NEW REPORT: The State of CLM and AI-Powered Contract Intelligence

Why Visual Contracting Is an Emerging Paradigm in Business

By Sunu Engineer

In late 2017, a team of researchers discovered a 4,000-year-old Assyrian clay tablet at the UNESCO World Heritage site of Kültepe-Kanesh in Turkey. The researchers were amazed to find that the tablet was a complex pre-nuptial agreement between a man, Laqipum, and a woman, Hatala. Not only did it include marriage clauses, but it even had clauses for divorce and surrogacy. What's fascinating is that all this complexity did not require reams of text but just pictographs on a small clay tablet!

We have surely come a long way from those visual contracts to the excessively verbose and legalese-laden contracts that businesses have to deal with today.

But the world is evolving and so are our modes of communication. From Instagram to Youtube to Netflix to augmented reality, the world is moving to visual, interactive and immersed modes of communication at an extraordinary pace.

As such, many companies are investigating a new approach to contracting: visual contracts.

Visual contracts have a number of benefits including:

  • Easy and Rapid Understanding: Humans have been processing visual information for millennia, long before the advent of text and languages. We have also been creating visual representations of information (infographics) for a very long time, as seen in prehistoric cave paintings. Our brains have evolved and perfected instantaneous understanding of visual information.
  • Impactful Delivery: Visual information impacts us far more than reading or hearing something. The McGurk Effect is a fascinating experiment in speech and visual perception. It shows that the visual information we get from seeing a person speak can override and change what we hear.
  • Support of Non-Native Speaker/Disabilities: Visual contracts are easier to process for non-native speakers of the language as well as persons with cognitive impairments, making them more user-friendly.
  • Nuanced Messaging: The expressions of the people depicted in a visual contract, the layout of illustrations, or even the colors used, can all convey a lot of meaning. Your company can appear friendlier or more professional just by how the visual information is conveyed and can be more engaging for stakeholders.
  • Shorter Negotiations: Because both sides (and lots of non-legal people from both sides!) find it easier to understand the contract and grasp the impact of the terms, negotiations can be much easier and faster than when using text contracts exclusively.
  • Gaps and Conflict Identification: Gaps in understanding are more obvious in a visual contract and it's also much easier to find terms that have the potential for future conflicts.
  • Relationship Illustration: One of the key aspects of visual contracting is that relationships become obvious. If you overlay the visual with data such as a supply chain that also shows inventory, distances, delivery times, etc., the relationships between objects, people, places and data can come alive.
  • Collaboration: It's much easier for teams to process and collaborate on visual contracts than text. This is especially true for those outside the legal profession.

The Icertis Vision for Visual Contracting

We see future adoption of visual contracting as a two-step process.

The first step involves creating a visual representation of a traditional contract – making it easier to understand, negotiate and execute. This approach ensures that enterprises can plan to evolve to visual contracts at their own pace, without potentially disruptive and confusing changes to the ways traditional contracts are authored, negotiated and interpreted. It also provides a quick path to convert more straightforward contracts like NDAs to visual contracts. Icertis provides the right tools today – enabling visual contracts and their representations on the Icertis Contract Management (ICM) platform.

Visualization of contracts extends naturally from single contracts to chains and networks of interconnected contracts. The world of contracts is poised to expand from being an archipelago of isolated contracts to a connected landscape. The visual paradigm becomes more and more useful in this scenario. It would be impossible to navigate this complex terrain without visual aids.

The second step uses more sophisticated, AI-based tools to convert written intent to its visual representation, and visual representations to software code – paving the way for what we call autonomous contracts.

This trailblazing concept envisages that once contract clauses are converted to code, contracts can negotiate themselves and solicit human interaction when exceptions are encountered–fundamentally transforming the foundations of commerce, the realization of risk and the enforcement of compliance.

To learn more about Icertis' vision for visual contracting, visit our VizualizeAI page, or download our eBook: "Visual Contracting: How Technology Will Make Contracts More Understandable and More Valuable."

Sunu Engineer serves as Principal Architect, R&D, for Icertis.