In this episode of the Future Contracts Podcast, Law Insider’s Electra Japonas sits down with Preston Clark—CEO of SimpleDocs and President of Law Insider—to talk about how legal workflows are shifting, why the CLM monolith is breaking apart, and what the future of contracting looks like from the trenches.
Preston shares personal stories from his early days in law school and legal tech, how he approaches building tools for real legal teams, and why he thinks most contract review tools are solving the wrong problems. This episode is a must-listen for anyone thinking seriously about practical AI and real-world contract automation.
Podcast Episode: Future Contracts with Preston Clark
Intro: Meet Preston Clark
00:00–04:00
Electra introduces Preston Clark, President of Law Insider and CEO of SimpleDocs. They discuss his background in law, what drew him into legal tech, and his perspective on contracts as more than just legal documents.
The Problem with CLM
04:00–09:00
Preston breaks down the disconnect between contract lifecycle management tools and actual legal workflows. He discusses the difference between contract storage vs. contract action, and why the legal industry continues to get it wrong.
Why AI Alone Isn’t the Fix
09:00–14:00
Electra and Preston explore how AI is being positioned in the legal world. Preston cautions against thinking AI is the silver bullet for contracting problems and emphasizes the need for workflow-aware solutions.
From Lawyer to Builder
14:00–20:00
A more personal segment. Preston reflects on leaving a legal role to build tools that solve the problems he experienced firsthand. He touches on entrepreneurship, failure, and learning curves in legal innovation.
Lawyers as the Product
20:00–26:00
A provocative moment where Preston describes how lawyers are taught to think of themselves as the “product”—credentialed experts who deliver services rather than lead teams or innovate operations.
Designing for Real Legal Teams
26:00–32:00
Discussion about the importance of designing legal tools that work for actual day-to-day users, not just buyers. Preston explains how SimpleDocs is being built around daily workflows and pain points.
Building a Standard that Works
32:00–37:00
They dive into Law Insider Standards and the goal of creating practical, community-vetted templates. Preston shares the origin and adoption path of these standards.
The Future of Legal Work
37:00–End
The conversation ends with predictions and reflections: how legal work is evolving, what skills matter most, and what Preston is most excited to build next.
Full Transcript
Electra Japonas (00:02.023)
Welcome to Future Contracts, the show where we talk to the people reshaping how legal work gets done. Contracts, workflows, AI, it’s all on the table. I’m Electra and for this very first episode in our series, I couldn’t think of a better guest than Preston Clark. He’s the CEO of SimpleDocs, President of Law Insider, and someone who’s been thinking deeply and building very boldly at the intersection of law and technology for more than a decade.
But before we get into all of that, I want to start with something a little simpler. Who Preston is, how he works and what drives him. Preston, thank you for joining us. Before SimpleDocs and Law Insider, what were you doing?
Preston Clark (00:40.536)
Thanks, Electra.
Preston Clark (00:46.574)
Lots of lots of things. I was not a linear path. I was a Peace Corps volunteer in Central America for two and a half years. I was a law student in Miami. I was an in-house attorney in South Florida and And then I got into sales. I loved enterprise software sales I think in part because I needed to pay off my student loan debts and it was something that came very natural to me
So I moved to New York and then later to San Francisco where I spent about eight years, helping legacy sort of slow growth, SaaS B2B businesses, repackage and reemerge and ultimately get sold. So I’ve been through seven or eight acquisitions, over the years. And, and then, you know, found my way always back to legal tech. And so, you know, there’s always sort of a throughput on all of this, but
I definitely have not had a linear path to getting to where I am now.
Electra Japonas (01:47.409)
Yeah, it doesn’t sound like it. So when you look at everything you’re working on right now, what’s the thread, I suppose, that ties it all together?
Preston Clark (01:57.27)
Yeah. So I have this idea of sort of compounding experience or stacking your experience, or maybe this idea that we never start from scratch or we never start from zero in any of the projects we’re working on, or we shouldn’t at least because we’re always pulling from things we’ve done in the past. Law Insider was a project that was focused on distribution and delivering global value.
to transactional lawyers. We didn’t really have a thesis necessarily for what we would do with it once created, but we had a lot of conviction that lawyers would use it, they would share it, it would have potentially a lot of engagement through Google, through Google search, and that over time that we might be able to do something with it. so you sort of, the throughput is, well,
I have B2B and software experience. have contract experience. have database and community experience. more recently, I have contract management experience. And so you connect all of these things together from my own past. it’s sort of, in some ways, it’s obvious. Of course, I would be building Law Insider and SimpleDocs. And of course, this is where I’d spend my time. But only in hindsight.
I think only as I’m looking back, did the pieces fit together? I think that there was lots of years where I was just a CRO working for a compliance tech company trying to get it sold. And that was all I was doing. And so it wasn’t sort of this methodical plan where I was then I was going to do this and then this. tend to be, I think as you know, and as I think you are, I tend to get very consumed by whatever it is that I’m working at and on in the moment.
