All bets on ODR, insights from 1 billion contracts, and news from OpenLaw: Issue #11
Hello, and welcome back to another issue of the Legal Tech Digest.
In this issue, I’ve covered:
Increasing adoption of ODR, calls for implementation from more sectors; the role of public-private partnerships
Contracts and enterprise: Fascinating insights from Ironclad’s reports on business behaviour, market expansion and partnerships in CLM.
News from the OpenLaw movement
Stuff I’ve been thinking about
Let’s dive in.
New ODR platform for Indian e-commerce to be live in 6-8 months
The Online Network for Digital Commerce (ONDC) is developing an ODR framework to simplify the resolution of e-commerce disputes on the network. ONDC is currently enlisting third-party ODR platforms to provide their services to/on the network.
The ODR platform/facility is expected to go live in 6-8 months.
What is ONDC?
The Online Network for Digital Commerce (ONDC) is a recent initiative backed by the Government of India (DIIPT) to develop open e-commerce in India. The programme was piloted a couple of months ago as an interoperable network, with the intention of building scalable public digital infrastructure for the e-commerce sector in India.
ONDC is being hailed as the UPI of the e-commerce world — attempting to bring interoperability in the world of digital commerce by allowing transactions to happen on any app or platform, regardless of whether a seller or buyer is registered on it. This is similar to the way UPI works in the case of payments.
The project aims to build a digital standard for the e-commerce industry that allows any buyer to transact with any seller, and vice versa, regardless of what platform (eg: Amazon, Flipkart, Paytm) they are on.
To understand the concept of ONDC and its implications on the Indian e-commerce sector, you can watch this video.
How will the ODR mechanism work?
Currently, e-commerce disputes in India are, by and large, resolved through a 2-tier system. Any dispute flagged by a customer on any platform is first attempted to be resolved by the platform. These are platforms such as Amazon or Flipkart where the buyer is registered as a buyer, and a seller is registered as a seller. The platform tries to resolve the dispute by communicating with/between the buyer and the seller.
If the attempts fail, then either party has the option of going to the consumer court.
The system envisaged under the ONDC framework is a 3-tier system, introducing a new 2nd step.
In the intended system, once a consumer flags a dispute, the platform where the seller is listed will attempt to resolve the dispute (the buyer needn't be a user of that platform). In case this does not succeed, the consumer will have the option of approaching a third-party ODR provider enlisted by the network to resolve the dispute.
This step is being introduced to expedite dispute resolution and limit the number of cases that go to the state court machinery.
To quote the CEO and MD of ONDC:
“We are trying to develop a framework for ODR and then establish a platform for ODR. Although it cannot guarantee dispute resolution, the platform will make resolution much simpler and an enabling feature of the ONDC architecture”
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Demands for ODR from cooperatives societies and housing sector
As the trend of adopting ODR mechanisms grows, calls for adoption are emanating from other industries.
A recent case is that of statements from the Maharashtra State Federation, which has suggested developing an online portal including ODR facilities to resolve disputes re registration and management of cooperative societies and housing redevelopment.
The hope is that a streamlined online portal and a single window system will help in building the cooperative sector and in self-redevelopment of housing societies in Maharashtra. To quote Mr. Shreeprasad Parab, expert director of the Maharashtra State Cooperative:
An online portal will help provide cooperative education and give a redressal mechanism to members, which will result in building the cooperative sector.
The co-operative sector, especially the co-operative housing societies, has to implement technology-based governance through an online portal as:
i. it will help provide uniformity in the adjudication process, and
ii. there will be a single window system for self-redevelopment of housing societies.
Similar concerns have been raised by the Mumbai Suburban District Cooperative Housing Federation, whose secretary CA Ramesh Prabhu recently said:
The government and cooperative department need to implement an online complaint redressal system and make it compulsory to accept complaints in online mode, similar to MahaRERA, and then hearing should also be held through video conference and the orders posted online. In this digital era, expecting everything in physical form is a waste of time, energy and money.
