contraxsuite - why we’re open-sourcing contraxsuite and product overview

Empowering the future of legal decision-making

© LexPredict 2012-2017

@lexpredict

www.lexpredict.com

[email protected]

LEGALTECH IN THE MODERN INFORMATION ECONOMY

Why We’re Open-Sourcing ContraxSuite

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On July 3, 2017, we announced our intention to open source ContraxSuite, our document analytics platform.

http://bit.ly/2uVEsbT http://bit.ly/2u3uJ6G

Read Full Version of our letter here

Executive Summary

Michael J. Bommarito Co-Founder +

CEO @ LexPredict

Daniel Martin Katz Co-Founder +

CSO @ LexPredict

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Starting in August 2017, both the code, documen ta t i on , and ou r pub l i c development roadmap will be released. We will be soliciting user and developer feedback and adjusting the development roadmap as we go. We are also looking for partner organizations to seed a steering body like the Linux Foundation.

The Path Forward

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ContraxSuite will be free for end-users such as law firms and corporate legal departments.

High-Level License Terms

Other technology providers and resellers can either purchase a license or contribute back any derivative work to the open source library (copyleft).

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Will you resell the software to third parties?

YES NO

How much does ContraxSuite cost?

Will you keep derivative work open? Free

YES NO

Free $12K/year

50% in trust for open source grants 50% for ContraxSuite, LLC

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What, How, Why, When? ContraxSuite Overview

What is ContraxSuite?

What are use cases for ContraxSuite?

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How does ContraxSuite work?

Do we provide support for ContraxSuite?

About LexPredict

Why are we open-sourcing ContraxSuite?

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What is ContraxSuite? Open Source Contract Analytics and

Legal Document Platform

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ContraxSuite.com

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ContraxSuite is a legal document analytics platform. …but what is legal document analytics?

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What is Legal Document Analytics?

…to legal documents such as:

Natural Language Processing (NLP) Text Analytics

Computational Linguistics Machine Learning (ML)

Contracts Operating Agreements

Policies and Procedures Benefits Plans

…or even communications like email.

Legal document analytics is the application of:

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What is Legal Document Analytics?

You’ve already seen legal document analytics technology across a wide range of companies. This includes both contract analytics and a number of other use cases that focus on other types of documents.

What is Contract Analytics?

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What is Legal Document Analytics? What is Contract Analytics?

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How is ContraxSuite different?

battle-tested

realistic

open source

human+machine

•  every bill and resolution of Congress •  every section of the US Code •  every regulation in the CFR •  every SEC filing and order •  every FCC filing and order •  every Supreme Court opinion •  every District and Circuit Court opinion •  every Tax Court opinion •  millions of pages of private legal documents •  over 500K public contracts and legal documents

things we’ve analyzed over the past decade -

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battle-tested

realistic

open source

human+machine

built for the documents you actually have, not the demo things that actually happen: •  documents come from mixed systems

•  shared drive, email, DMS, SalesForce

•  documents arrive in mixed formats •  PDF, Word, text

•  OCR is never perfect •  multiple engines, fuzzy matching

•  standards change •  assignment is more than just allowed/disallowed

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battle-tested

realistic

open source

human+machine

free and open for end-users to audit and improve

what you can do as an end-user: •  use ContraxSuite at no charge

•  modify ContraxSuite at no charge

•  run ContraxSuite wherever you want

•  audit ContraxSuite at no charge

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battle-tested

realistic

open source

human+machine

designed to augment and integrate, not replace

things we plan for: •  algorithms do not have perfect accuracy or recall

•  humans are still more efficient for many tasks

•  humans need to review and interpret results

•  multi-user projects and workflows are important

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What are just some of the potential use cases for ContraxSuite?

Use Cases And Applications for Contract Analytics

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Use Cases for Contract Analytics

DUE DILIGENCE FOR M&A ContraxSuite can assist organizations with due

diligence tasks related to mergers and acquisitions

(M&A), re-structuring, bankruptcy, or audit.

