Legal Spotlight: Electra Japonas on how a community-led NDA is changing the game

Steph Smith
Inbound Marketer
@
Leeway
August 15, 2021
6
min

The legal industry has been using the same contract process for decades now. In-house counsel are finding themselves swamped under with huge volumes of contracts to review, edit and negotiate, leaving little time to focus on more strategic matters.

In 2020, tlb. crunched the numbers and found that NDAs made up 63% of agreements reviewed but only accounted for 7% of the company’s revenue.

Taking inspiration from other professions and determined to bring legal into the current day, Electra Japonas and her team at tlb. set out to challenge the contract status quo.

The result? An open-sourced, standardised NDA, created using the collaborative brainpower of the legal community.

In this spotlight, Electra, CEO at tlb. and Co-Founder at oneNDA, shares what oneNDA is all about as well as her hopes for the legal profession as it continues to build momentum in the business world.

Thanks for accepting our invitation to speak with us Electra! To start, could you tell us a bit about yourself, please?

I'm a former in-house lawyer and I'm the founder of tlb. a contracts optimisation company that helps in-house legal work better. Since founding the business in 2017, we've worked with the legal teams in some of the most exciting and fast-growing tech companies in the world.

I'm also the co-founder of oneNDA, a standardised NDA initiative. I love working at the cutting edge of legal innovation and having worked with legal contracts for 14 years, I know they're broken. They take too long, cost too much and make salespeople angry.

And you launched oneNDA at the beginning of August. Could you tell us a little more about it?

Contracts make up a big chunk of what we do as lawyers, especially in the in-house environment. One of the reasons that there is such inefficiency is the fact that we all start from our own starting point.

oneNDA is a standard non-disclosure agreement (NDA) for use when beginning negotiations over corporate transactions. It was created in collaboration with the legal community and is open-source, so it's completely free to download and adopt.

If we all begin from the same starting point, particularly with regards to contracts that are lower value and higher volume, the efficiency that we could gain would be immense. It also opens doors to apply technology to those agreements in a way that can give you lots of value because of the standardisation.

Why is it beneficial to have a standardised NDA?

The obvious benefits are that it saves you so much time and money but it also preserves your relationships with the third party.

I've been in many situations where you've got two salespeople and they've agreed to enter into a commercial discussion and, therefore, opted into signing an NDA. But then the NDA takes so long and is so painful that it can actually damage the relationship with the third party - and for what?

If you sign the NDA and then enter into a commercial agreement, the NDA falls away immediately as you've just signed an agreement that contains a confidentiality clause. Was it worth you going through the rigmarole of signing the NDA?

If we all start from the same template, we can skip the back and forth as both parties expectations will be met from the standard template. We can then fill in the blanks, agree and crack on with the commercial discussion. So better relationships are a big benefit too.

It seems to make a lot of sense. Why hasn't this been done before?

I think that one of the reasons this hasn't happened before is that not many people would want to lead on the change. People might think it's sensible and can see the benefits but to do it right takes a good bit of work.

It's a matter of going through change management internally, which can be a big piece of work. It's a process that includes a lot of moving parts but one that people will hopefully be willing to do because they can see that there's a huge benefit.

Also, there have been other initiatives that attempted to standardise the NDA but the approach they took was quite different. Their approach was to present an NDA that they believed to be great and ask people to adopt it. Now, we all know that if you give a lawyer a document, the first thing they're going to do is get the red pen out.

How has onaNDA approached things differently?

The key to this initiative and the reason why I think it's been so successful is that we got buy-in from the beginning. Over 1200 people input into the process!

We made sure to have the right stakeholders in the room with the right message going out at the right time. It was about gaining feedback and using a collaborative approach rather than worrying about whether it is legally perfect.

I would challenge anyone to show me an NDA that's perfect. It's always been about creating something that's fair and balanced so that enough organisations will adopt it. This means we can build a critical mass of organisations that are all on the same template so when you're negotiating an NDA, it's immediately much more efficient.

As it's always been done in a certain way and lawyers have always spent a lot of time on NDAs, it's perhaps not been as challenged as it should've been to date?

That's it - it's having the mindset that we can challenge the status quo. If there's a better way of doing things then it's in our power to do it. We don't need to wait for an organisation, an official body or an association to tell us how to do something. We as the legal community can band together and create standards that we all agree to agree on. It's very empowering for lawyers.

It seems that there's more pride in work that's achieved through collaboration too.

I agree. What we learnt with oneNDA is that if you take lawyers out of the adversarial context in which they usually find themselves, they agree on much more than you'd expect. Everyone told us that we'd never get more than 10 lawyers to agree but we had 59 lawyers on the steering committee and they broadly agreed. Consensus on certain points was over 80% because, actually, lawyers have similar training so when you ask them for their thoughts, it's likely that they will agree with each other.

We're usually finding ourselves in situations where we're trying to win or wishing the other party to lose and that's not the best situation to put ourselves in if you're trying to agree on things that are sensible or to be creative.

As you've said, it's quite ambitious to get so many lawyers to agree on one text for an NDA. What would you say to lawyers who may be a little hesitant to adopt oneNDA?

If you're comparing oneNDA to your existing NDA and thinking that there are certain elements missing or that oneNDA is longer or shorter, I would go into the crux of what you think is missing and assess the risk. If you think that there is a huge risk associated with those gaps then I understand – and please tell us as we’d like to know so we can consider iterating on that gap in the future. But, in reality, if we look at the statistics, less than 1% of NDAs get litigated so how likely is it that the risk you're foreseeing will materialise? And is it worth the time and effort we go to manage NDAs? What’s the risk / reward ratio here?