There are currently over 1.25 lakh registered cooperative societies in Maharashtra, with the maximum number of cases coming from urban cooperative societies from Mumbai, Pune, Thane, and Nashik. A major chunk of disputes arising in the cooperative housing sector are in the nature of petty cases, which due to lack of timely resolution transpire into bigger conflicts. For instance, a small conflict in the beginning such as quarrel over parking space or over non-occupancy charges later emanate into bigger conflicts, such as members not paying maintenance charges, and so on.
10.7 lakh crore locked up annually in delayed payments to MSMEs. Can ODR help…?
A recent report by GAME and Dun & Bradsteet estimates that a staggering amount of Rs. 10.7 lakh crore is held as delayed payments to MSMEs - on an annual basis.
This figure amounts to approximately 6% of India's GVA (Gross Value Added).
Within MSMEs, micro enterprises are overwhelmingly at the receiving end of this crisis, with around 80% of the total annual delayed payments being owed to them.
This is attributed to a power symmetry between smaller suppliers and large buyers.
In essence, the smaller you are as a business, the more you suffer at the hands of tardy buyers. Withholding these enormous sums of capital from India’s smallest businesses deprives them of their opportunities to grow and return value to their owners, and consequently the millions of ordinary households that are supported by these businesses.
The report highlights problems, among others, on the regulatory front that deeply worsen the situation for MSMEs, such as the GST regime which requires businesses to deposit tax on invoices irrespective of whether they have been paid themselves.
The report has suggested various measures to address this unfortunate reality of MSMEs doing business in India. One of these measures is to:
…enable the entry of Online Dispute Startup (ODR) startups to ensure faster and more effective resolution of payment related disputes by reducing the burden on the state (i.e. the district level Micro and Small Enterprise Facilitation Councils). State legal service authorities may tie up with private ODR startups to create models similar to e-lok adalats to unlock the potential of ODR by leveraging data and technology.
This suggestion is in line with the already rising trend of public-private partnerships in ODR across industries and sectors. Private ODR startups are already looking in this direction by first building a scalable digital ODR infrastructure and then applying it for specific contexts and needs such as the BFSI sector, matrimonial matters, and MSMEs.
What can 1 billion contracts tell us about business behaviour?
US-based Ironclad has published a Digital Contracting Data Trends report, in which they have shared their insights about how businesses behaved during the pandemic. The findings are based on machine analysis of anonymised data from 1 billion+ contracts managed on the Ironclad platform.
Synopsis of some of the findings:
Massive reduction in contracting speed: Contracting cycle times have steadily decreased from a pre-pandemic average of 16.6 days to now an average of 6.7 days in 2022.
Reliance on online digital agreements: The pandemic has catalysed adoption of online digital agreements / clickwrap agreement (which can be accepted with a single click). Data from contracts processed on the Ironclad platform shows a dramatic 274% increase of clickwrap contract volume in 2020 from pre-pandemic levels, and a 443% increase in 2021.
Increased use of browser-based collaboration tools to create and edit contracts, such as on Google Docs or Dropbox (versus solely relying on Word). Also, more and more companies are inviting parties to collaborate on the contracts in-app (versus on email).
All-time high search volume within contracts suggesting businesses reviewing their contracts to absorb volatility, manage risk, reviewing obligations — unsurprising.
The Great Reshuffling: Increased number of offer letters and severance agreements point to major shifts in needs and values of the talent market, change in companies’ approach towards hiring talent, and openness to new work arrangements.
The pandemic led to a massive reevaluation of what makes us happy at work, which catalyzed a stage analysts call “The Great Reshuffling:” a period of employee mass migration between jobs, industries, and careers. At the same time, companies are changing how they do business; they are incorporating new health and wellness benefits, programs to encourage financial health, and moving to remote-first policies in droves. As a result of this reshuffling, in 2021 alone workers were hired and 68.9 million quit or were laid off or discharged.
Other data points such as increasing partnership and procurement agreements indicate that while talent rethinks their approach towards work, companies are responding to changes by hiring more consultants and freelances, adopting software for flexible work, and re-evaluating HR policies.
