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  • 4 Contract-Tech Companies Reveal Their Strategy for Winning the Market
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4 Contract-Tech Companies Reveal Their Strategy for Winning the Market

By Jackie Patricia 2 years ago
  • Contract lifecycle management is a red-hot part of the legal-tech market.
  • As the market consolidates, a handful of companies could be poised to come out on top.
  • Execs from DocuSign, Ironclad, Icertis, and ContractPodAi told Insider how they’re trying to win.

Contract tech has seen a boom over the past several years, and companies are jockeying to claim the title of the market leader.

As businesses grappled with the effects of the pandemic, many have turned to technology to manage, analyze, and automate their contracts, which hold key information that could cost them thousands or millions of dollars if overlooked.

The market for contract tech has exploded as a result: The total addressable market of contract lifecycle management, or CLM, has skyrocketed from $300 million in 2012 to a whopping $20 billion in 2020, according to estimates from Forrester and MGI Research.

The massive growth is also driven by an expanding definition of what CLM is, experts told Insider. About seven years ago, CLM simply meant a repository for lawyers to store contracts. Now employees in sales, HR, and other business departments can use data extracted and analyzed from those contracts to make critical business decisions.

This new type of contract tech is a “much higher-stakes game” and has a “bigger size of the prize” than pure legal tech itself, according to Jae Um, founder of legal research company Six Parsecs. Companies with better contracting technology can increase their revenue by 9% and decrease their claims and disputes by 20%, Um said.

More than a thousand contract-tech companies were launched in the past decade, but that’s down to just 200 to 300 today as a result of either acquisitions or failure, Um estimated. That’s still a lot of players for one market.

Industry consultants told Insider they expect increased consolidation in the space. But advances in technology will also lead to newer entrants and competitors, according to conversations with nine industry analysts and startup execs.  

“Technology continues to leapfrog. I don’t think anything is safe here,” Joe Borstein, founder of the legal-tech consulting firm LexFusion, said. “It’s a space that I see being in flux for a little while longer.”

Experts said it’s still too early to call the definitive winners in the contract tech race, but they identified four companies emerging as some of the front-runners: DocuSign, Ironclad, Icertis, and ContractPodAI. 

Insider spoke with their executives to learn how each is approaching the market. Their successes boil down to two main strategies: expanding their platforms to offer end-to-end contract tools and growing their business through data and artificial intelligence. 

The top contract-tech companies have grown and adapted to the market  

Contract-tech leaders are following the age-old wisdom of following the market, adapting to evolving customer demands.

DocuSign, for example, is well-known for its flagship e-signature tool, but the company began expanding into CLM as early as 2018, the year it went public. After acquiring the contract-automation startup SpringCM in 2018, the company launched its own CLM platform in 2019.

“We learned from our customers that beyond e-signature, they wanted to be able to automate data processes before and after signature,” said Antonis Papatsaras, chief technology officer of DocuSign CLM.

DocuSign has grown its user base from 900,000 customers in 2021 to 1.2 million in 2022, Papatsaras said. Customers include Fortune 500 companies like Apple, Samsung, Visa, and T-Mobile. 

Other legal-tech companies are following this route, expanding their suite of contract creation, automation, and analysis tools to become a one-stop contracts shop for businesses. And it’s not just contract-specific companies that are considering the sector: General enterprise-management companies like Litera, Mitratech, and Onit have also begun branching out into contract tech.

Ironclad is another company poised to dominate contract tech. Last year, Ironclad made its first acquisition of a clickwrap company — a move that market observers said put the company in a better position to compete with DocuSign, which had a similar technology.

Ironclad CEO Jason Boehmig said Ironclad doesn’t see DocuSign as a competitor despite their competing products. 

“We don’t think of ourselves as a legal-technology company,” Boehmig said. “We think of ourselves as a technology company. We think of it as business contracts.”

He added that their approaches to CLM are different: Ironclad offers a more integrated variety of contracting tools, while DocuSign’s tools are a little more fragmented.

They’ve also achieved scale through data and AI

Access to data — and a lot of it — is another driver of success in contract tech.

“The company that has the most data, diverse data, and highest-quality data will win in the long run,” Samir Bodas, the CEO and founder of Icertis, said.

Artificial-intelligence technology has also become table stakes for contract tech, according to LexFusion’s Borstein. It’s a virtuous cycle: Companies use technology to amass and comb through huge volumes of data, which they can then feed back into their AI to make it smarter. 

Bodas said Icertis’ partnerships with industry giants like Microsoft, Google, Accenture, Boeing, and Costco, have given the company access to a wide variety of data like contract provisions and clauses that allow it to provide companies with more accurate predictions and insights.  

ContractPodAi, another CLM company, also can mine data using a no-code, drag-and-drop tool that allows customers to easily create custom apps for their needs, said Anurag Malik, ContractPodAi’s chief technology officer.

The “real future” and “real expansion” from CLM into broader legal tech will be driven by platforms that enable users to create their own tools, Malik said.

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