And then when I’m bored, when I’m done with it, then I move on to the next thing. But the next thing, I always try to stack it. I don’t want to run away from the work I’ve done. I want to figure out what is the next thing I can do that brings that experience with me. So I don’t know if that’s fully responsive, but that’s, in my mind at least, that’s how the pieces connect together.
Electra Japonas (04:16.294)
Yeah, totally get it. I get what you’re saying about that all-consuming feeling that you get when you’re into something that you can see has a real opportunity to work. And it kind of ties all your experience together and the things that you like. I totally understand that.
Preston Clark (04:33.484)
When, and sorry, just like I really believe in the idea that inspiration is fleeting. Like it sounds like romantic or poetic, but it’s, it’s real. Like if you feel moved by something, especially if you have a track record of doing deep work, meaning you’re not whimsical in your decision-making, you don’t jump from one thing to another. If you’re the type of person that has, you know, follow through.
then that inspiration, you sort of have to, you have to then go do the next thing, sort of compelled. And I know that’s moved a lot of your career as well.
Electra Japonas (05:06.845)
Yeah, I get it. And I think that when you feel that feeling, it’s often the best indicator that you have to do it from a reasonableness perspective, not just from a this is what I want to do perspective. There are reasons that you might feel inspired by something and it’s not random.
Preston Clark (05:24.492)
For sure, yeah, you have intuition there, for sure.
Electra Japonas (05:27.761)
Yeah, so just going back to Law Insider for a second, what gave you the idea to start that?
Preston Clark (05:33.902)
So I’ve told this story before, I’ll keep this brief, but I was living in San Francisco. My best friend at the time and, or, you to this day is David Baga. He has been sort of a CRO, CEO in the Bay area for a long time. But in this moment, he was the VP of sales for Rocket Lawyer. And Rocket Lawyer was growing very quickly at the time. They just taken a bunch of capital from Google Ventures. And
I was sort of unpacking the business with David and he was walking me through how they grew. for whatever reason, I just have a deep fascination with distribution and sort of what I’ve, didn’t know this term at the time, but sort of, you know, permanent distribution advantages, sort of what is, or what we call like proprietary distribution. Like what are the aspects of your business that create acquisition efficiencies? I know that’s not very romantic. It’s not very.
probably interesting to your audience for me to be interested in that. like that’s, that was my obsession and in many ways still is. And, and so I’m like, David, explain this business to me and how Rocket Lawyer grows. And he started pointing me to a few of Rocket Lawyer’s marketing partners. And one of them was a website called 1CLE, which had indexed the Edgar database. And I was fascinated by it. I looked at the website, I felt like it was
really well indexed by Google and very popular, had a lot of traffic, but it wasn’t particularly well conceived. It looked like sort of a side project. But clearly it was delivering a ton of value to Rocket Lawyer and in exchange it was a very profitable business in its own right. And it was just this like really simple idea where I thought, immediately I got it. Like I saw the whole thing. Lawyers go on Google, they’re looking for a clause. They’re looking for know, a leasing, indemnification clause with these parameters.
long tail searching Google, comes up, you end up on this website and then you stay there because you’re going to search for other things. And I thought it’s a valuable audience, lawyers, transactional attorneys, it’s global. The percentage of lawyers that are negotiating and drafting in English is certainly in the hundreds of thousands, if not more. And not to mention business owners and other people who are doing it, contract managers. there was this idea that
Preston Clark (07:57.282)
we could create an audience around an existing database or an existing data set and just stick with it for a long time. But even as I say that, it was with the acknowledgement that I knew I’d been in business long enough at that point to know that to get well-indexed by Google would be probably a five-year project. And so it was ambitious and very patient in that regard. But that’s what we set out to do. We didn’t know exactly what I would do with it.
but knew that if we could commit to it for a long enough period of time that we would have something that potentially could be very special.
Electra Japonas (08:35.623)
Yeah, that’s a great story. And then from there SimpleDocs was born. Can you talk us through how that came?
Preston Clark (08:43.5)
Yeah, that’s a heck of a bridge. That’s not the bridge at all, right? It wasn’t like, and then it was, there was like, you know, three careers in between that because it was, you know, it was, it was almost 10 years before we started monetizing Law Insider. And then, you know, years after before I created SimpleDocs, but
Preston Clark (09:03.884)
I don’t want to be too indulgent here. So I’ll just say Law Insider went from free to gated paywalled. If you want more access to the database, you have to pay. We have 11,000 customers who pay us for that service today. Seems like a good business, but it has some flaws to it because the repetitive or frequency of use isn’t as high as we’d like it to be. And it’s not because the product isn’t better. It’s because the nature of
needing a database to pull samples is not a daily use case. I think it’s arguably maybe not even a weekly, I think it’s a monthly. And that has some inherent flaws. And so, but all the while we’re acquiring customers, we’re acquiring free users, have millions of free users who’ve accessed the site over the years and created free accounts. And so I thought, well, we have to add other…
product skews, we have to add other product layers. And so SimpleDocs was my vehicle to do that. And so we created a separate engineering team, a separate sort of go to market function focused on in-house attorneys and AI capabilities that would automate workflows, AI enabled repositories, AI enabled contract review.