It’s also important to note that from the very beginning, we've said that version 1 of oneNDA is an MVP (minimum viable product). It’s without a doubt a solid template that has been crafted by some of the brightest legal minds in our industry, but we need people to start using it in practice and for those users to give us feedback so we iterate and make it fit for purpose for a wider audience. The more feedback we get, the more we can broaden its scope. This is a community-led initiative so we want to hear what people think – it’s imperative.

It sounds like a big part of it is mindset?

Massively, yes. If we took a really pragmatic approach, how many times have we litigated an NDA? In my 14 years as a lawyer, I've never actually been a part of an NDA litigation nor has any lawyer that I directly know. As I said, less than 1% of NDAs ever get litigated.

Especially in an in-house environment, these are the things that you need to be considering. Is this work offering value that is proportionate for the effort that I'm spending? If the answer is no then it's really worth thinking about a more pragmatic approach and being really pragmatic about assessing the ‘gaps’ or the ‘risks’ you’re foreseeing. oneNDA may not include all the provisions your existing NDA does, but is that really a problem?

You mentioned collaboration being critical in the creation of oneNDA. Can you expand on the importance of collaboration when it comes to contracts?

There's very little collaboration in the legal industry. We tend to take a very artisanal approach to drafting contracts. We have complete flexibility in how we express certain provisions even though that flexibility isn’t always necessary and it certainly isn’t needed when we’re crafting boilerplate provisions or low risk / high volume documents like an NDA. Lawyers are praised for their drafting skills and often might think that our way of drafting is best or that something could be expressed in a better way. We're proud of the contracts that we've created and this creates an emotional barrier for us when we’re making decisions about what’s operationally savvy, risk-proportionate, and scalable.

The current way of contracting creates a lack of interoperability between agreements which means that if I send you my house NDA and you have yours, even though we both know what it should say, you still have to read every word to make sure it doesn’t include anything untoward or that there are any gaps. In fact, the purpose of an NDA is to say: ‘we’re going to share some information that’s sensitive, please keep it schtum and by the way this is legally binding’ – yet the agreements we use to reflect that rather basic principle often end up in long, protracted negotiations over points that are often irrelevant and the impact on business is less than ideal.

What do you think are the biggest challenges right now for in-house lawyers when it comes to contracts?

I think it's the volumes. It's ridiculous. I think the reason is that we haven't really re-thought how we do things.

Essentially, what we've done is take a very ancient process of writing down documents as though they're meant to be static and perpetuated it by overlaying it with technology. Instead of rethinking the possibilities that exist (e.g. how we can take legal agreements and make them more dynamic?), we've just replicated the ancient process (of writing out important things like contracts with a pen and paper) with technologies like word processing. And because we now operate with those technologies which make it a lot easier to add, cut, paste, and pull stuff in from other places, what might've been a 2-page contract in the Roman times is now 150 pages. But the process is in fact ancient and it needs to change.

The result is the creation and use of contracts that are often 150 pages long. That’s not designed for a human to read in one go, is it? It's not dynamic and it's not really adding much value other than serving as a tool whereby two parties agree on certain principles before you stick the contract in a drawer until a dispute arises. The current process isn’t helping you operationalise, it's not giving you valuable data insight, and to get any data at all, you have to either pull it out manually or overlay it with complex technologies like AI and NLP. Instead of rethinking the underlying process of drafting flexibly written agreement on a static word document, we’re just adding more and more tech ‘solutions’ to alleviate the pain that process causes. AI and NLP are incredible technologies but the way we’re using them in law is a waste of their potential. Standardisation would supercharge what these technologies can do for the industry and the efficiencies gained would be immense. But we need to fix the process first, before we jump in to solutionise with tech.

So, I think the problem of volume for in-house counsel stems from a systemic issue within the way that we perceive contracts, which is just as static documents that just grow and grow.

Definitely. You talk a lot about legal innovation. What does this mean to you and how do you think lawyers can best foster it?

Collaboration is key. The legal industry has been siloed for so many years that we have unfortunately fallen behind. If you look at the software community, it's a much younger profession than law and yet they've moved leaps and bounds ahead of us. We're still doing law, and especially in terms of contracts, the way we were 50, 60, 70 years ago. It's not good enough.

I think that the future of law and contracts lies in collaboration and the creation of common standards. If we're going to serve businesses and be commercial enablers, we need to move with the times. This means gaining efficiencies and working in ways that are more sensible. I don't think that you can achieve that unless you collaborate.

And, at the time of our conversation (in early August), oneNDA launched one week ago. How's the response been so far?

It's been quite phenomenal, to be honest. We've had over 2000 downloads of the document itself, 7,500 unique website views and we've had 50 adoptions already - all in the space of one week! As you can imagine, getting a document adopted in huge organisations can be a big deal as you have to go through your internal processes and get it signed off from a risk and compliance perspective so it's pretty amazing that we've had that traction in just one week. The crux of this is adoption so there's more to come.

Very exciting! What are your plans for the future?

For oneNDA, the next step will be an M&A clause. This will be a module to enable oneNDA to become fit for purpose in an M&A context. The current version is only suitable for run-of-the-mill procurement transactions.

Plus, we now have a community page on our website where we're inviting people to talk to each other and give us feedback on oneNDA so we can iterate and make it even better. To my point previously, we need to collaborate and we want the community page to be a safe space in which to do so. Following feedback and building more provisions, we can hopefully move on to more types of agreements as well.

As for tlb., we continue to specialise in contracts and gaining efficiencies through legal design, smart contract outsourcing and the creation of playbooks which are a really good tool.

Thank you for speaking with us! We're delighted to see such big strides in the legal industry. How can people learn more?

You can check out the oneNDA website, the tlb. website or catch me on LinkedIn.

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