•  Search shared drives, mail servers, and cloud

services

•  Validate key financial assumptions like revenue

and sales terms

•  Validate key legal terms like change of control and

executive benefits

•  Identify client risk like Most Favored or discount

terms

•  Analyze regulatory and geopolitical risks

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SUPPLY CHAIN RISK Many organizations have developed complex webs of supplier

relationships that are critical to their operation. But when a counterparty

fails or a dispute arises, few organizations can identify the effects or

mitigate risks. ContraxSuite helps organizations identify risks through the

supply chain, including counterparty risk, geopolitical risk, regulatory risk,

and dispute/litigation risk.

•  Identify contracts by counterparty or geopolitical risk

•  Identify contracts with abnormal venues or liquidated damage

clauses

•  Identify contracts with alternative dispute resolution

mechanisms

•  Identify contracts with escrow or bankruptcy/default provisions

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REVENUE RECOGNITION Financial accounting standards require analysis of documents to comply

with revenue recognition standards. ContraxSuite can identify whether a

document is a contract and can pull the relevant financial information for

use in revenue recognition models.

•  Identify contracts

•  Detect performance obligation clauses

•  Identify the transaction price and discounts

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Use Cases for Legal Document Analytics

RECORD RETENTION ANALYSIS Record retention is a complex problem for many organizations. Many

organizations resolve the uncertainty by retaining records too long,

resulting in unnecessary risk and compliance concern. ContraxSuite can

help organizations classify documents and communication based on

requirements like state and federal employment law or the Uniform

Preservation of Private Business Records Act (UPPBRA).

•  Identify personnel and employment records

•  Identify health, medical, or tax records

•  Identify retirement and investment plan records

•  Identify records related to the sale or disposal of weapons,

chemicals, or dangerous substances

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REAL ESTATE AND LEASE ABSTRACTION Many organizations manage hundreds of properties or lease to

thousands of tenants. How do these organizations keep up with the

unending stream of renewals, vacancies, discounts, restrictions, and

zoning issues? Contract analytics systems like ContraxSuite help

organizations stay on top of their portfolio by abstracting these

documents into key facts and terms.

•  Analyze key clauses like restrictions, subleasing, evergreen, and

discount

•  Extract key terms like location, party, duration/term, pricing and

discount, and termination date

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ISDA, CSA, AND ED/PB AGREEMENTS Financial services agreements often rely on specialized terminology and

specific forms like ISDA Master Agreements and Credit Support Annex

Agreements. Contract analytics software like ContraxSuite can help

organizations to structure and abstract these critical counterparty

agreements to analyze key rates, conditions, and assets.

•  Analyze International Swaps and Derivatives (ISDA), Credit

Support Annex (CSA), Executing Dealer (ED), and Prime

Brokerage (PB) agreements

•  Identify key terms like interest rate indices (LIBOR/EURIBOR/

UST), equity indices, exchanges, and protocols

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POLICY AND PROCEDURE CONSOLIDATION

As organizations grow organically or through M&A, policy and procedure

documents often spiral out of control. These key documents slowly

become fragmented or conflicting sources of compliance nightmare and

litigation risk. Many organizations have taken on projects to consolidate

and re-organize their policy and procedure documents, resulting in up-to-

date, standardized compliance programs across the organization.

ContraxSuite can help organizations locate, organize, and analyze these

agreements to rapidly accelerate projects.

•  Search shared drives, mail servers, and cloud services

•  Locate employment, information security, benefits and

compensation, and other policies

•  Identify key regulatory issues like HIPAA, the Fair Credit

Reporting Act (FCRA), and the Americans with Disabilities Act

(ADA)

•  Cluster similar policies and automatically identify differences

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FRAUD DETECTION AND COMPLIANCE SUPPORT Instead of waiting for discovery in litigation, many organizations have put

the emphasis on pre-discovery compliance and fraud detection.