with the idea that we would incubate these, we’d bring these to market in slow ways in sort of fragmented point solution ways, test, validate, get through beta, and then start distributing it through Law Insider to see if we could establish product market fit and then ultimately, establish channel channel market fit with Law Insider. know I’m sort of, I probably lost half the audience at this point, but all that really means is we got to
build a product that people want and then I have to prove that Law Insider is good at distributing that product. And the punchline of course is we’ve done that now and it’s incredible as you know, we talk about it every single day. But that’s sort of, that was the bridge between the two and it was a pretty, you know, painful process to get there. It’s a lot of work to build software and to get through beta and get through your first customers who…
Preston Clark (11:19.66)
have some speed bumps and things that they want that you haven’t built yet. And now we’re in just ruthless execution mode, which is a ton of fun.
Electra Japonas (11:28.595)
I mean, it is so much fun because I’ve never experienced product market fit quite like it. Can you talk about product market fit and what it means?
Preston Clark (11:34.99)
crazy.
Preston Clark (11:40.79)
Yeah, yeah, if you’re on Twitter or X, there’s lots of wonderful definitions. Mark Andreessen has a great definition. Like there’s lots of great YC has great definitions. It’s magic. It’s when your sales process is broken, your marketing is broken, your sales team isn’t very good, you’re slow on follow up, like everything, you don’t have pricing right.
and you literally your customers are ripping the product from your hand. saying, hey, you haven’t got back to me. I filled out the due diligence form for you. Can you just verify that everything is right? then if so, they’re just like saying, I need this product now. And I’d like to say that you can have a vision execute and just with assurance get product market fit. And it just doesn’t work that way. I’ve had it one other time in my career was seven years ago. Haven’t had it since then. Like I’ve had
sort of mild degrees of product market fit, but not the magic that you’re asking me about where the product itself is just flying off the shelf and where you’re sort of catching up to the demand perpetually. you know, we were watching the adjacent competitors very closely, as you might expect. So we were watching their growth, but that was no guarantee that we could build it.
that we could capture the momentum of the market, that the feature set would be right. it’s not, even when you have competitors who have product market fit, and this is not intuitive, even when you have competitors who have product market fit, you creating a competing product does not mean that you are going to achieve product market fit. And I think that’s sort of maybe not obvious, but a lot of magic still has to occur in order to achieve it. Least of which is you have to be able to sell it.
against a competitive market. And we all know this is proving to be an incredibly competitive market.
Electra Japonas (13:38.863)
It is indeed and you’ve been in legal tech before, you know, from before it was trendy. Why did you stick with it for so long? Because it has been a rocky road for legal tech generally.
Preston Clark (13:51.948)
Yeah. I really enjoy it. enjoy selling software to lawyers and building products for lawyers. think it aligns with my skill set. think lawyers are difficult. They’re difficult to sell to. Sometimes they have unreasonable expectations. The sales cycles can be very long and arduous. And in many cases, they’re not great buyers.
candidly, and I don’t mean that like offensively, like they’re not like CMOs are great buyers because they buy so much software. And legal rarely buy software. And so there’s just a learning curve. And I really enjoy that. And I think it plays to my strengths and our team strengths. But I also going back to my point about not wanting to start over and never starting from zero, I just felt like this is an area where
I have an advantage and I just didn’t want to leave it. Now I say this having built and sold or helped build and sold a FinTech, HR compliance tech companies and EdTech company. So I’ve had side quests that I think I cared less about candidly from a sort of passion about the user, passion about the product. Like this is the most interesting work I’ve ever done.
I care more about the buyer, I care more about the product than I ever have before. so I couldn’t imagine, you know, this stage of my life and this stage of my career, I wouldn’t do anything else than this.
Electra Japonas (15:29.041)
Yeah, Preston, what we’re now talking about in terms of product market fit and where we found it is with regard specifically to the word add-in that SimpleDots has developed for Law Insider. Why do you think…
Preston Clark (15:39.65)
Mm-hmm. Yep. Yep. Yep.
Electra Japonas (15:46.727)
that has found product market fit so quickly versus other products that you’ve may have tried to sell in the past, both to lawyers and to not, I don’t want to say non-lawyers because people don’t like that term, but people who are not lawyers.
Preston Clark (16:08.366)
Why, to use sort of an American expression, like why is my batting average so low? I don’t know. I don’t know. Like know you’re not asking me the question in that way, but there’s this sort of like, if I knew, then I wouldn’t have striked out 10 times or a hundred times. So I can hypothesize that, so there’s this concept of category awareness.
and then vendor awareness. And then there’s this concept of green field. There’s a confluence of things that are happening that are very magical. And thanks to a lot of other competing vendors and a lot of VC money that has flooded the space, category awareness for AI powered contract review is clearly here. And that’s wonderful.
