and analyzed.
At one point in my tenure as CFO, our company was shaken down by a patent troll. Out-of-the-blue we were sued for IP infringement. I’ll spare you the details. Needless to say, we prevailed and settled for $0, but the lawsuit took two years to resolve.
My point here is that as soon as I found out about the lawsuit, I recalled that we had to comply with certain licensing agreements that required us to notify certain customers within three business days of becoming aware of such an IP infringement issue as some customers had special rights that others did not.
In addition to dealing with the drama of attorneys, co-defendants, etc. I was also tasked with researching every contract we’d ever entered into to determine who to notify. By this time, I had only two days left to wade through 10 years of contracts – I probably failed to identify even half of them. Our lack of a contract management process had put the company at risk, but I was too busy frying other fish.
So, You Can See How We Got Here
These are just a few examples of the problems I faced as a CFO in the back office, and what inspired me to act. From my chaotic experiences, came e-Agree.
I was not alone. Since launching e-Agree, we’ve met numerous folks who’ve shared similar horror stories and we’ve made it our mission to end the madness.
e-Agree.com is a secure cloud-based platform that enables legal transactions to be conducted between two parties. A closed-loop agnostic transaction system, e-Agree eliminates the friction of today's contracting logistics by centralizing internal and external contracting processes on a unified platform. It puts its users in complete control of their contracting environments. The platform improves and streamlines existing contracting operations that typically consisted of decentralized and often divided processes that were fragmented and cluttered with too many tools.
Dedicated contracts personnel to accomplish more
Non-dedicated personnel to redirect more of their efforts on their missions
Complete transparency into the overall contracting process
Unprecedented visibility into an organizations contractual rights and obligations in context across the entire portfolio