Document analysis platforms like ContraxSuite can help organizations

review communications and material that could signal illicit or illegal

behavior, such as anomalous or missing agreements or suspicious

references to regulators and audit boards.

•  Identify KYC/AML documentation

•  Identify regulatory and audit chatter

•  Identify unusual agreements or communications

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EMPLOYMENT AND BENEFITS STANDARDIZATION As organizations grow organically or through mergers and acquisitions,

they acquire a wide range of employment and benefits terms. Over time,

these inconsistencies result in serious compliance and financial

overhead. ContraxSuite helps organizations locate, organize, compare,

and standardize employment and benefits documents.

•  Locate and organize key agreements like employment

agreements and benefits plans

•  Analyze key clauses like at-will, invention assignment, stock

options, and confidentiality

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HIPAA AND BAA AUDITS The Health Insurance Portability and Accountability Act (HIPAA) requires

organizations to take certain protections with patient data, and these

protections extend to so-called Business Associates as well.

ContraxSuite can help healthcare organizations audit and document the

existence and quality of their Business Associate Agreements (BAA),

which are key resources in the event of breach or governmental audit.

•  Locate Business Associate Agreements (BAA)

•  Analyze coverage of key terms for HIPAA compliance

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How does ContraxSuite work? How Contract Analytics Tools Like ContraxSuite Work

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HOW CONTRACT ANALYTICS TOOLS LIKE CONTRAXSUITE WORK

How It Works

IDENTIFY LEGAL MATERIAL Tools for real-world data Do you know where your legal material lives? How many contracts do you have? Where are your subsidiary operating agreements? Have your sales personnel made binding statements in email? In our experience, many organizations never realize the benefits of contract analytics because they struggle to locate their contracts. ContraxSuite doesn't just analyze legal material; it can also identify legal material in the sea of other documents and files in your organization.

•  Search shared drives, mail servers, and cloud services

•  Automatically identify legal agreements or compliance material

•  Ingest and OCR documents from Word, WordPerfect, PDF, HTML, etc.

•  Built to process millions of files per day

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How It Works ORGANIZE DOCUMENTS Automatically group and explore Once you've identified your legal documents like agreements and benefits plans, how do you organize them? Do you put them in categories by agreement type? Do you sort them by counterparty or year? Maybe you group them by practice group or managing attorney. ContraxSuite takes most of the work out of this process, automatically organizing documents and suggesting labels or groups based on content and metadata. This unsupervised approach can save thousands of valuable hours for organizations, especially at early stages of contract management maturity.

•  Cluster legal documents based on content like key clauses or counterparties

•  Group legal documents by metadata such as author or date

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How It Works DE-DUPE DOCUMENTS Automatically find exact and near duplicates Many organizations use shared drives and emails to store documents like agreements. Over time, however, these systems fill up with exact or near duplicate copies of the same document. When it comes to contract analytics, de-duplication is critical for reporting and analyzing the real risks and opportunities in your data. ContraxSuite uses clustering and approximate matching algorithms to identify documents that are similar or exactly identical. Furthermore, ContraxSuite can identify common amendment content, allowing organizations to separate "true" duplicates from near-match amendments.

•  Locate and consolidate exact duplicate documents based on content and metadata

•  Locate and consolidate near-duplicate documents based on content and metadata

•  Locate and consolidate amendments with parent or master agreements

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How It Works ANALYZE DOCUMENTS Locate key clauses and references Organizations are increasingly using contract analytics and document review tools to locate key clauses and references. This analysis often focuses on tasks such as validating contract standards like as service level requirements, assignment restrictions, or controlling law and venues. ContraxSuite allows organizations to quickly apply standard analysis approaches like those used in diligence, lease abstraction, contract review, or compliance consolidation. Furthermore, ContraxSuite is built to allow organizations to train new tools or customize the underlying software. In most circumstances, regular users can teach ContraxSuite to classify clauses without any additional development. However, when required, organizations can "lift the hood" and customize the underlying open-source software to address their own problems.