Thanks to OpenAI, thanks to other LLMs, there is broad exposure now to what AI can do. And so its power is understood. don’t, there’s less skepticism in the market. But the real magic in all of this is that if you think about like the crossing of the chasm of sort of going from non-adopters to adopters and like full penetration.
however many years that takes and full penetration for us would be every transactional lawyer, every lawyer in the world using AI in their practice. And are we there yet? we 20 %? Are we 50 %? We don’t know. But I think that the magic of what’s happening now is that category awareness exists. Everyone’s tested AI. They believe in it. They know that they need a legal focus, a sort of legal enterprise AI ready tool, and they have not bought one yet.
95 % of our customers, and you know this, are first time buyers of AI Legal Tech. They’re not first buyers of AI because they have their chat GPT accounts, etc. But what that means is that we’re not, you know, I’m getting off the point, I’ll sort of land the plane on this, but I would say you go into a CLM evaluation two years ago, and it’s someone walking in with battle scars.
Electra Japonas (18:34.099)
Yeah.
Preston Clark (18:35.01)
Tell me about, well, I need to know. Yeah, I don’t want to hear the promises about ROI. I don’t want to hear the promises about how fast implementation is going to be like just pure skepticism because they’ve been burned by two vendors. All the promises didn’t land. They got in trouble with their CEO. Their CFO was pissed like on and on. And now you just have optimism, excitement. We show them the product, as you know, their eyes light up. They can’t believe it. They bring the skeptics into the call. Skeptics can’t believe it. Like this is such a magical moment.
And we get to be along for the ride. We are an LLM rapper, but with a lot of legal capabilities that are very well conceived and well designed for the legal use case. And I think that that’s just really special. We’re very lucky to be in the position we’re in right now.
Electra Japonas (19:27.325)
We’re really lucky and I think that what we’re doing and what excites me about this is the fact that we’re at the forefront of true legal transformation and this term of transformation has been bandied around for years. It’s happening and it’s happening without the consultants pushing it.
Preston Clark (19:36.78)
Yes, yes.
But it’s happening, but it’s happening.
Electra Japonas (19:47.845)
It’s happening without the big four selling a huge transformation project to legal. And that is incredible because it kind of flies in the face of everything that everyone’s been talking about in terms of transformation and this kind of waterfall approach to transformation that you were expected to take, even though you had a proper, busy, full-on job. And so to be able to take something so lightweight.
Preston Clark (19:51.543)
Yes.
Electra Japonas (20:16.699)
to prove the case of yes, technology can totally change how you work and it can do it quickly and there isn’t this enormous adoption journey, I think that’s the thing that really is exciting about this coupled with how is this going to change the job of lawyers in the future. So what are your views when it comes to that? How would a super efficient legal team work in your opinion?
Preston Clark (20:49.686)
agentically, you know, it’s a buzzword, but I think it’s very real.
Preston Clark (20:58.478)
For law firms, I think it may be different and more complicated and more nuanced and more practice area specific, what an immigration lawyer does versus a litigator and how they leverage AI. I have less expertise there. I think for in-house, agentic is the answer. And what that really means is that the promise of workflow automation, the promise of a centralized repository where all the contracts live,
I think was always sort of a deficient promise without AI. And I think it’s AI, it’s the agentic version where complete workflows, complete requests can be processed. basically the view, just I think the simplistic way to say it is you have a team of junior associates that happen to be sort of agentic bots or whatever they are out there.
doing work that then you are reviewing. So it’s almost like you’re managing a team. And so we can just illustrate that through examples. It could be the sales team needing to create and send out a purchase order or your head of marketing needing to review, someone to review a cloud services agreement for a piece of software that they’re going to license or the CFO needing to see, because there’s an M &A activity needing to see all of the contracts that have
non assignment clauses or provisions. These are things that are like, yeah, we know these things that software already does those things, Preston, like what’s new about it? Well, what’s new is that they still require several manual steps, even within modern workflow management that is that is sort of well structured and well designed. And I think where we’re heading is that those things will just the V one and maybe ultimately the V final.
will just occur instantly. And so a salesperson is not ever waiting. There’s not this like, gosh, it’s that we’re closing the quarter and legal has to really just, you know, have all the caffeine ready to go because they’re going to be up till 3am because all of these contracts are going to come in that need to be reviewed and signed, etc. Like I just, I think that that goes away because, because all of those, those rules and routing instructions and playbooks and approvals.
Preston Clark (23:23.566)
AI is going to handle it so elegantly and so instantly and all we’re going to see is outcomes that can still have legal oversight. But over time, that legal oversight is going to get less and less the more confident we get with the output.
Electra Japonas (23:38.397)
So where does that leave lawyers if they’re not doing the daily tasks? How do you think their role will transform in a world of AI, particularly agentic AI, where there’s more autonomy?