The key takeaway
In my view, the most important of these insights is not so much what the content of these findings are in specific, but the fact that such invaluable pieces of business intelligence can be extracted from contracts. Imagine all the ways in which it enables businesses to understand their own behaviour, make data-driven decisions, and understand industry trends with accuracy.
When a company documents its rights, responsibilities, obligations, policies, SOPs, guides in formalised documents, the body of record can come close to representing the company’s DNA. Insights from these can be extremely effective in telling businesses what actions they need to take and how they should make decisions. When aggregated from thousands of contracts, this data can give us answers on a microeconomic level, allow businesses to make everyday decisions, while also keeping them apprised of reliable, data-backed macroeconomic indicators.
SirionLabs ties hands with KPMG India
CLM provider SirionLabs has announced a strategic partnership with KPMG India. The partnership aims to bring together KPMG's experience in contract management services with Sirion Labs’ CLM software solutions.
SirionLabs had also recently raised an $85 million Series D investment, and is an established player in the CLM market.
“We are excited to join hands with KPMG in India, which consolidates our existing relationship with KPMG globally. SirionLabs’ AI-powered CLM solutions offer a host of category-leading capabilities that help businesses simplify and transform their contracting experience as they navigate through the challenges and opportunities of digitalization. With KPMG in India’s rich expertise and experience, this alliance will open immense possibilities for organizations across the contracting lifecycle, ensuring their digital strategy is aligned to business outcomes and delivers measurable value.”
— Puneet Bhakri, Senior Vice President, Global Alliances & Partnerships, SirionLabs
Wolters Kluwer opens innovation hub in Chennai
In a recent development, Wolters Kluwer has announced that it is opening a new Innovation Hub in Chennai.
The office will house 400+ employees in product development, product implementation, technical operations, law firm ops, and global business services.
The hires are in both leadership and operational positions, and are responsible for handling different business areas including ELM solutions focused at legal spend and matter management, CLM, and analytics.
Mr. Raju Vaidyanathan, MD of Wolters Kluwer ELM Solutions in India commented:
As a premier destination for technology talent, not just in India but throughout the world, Wolters Kluwer is constantly looking for more impactful ways of creating an open environment for our employees to collaborate and innovate. The opening of our innovation lab will allow our world class engineers and developers to thrive and innovate as a team as never imagined before.
From the world of OpenLaw
The OpenNyAI Make-a-thon
Agami has announced the OpenNyAI Make-a-thon, an 8 week long online challenge inviting engineers, technologists, lawyers, designers, and business professionals to create AI applications to improve legal services and access to justice.
Check out the details on the website. The last date to apply is Friday, 15 July 2022.
A new Open Cap Table format that enables better access to company capitalisation data
The Open Cap Table Coalition has released its first iteration of the Open Cap Table Format (OCF), an open source and standardised approach to accessing and sharing company capitalisation data.
The goal here is to help companies waste less time and resources in creating and managing cap table data, increase transparency, and allow companies to easily share the data across other applications and services.
Learn more about the Coalition and the OCF format :
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Stuff I’m thinking about
SAMA’s Quarterly Newsletter
Congratulations to the SAMA team for crossing 1 crore cases filed on their platform, passing 15,000+ arbitration awards in a month, a successful fundraise, and crossing net profit of 1 crore.
Also, may I mention that it is probably the best company update newsletter I have read. The founders share all they have achieved in the last six months, but do not shy away from talking about the challenges they’ve been facing. They share where they are coming from, where they are today, and a piece of their vision — all in a highly conversational format that makes you care even if you have no direct participation with them.
ImageRights for law firms
I recently learned about ImageRights for Law Firms, a service that allows law firms to automatically find their clients’ images being used on the internet, even if they have been radically cropped, colors changed or removed, text or image overlays added, or if images have been flipped or added to a collage.
Google launching eSignatures
I have also been reading about their ContractDoc AI.
ODR-enabled in GST appellate tribunals
A proposal for introduction of ODR-enabled GST appellate tribunals as a way and the many benefits it promises in the form of a new dispute resolution landscape.
That’s a wrap for this issue!
See you next month,
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