•  Apply out-of-the-box analysis for diligence, lease abstraction, contract review, and regulatory compliance

•  Locate key clauses like assignment and change of control, controlling law and venue, and discount or MFC

•  Train new models and clauses with regular users - no development required

•  Customize the underlying open-source software when desired

•  Own your own models and data

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How It Works

EXTRACT INFORMATION Extract key terms and facts What is the average term of your supplier agreements? What is the most common jurisdiction for dispute resolution? How many contracts would be affected by a change in HIPAA regulations or EU data protection directive? If you can't answer these questions, then your contract management program still has room for improvement. ContraxSuite allows organizations to extract key terms and facts, including dates, financial or monetary amounts, rates, company entities, geopolitical entities, financial indices or benchmarks, and regulations.

•  Extract key terms like dates and dollars

•  Extract key legal facts like governing law, dispute resolution mechanism, or regulation

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How It Works

VISUALIZE AND EXPORT Generate reports and export to Excel ContraxSuite allows users to easily export and visualize the results of tools, like maps that show contracts by country, spreadsheets with termination dates, clusters of similar agreements, oro spreadsheets with master agreements and SOWs.

•  Export all results to Excel or PDF

•  Visualize results using charts or maps

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OPTICAL CHARACTER RECOGNITION

Unfortunately, many documents were born "analog" and scanned as PDF or TIF files. Opt ica l character recogn i t ion , o f ten abbreviated as OCR, is a technology that can help convert scanned or handwritten material back into digi tal , "computer- fr iendly" documents. Once upon a time, OCR was much more difficult. Today, high-quality OCR tools like Google's Tesseract Project are freely available for nearly 100 languages. If you've ever used Google Books, you've already used the OCR software underneath the hood in ContraxSuite.


How It Works

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NATURAL LANGUAGE PROCESSING

Over the last 50 years, computer scientists and linguists have made huge strides in the fields of natural language processing and computational linguistics. Luckily, almost all of the most important discoveries in this field have been published in leading academic journals, and many of these algorithms are freely available in packages like Stanford's CoreNLP and the Natural Language Toolkit (NLTK). Today, tools like CoreNLP and NLTK allow users to quickly analyze the structure of words and sentences, look up synonyms and antonyms, tag parts-of-speech, and identify proper nouns like countries in tens of the world's most common languages, including English, Spanish, French, German, Chinese/Mandarin, and Arabic.


How It Works

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CLUSTERING

Clustering is a powerful form of unsupervised learning that has been used for over 50 years in fields like biology, genetics, and statistics. By combining natural language processing with clustering, we are able to automatically categorize clauses and documents just like scientists group sequences of DNA or regions of the brain. As a tool for modern data science, clustering is readily available in many open source and freely a v a i l a b l e f r a m e w o r k s s u c h a s scikit-learn, Apache Spark/Mahout, and Weka. Thanks to contributions from two generations of academics and companies like Facebook and Google, we can stand on the shoulders of giants instead of starting from scratch.


How It Works

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CLASSIFICATION

When you hear someone talk about "machine learning", they are probably referring to a mathematical approach called classification. Classification is a form of supervised learning (alongside regression - which you might remember from your schooling), in which a set of rules or equations helps distinguish between two or more types of “things.” Back in 1983, when machine learning was already old enough to warrant a history, scientists were drawing distinctions between expert or rule-based systems and data-driven systems. As systems like Google's DeepMind or IBM's Watson show, the "battle for AI" has swung in favor of data. Luckily, the battle has also produced a rich open-source ecosystem of machine learning frameworks like f r a m e w o r k s s u c h a s s c i k i t - l e a r n , Apache Spark/Mahout, and Weka.