Preston Clark (23:51.95)
Um, yeah. So there was an article floating around CNN and elsewhere that like the market is in a, um, uh, no fire, no higher zone right now. And that to me is, is economy driven, but it feels, or at least it’s a convenient narrative to say it feels like it’s AI driven as well. And so every head count you lose, say, um, do we need to backfill it? Um,
And, and every CFO before you backfill it is going to ask the question, can AI fill some or part of this role? And, and I think that that just increases over time. think law firms are thinking that way too, not just in-house where they’re saying what more we can do. So I think it’s going to be an evolution that’s going to happen very quietly and not dramatically. It’s, it’s not like this Elon Musk, let’s fire 80 % of the workforce and like,
we’re just run AI. Like I’m really skeptical when I see those, like we shut off Salesforce and we’re doing with AI. It’s like, okay, like sure that that’s just for, for headlines. What’s actually going to happen is, is much quieter. and, and it’ll just happen every day. And I don’t, you know, I talked to a lot of law students at the university in Miami. I talked to Marcia Weldon who leads a transactional skills department there. And we talk about what it means for legal education. We talk about what it means for, for,
you know, three L’s that are graduating that are coming into the legal profession. And it is, it is different now and it’s scary. And even though you and I are building a business that is creating more efficiency that may be contributing to that downside impact, it doesn’t mean that I sort of revel in it or that I’m counting the numbers. It’s like one less legal job means that we won. It’s like, I don’t think about it that way at all. But I also, I’m not going to fake a narrative, which is that everything is fine.
I have a good buddy who is a personal injury, a lawyer in South Florida. And, and he sort of manages the corridor from sort of Key West up to Fort Lauderdale. A lot of sort of motorcycle accidents, car accidents, and he’s just like, you know, autonomous vehicles, you know, in in his part of the business, like it’s, it isn’t just like AI powered contracts that are coming for one segment of jobs, like AI is going to disrupt
Preston Clark (26:20.344)
what you and I do. And so I don’t, no one can stand on a mountain top. No tenured professor right now is saying, it’s all good, no problem. Everyone’s being disrupted and we all have to think creatively about where we’re gonna fit into this new world.
Electra Japonas (26:35.345)
Yeah, it’s going to be really interesting. And I do see that there is going to be an evolution of just the role of a lawyer, the same way there’s going to be an evolution in any role. Because today, if 20 years ago when we were deciding what to study, we knew what roles existed now.
maybe would have made different choices because the roles of today weren’t even fathomed years ago. So I think that there’s going to be this whole new era of career options that we haven’t even imagined yet.
Preston Clark (27:12.962)
That’s right. That’s right. And I do think that law schools like the University of Miami are pushing in that direction. It’s hard. It’s moving so quickly. It’s hard to sort of be cutting edge in that. But I think they’re doing a good job of sort of saying, how can we help our students rethink about the expertise that they’re going to need and be ready for it? Sorry, one more anecdote. I have another friend who hired an attorney who is a fifth year and paying $100,000
plus thousand US and they were saying, gosh, this is kind of a worst case scenario because this fifth year doesn’t really have enough experience to carry the workload I need them to, but they also don’t have the AI and the sort of new tech skills that I really am craving from sort of a junior hire who can bring that in in a way that we don’t have. And so there’s sort of dead man walking in the middle because they’re too old to know the new tech and they’re not experienced enough to sort of have the full expertise to lead the practice.
It’s just, yeah, we’re all gonna have to figure out wherever we are right now. It’s up-skilling, it’s getting, sort of figuring out the new areas of expertise, but we’re all gonna have to do it.
Electra Japonas (28:22.599)
Yeah, yeah. And it’s also thinking about how you systematize or transpose your knowledge and capability into an AI ready system that can scale it. So how do I take the knowledge that I’ve got in my head around how to review a contract and then how do I package that so that it’s AI ready so that I can then turn what I do into something that can happen much more quickly, much more efficiently, much more…
much more cheaply.
Preston Clark (28:52.558)
Yeah, one of the biggest problems is, know, and I hope this isn’t controversial, lawyers are not good managers. The reason they’re not good managers is because they’re products. No offense, not being offensive, but we go to law school so that like a lawyer or a doctor is a product. You’re delivering a service that is a product that you have a credential for. We take a lot of pride in that.
You know, I failed the bar the first time, I had to take it a second time. My God, how painful was that? But now I have the credential and I am product now. I can deliver a service and charge you for it.
I don’t want to manage people because I am the product. It’s like taking your high performing salesperson and saying, I need you to be a VP of sales. Like, no, I’m making half a million dollars a year selling software. I don’t want to manage people. I think that there’s going to be a learning curve, but I also think that there’s this like sort of foundational challenge, which is that lawyers want to be the product. And when you say, it’s not just about the billable hour, it’s about saying,
Hey, do want to get good at using in sort of designing agentic tools that can automate parts of your work? And even if like that month that sort of idea of so you can get back to doing more strategic work They’re like, well, what is the strategic work? Like I like doing this. went to law school for this I’m good at this and now you’re gonna say I need to learn how to train a tool To do this automatically
Like it’s not just scary, it’s like it takes away a part of their identity. And I think that that’s super scary.
Electra Japonas (30:29.873)
It is scary and I think that is the number one barrier to true adoption of AI tools from lawyers and for them to drive that adoption rather than it being kind of imposed on onto them.
Preston Clark (30:44.076)
Do you think that in 10 years any doctors will be doing surgery by hand? Like I won’t want, like you’ll be like no, like what sort of archaic.
Electra Japonas (30:50.099)
We’ll stop.
Electra Japonas (30:55.163)
Exactly. was saying to someone the other day, was saying, you know, if an accountant told you that they do your accounts with a calculator, which is an element of tech.
wouldn’t you fire them immediately because that is so negligent. That’s such a negligent way of practicing. And then you’ve got Excel and then you’ve got Xero that now integrates directly with your bank account. Obviously you expect top of the, you know, top of the range technology to be used for someone to be providing you with a service. And I think it will just be expected from the client that you are deploying state of the art technology.
and are giving them therefore the efficiencies that come with that. And so I don’t think that it will necessarily, when I say lawyer driven versus imposed on lawyers, it comes both from the CFO, if you’re in an organization or your client who is expecting you to do things a certain way.
Preston Clark (31:50.402)
Yeah, yeah, that’s really, it’s really interesting.
Electra Japonas (31:55.795)
Preston, we talked earlier about battle scars and lawyers and adoption and CLM. Let’s talk CLM for a second. Is it dead?
Preston Clark (32:15.064)
So a couple things. We’ve talked about this before. I’ll try to be concise. I think that CLM had really good aspirations. I think you’ve made the strong point that the core problems that CLM endeavors to solve are important. We need a place where all of our contracts live. We need to speed up getting contracts out. We need to accelerate time to signature. We need to know when contracts are expiring so that we’re not trapped in auto renewals.
We need to be able to review contracts faster and get to redline and get to resolution and get to signature. need to advance integrations. Like, no one’s saying that these things are dead, but it does feel to me that unlike larger software categories like HRIS, like a Workday or CRM, like a Salesforce, they always had this like foundational job to be done initial point. You know, HRIS, was running payroll and…
CRM, was just storing all of customer and op records. And then you sort of built on top of that. I don’t think, maybe people will disagree, but I don’t think CLM really ever had that because the repository was never enough. Why was the repository never enough? Because just go use Microsoft or Google. Like storing documents doesn’t need to be a legal function or a legal tool. So you sort of had to do more, but all of the more really needed AI. And so my answer
is that CLM has been waiting for this moment, which is why the ironclads and others invested so much money and so many years in developing their own AI. And unfortunately, and this is not an indictment on any of the legacy vendors, it just wasn’t as good as it needed to be to create the magic moment that we’re now having.
as we’re all building on top of open AI and other LLMs. So the most controversial thing I’ll say, no one cares about my opinion in this, because I think that, you I probably don’t have enough industry expertise. So I’m just, this is the one like, like, future, futurist statement. I don’t think any CLM that existed seven to 10 years ago will be alive seven to 10 years from now.
Preston Clark (34:39.622)
and maybe I could say five years ago and five years into the future or 10 and 10, I’m not, you know, I don’t, I’m not that exacting, but I just think that if you built your software pre LLM pre open AI that, you’re going to have too much technical debt. and I think that your whole framing of what it means to solve the problems that I sort of was just sort of outlining before.
workflow automation, approval, self-serve, alerts, et cetera. I think that if those aren’t AI native capabilities, it’s just gonna be too hard to throw out the code, convert existing customers. Like it’s just, you’re gonna get stuck. So anyway, that’s my hot take.
Electra Japonas (35:26.917)
Interesting, that is definitely a hot take. And does it feel to you that we’re going into kind of the third generation?
of CLM because the way I see it, you’ve got the first generation, which wasn’t actually CLM, but it later transformed to CLM and it was more document management systems like your I-Manage or those older legacy tools that law firms and in-house legal teams adopted to store their documents in a more intelligent or secure way rather than just sticking it on SharePoint. And then you had second generation CLM.
which was the first kind of wave to just straight up call themselves CLM, contract lifecycle management systems that came along. And that includes the ironclads and the contract pods. And they did invest very heavily in their own AI. And they started off, to your point, with repository because it was the thing that people were buying. And then they had to, of course, justify the higher costs because they were selling to quite a small market and they had to add stuff
to it and they were just responding to what people were asking for. And they ended up building these monstrous systems that were very hard to implement. And I say this from experience because I’ve implemented many a CLM and there was never a project that went without a hitch. It was always really, really complicated and really frustrating from the client. And I ended up in more of a relationship management role rather than a software implementation role. And I was like, why is this so complicated?
And it was because there was a lot of over-promising and under-delivering, or the client’s expectations were completely inflated when it came to the problems that CLM would solve. But now we’re seeing Generation 3, I think, which is these AI native, unbundled, lightweight, bi-
Electra Japonas (37:27.015)
Buy it like a point solution. Don’t buy it like enterprise software. Buy it to solve your current problem. Don’t worry about buying the rest of the suite of modules that we have. But if you do want them, we’re here for you and we can scale with you as and when you need. And I think it’s not even the technology to an extent, it’s the approach to solving the client’s problem that’s changed.
Preston Clark (37:29.219)
Yeah.
Electra Japonas (37:52.569)
and is capable of changing with the evolution of technology. That’s not really a question, but that is just a hypothesis that I have, I’d love to hear your thoughts on.
Preston Clark (38:03.468)
Yeah, I think I agree with the hypothesis. in order for Netflix to charge us whatever they’re charging now, they need to have a lot of movies because they couldn’t just license five movies and then we’re not going to watch the same five movies over and over again. And so a lot of the thesis around bundling is that none of the parts can stand sufficiently on their own. Another thesis of bundling is that people want to buy all the things.
And so getting a discount and getting integrations makes sense, but that’s sort of a crude explanation. I think that pre AI or at least this iteration of AI, the individual parts weren’t good enough to stand on their own. And so another way of what you spin on what you’re saying is that something like AI powered contract review that integrates into Microsoft word.
was just really underwhelming. When we had our Future Contracts Miami event in February, we talked about this. We heard some horror stories from law firms and in-house teams who had tried to implement for, sorry, now I’m like gonna have a different version of First Gen, who had implemented First Gen AI review tools and they just failed. They were really hard to implement, a lot of if-then, lot of very descriptive language, not very semantic at all. And ultimately wasn’t a time saver, but it took a ton of time to implement.
And now we’re at a place where, as you know, like these tools are just magical. And so people want to buy that magic and they want to just buy that. And they’re less concerned about this larger vision. You made a sort of comment about not needing consultants. Well, yeah, you don’t need a consultant to purchase a point solution, especially one that you know works. You know the LLM model it’s based off of. You get a free pilot. Remember there used to be bake-offs for repositories?
based on their LLM models, their own homegrown AI, because no one knew if the AI was any good, like that’s dead. So I think it’s really exciting. I do think that this is a moment of unbundling, but I think that the unbundling is only possible now because AI has injected life into these individual products in a way that allowed them to be evaluated discreetly or sort of singularly, purchased singularly and then implemented very quickly. But nothing…
Preston Clark (40:24.256)
Even across CLM, like we have a lot of people have like the CLM wheel. It’s like, you know, it’s, it’s integrations, it’s repository, it’s alerts, it’s, it’s self-serve, it’s workflow automation, know, eSign, et cetera. It’s like review and redlining right now for whatever reason, Electra is just like, it’s the thing. It’s, it’s the tip of the spear for CLM. It’s what, you know, my biggest surprise, you’re not asking me this question. My biggest surprise.
is I don’t feel like legacy CLMs have moved fast enough to get into the market to compete with Law Insider, SimpleDocs, Spellbook, et cetera, to capture this greenfield moment that would allow them to preserve their position in the market as well as capture new market share that then they can upsell into full CLM over time. And so you’re allowing these new incumbents or these new potential future incumbents to chip away at your incumbency
And then over time, and is exactly you just described, chip away at the full CLM, but piece by piece, rather than forcing this very complex, very labor intensive, massive implementation, which I think just won’t exist in the future or probably shouldn’t exist now.
Electra Japonas (41:42.099)
And why do you think they’ve not moved fast enough?
Preston Clark (41:46.158)
I think it’s really hard. I’ve been stuck before. I’ve had legacy businesses. Customer, you got your sales team cranking, you got your CS team cranking, you got engineering cranking. Maybe you have like a little skunks work team that’s building on the AI, looking at the competitors. Oh, I think we’ve built one. And then even if it’s as good, you’re like, okay, your marketing team, what are we gonna do? Are we just gonna sell that? Are we gonna do freemium of this? Well, if we do that, is it gonna erode our existing price point? What about the people who are expecting this for free that it’s gonna be bundled in? It’s like all of these like questions and the CEO is like, shit.
I’m not sure how bold we should be because we’re already valued at 50 million or a hundred million or a billion dollars. Are we willing to bet everything on this new product, which has countless competitors? And oh, by the way, Law Insiders out here selling it for $59 a month, which for an enterprise CLM is like the scariest thing they’ve ever heard of. So I think it’s very difficult.
to do what we’re doing and the other new entrants are doing for the incumbents. But I think they’re watching it probably in slow motion and just being like, shit. Yeah, knowing that there’s not much they can do about
Electra Japonas (42:51.763)
cringing.
Electra Japonas (42:56.627)
Why can Law Insider offer this tool for $59 and others are offering it for $500?
Preston Clark (43:08.302)
I was looking at pay-per-click costs for contract automation, AI contract automation, sort of variation of packages of words. And the going click-through rate right now is I think around $29. Generally in enterprise software, and this is like, you know, I don’t have any data of what, you know,
Electra Japonas (43:26.472)
Yes.
Preston Clark (43:36.814)
Harvey or Spellbook or whatever what their conversion rate is, I have no idea. But let’s assume that you’re going to have to spend 50 clicks, probably 20 clicks to get a demo. Your demo to close rate is going to be probably 15%. You do the math and it’s going to cost you hundreds and hundreds of dollars or more to close a customer. And those customers are going to vary between individual solo attorneys.
And then on occasion in-house and on occasion law firms. you know, uh, KL Gates, um, and, uh, Denton’s, are not going through pay-per-click, right? So your biggest leads are not there. So just, it comes down to customer acquisition costs, long story short. And, um, because SimpleDocs had already been down the road of developing the software with the intent of distributing it through Law Insider, sort of the economics were good, the investment.
You know, we still had to spend, you know, a million and a half dollars to build the tool. So it wasn’t like it was sort of easy to build. It’s like, oh, it’s just a wrapper, right? You just sort of, you know, put this into the market and it’s done. It’s like, okay, it doesn’t work that way. But because we have distribution efficiency via Law Insider, for all the reasons, I think everyone watching this knows, you know, we have, 1.2 million registered users today. We have 11,000 paying customers. have an email listserv of, I don’t know what it is today, over 400,000.
These become distribution efficiencies for us that allow us to play by different rules and have fundamentally different economics. And by the way, we’re privately funded, so we don’t have private equity or venture capital telling us what to do in terms of how much revenue we have to extract from every customer. So we just, you we get to play by different rules, which is awesome.
Electra Japonas (45:22.715)
It’s so awesome and it’s so fun to have that freedom. Preston, we’ve got time for one last question. What’s something about the future of contracts that you believe strongly but most people still don’t see coming?
Preston Clark (45:40.884)
wow, this is going to be a total letdown of a last question. I don’t, I’m not a futurist. like someone like a biology or others just like, or just blow my mind with their, with their vision. I don’t have that type of vision. and maybe if I did, I just wouldn’t tell you. So maybe I’m lying to you right now and I actually know two things and I’m just going to keep them a secret. but truthfully, I don’t know. I think that contracts are.
things that ought to move faster than they do today. And the same way it’s really easy to say, do I think any of us are gonna be driving cars in 20 years from now? I don’t. Do I think drones will be everywhere in our lives in 10 years? I do. Like you should go through, I think doctors will perform surgeries using their hands in five to 10 years? I don’t. Do I think most medicine will be telemedicine in 10 years? I do. Like all of these things, because
they don’t affect my job as a lawyer are sort of non-controversial. But when I say, think that all contracts just become instantly automatable, easy to create, easy to send, easy to sign. And these are things that are happening with a lot of codified rules in the background, but that on the surface level, once implemented, it’s just pure magic in a way that we were trying to get to before. I don’t think that that’s a novel idea though. I think I’m not pretending that I’ve just said something
that is wildly magical. But what I would say, and you and I have to deal with this, you are an optimist, I’m an optimist, we push hard, we innovate, and we have to deal with the backlash of that because we’re in a very cynical profession. And I say that with battle scars because we get attacked. We get attacked for being naive, for having bias relative to how we make money.
meaning of course we want you to feel this way because we want you to buy our software. And the purists, the experts, the ideologues that are on the other side of this feel very strongly that we are wrong. And that’s okay because we have to, can’t come out here and say that I think everything surrounding a contract should be automated and will be automated here very shortly without it.
Preston Clark (48:06.188)
you know, making a lot of people nervous. And so maybe I’m wrong. I don’t think that I am. And it’s going to be really interesting to play out. And I’m also very cognizant that if it does play out, it’s going to change a lot of people’s jobs and it’s going to change a lot of people’s careers. And it’s going to steal from people a lot of work that they’ve enjoyed doing. And I don’t relish in that. We may be building for that, but I know that that’s pain. I’ve switched careers. I’ve lost jobs.
I’ve had a zero dollar bank account and lots of debt in my thirties. Like I’ve had lots of pain. So I don’t, you know, I don’t want to diminish or minimize how painful this will be, but I think a big change is coming and how it’s distributed and how it’s received is going to be very complicated. So sorry, that’s sort of a downer note to end on, but that’s, that’s how I feel. Great conversation.
Electra Japonas (49:02.169)
I think that you are definitely right that things will be automated and this will have an impact on people’s roles and lives and ways of working. On the other hand, just to bring a not just for the purposes of bringing a more positive outlook into this, which is necessary after that Preston, but I think it is so exciting to see what’s going to happen in this world and the fact that we’re at this stage of our careers while it’s happening.
Preston Clark (49:22.786)
Sorry.
Electra Japonas (49:31.883)
is going to be amazing because we can be at the forefront, we can drive it, we can almost control it, we’ve got proper influence over what’s going to happen.
Preston Clark (49:40.332)
Yeah, it’s a huge responsibility to write we have to create like what makes a great product has to be beautiful. It has to be powerful. A lot of work has to go into making that that that that reality. So yeah, it’s not we don’t because we’re sitting on this side of the table does not mean that that our job is easy by any means we have. We have a lot of work to do.
Electra Japonas (50:00.295)
Yes. Thank you, Preston.
That’s it for our first episode of Future Contract. Huge thanks to Preston for kicking things off with clarity and honesty and also a real sense of what’s possible. If you enjoyed this episode, please hit follow and leave us a review. It really helps other curious minds find the show. And we’ve got more great guests coming up from technologists to legal ops leaders, general counsel, all helping shape the next era of contracting.
I’m Electra and this is Future Contracts. Thanks for listening.