How It Works

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TRAINING DATA

If machine learning techniques are driven by data, where do contract analytics platforms get their data from? Generally, there are two sources for high-quality contracts and legal documents:

•  public data, like Federal court evidence or SEC filings

•  private data, like material acquired from clients

C o n t r a x S u i t e i s b u i l t o n the LexPredict Legal Document Database, which draws entirely from public sources like Federal Courts and SEC filings. Unfortunately, many vendors build their products on private data acquired from clients, which introduces serious legal and economic concerns. Because ContraxSuite is an open-source product and can be used freely by most organizations, organizations can benefit from contract analytics without worrying that their private data will be aggregated or re-used.


How It Works

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Why are we open-sourcing ContraxSuite? What We Do and Why

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OPEN SOURCE IS A SUCCESSFUL BUSINESS MODEL

IN MANY OTHER FIELDS

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OPEN SOURCE IS A SUCCESSFUL BUSINESS MODEL

IN MANY OTHER FIELDS

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WE HAVE HIGHLIGHTED THESE IDEAS IN A VARIETY OF FORUMS**

**But talk is cheap – for us this announcement equals action

https://www.thelawlabchannel.com/daniel-martin-katz-mlaas-machine-learning-as-a-service

https://www.slideshare.net/Danielkatz/machine-learning-as-a-service-mlaas-open-source-and-the-future-of-legal-analytics-by-daniel-martin-katz-michael-j-bommarito-ii

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Legal Tech and the Unfinished Good Problem

If Open Source Code Is a Public Good, Why Does Private Provision Work (Or Does It)? David R. Agarwal, LBJ Journal of Public Affairs, Spring 2006.

DESIGN PLAN BUILD ?

1. http://www.uky.edu/~drag222/research/Agrawal_OSS.pdf

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CLIENTS DON’T WANT PRODUCTS. THEY WANT SOLUTIONS.


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THEY REALLY DON’T WANT TO PAY (SHOULD NOT HAVE TO PAY) FOR PRODUCTS THAT ARE 80% COMPLETE FOR THEIR USE CASE.


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WE NEED A DIFFERENT MODEL IN #LEGALTECH –

WE NEED AN OPEN SOURCE MODEL.


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LIKE LINUX AND DATA SCIENCE, CONTRACT ANALYTICS IS ABOUT TWO THINGS:

TECHNICAL PRACTICES

+ DATA

THERE IS NO MAGIC MACHINE OR SECRET SAUCE.

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Do we provide support for ContraxSuite? What We Do and Why

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HOSTING, CONFIGURING, AND CUSTOMIZING CONTRACT ANALYTICS

Support and Customization

SUPPORT AND TRAINING SERVICES If you'd prefer to have third-party support and hosting, we can make sure that you're up and running in a hurry. Need ongoing support for your users or IT staff? As the original project developers, we're uniquely positioned to help.

•  Hosting

•  IT Support

•  User Support

•  User Training

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HOSTING, CONFIGURING, AND CUSTOMIZING CONTRACT ANALYTICS

Support and Customization

CUSTOMIZATION AND DEVELOPMENT SERVICES Are you interesting in tackling a problem that ContraxSuite doesn't handle out of the box? Maybe you want to integrate with a software system or cloud service that we don't currently support. Maybe you need help working with a new contract type or novel industry form. Our expert team of developers can help you devise a solution quickly and efficiently.

•  Implementation and Configuration

•  Custom Contract Models

•  Custom Workflow Development

•  Custom Data Sources

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Learn More ContraxSuite.com

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About LexPredict What We Do and Why

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Empowering the future of legal decision-making

Mission Statement

LexPredict helps organizations make better decisions

in the practice and business of law.

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Michael J. Bommarito II Chief Executive Officer

Co-Founder

M.S.E., M.A., B.S., University of Michigan, Ann Arbor.

Lecturer, University of Michigan, Ann Arbor.

Adjunct Professor, Michigan State University.

Fellow, Stanford CodeX Center for Legal Informatics.

Michael is co-founder of LexPredict and an experienced consultant and entrepreneur in financial and legal services. His experience spans strategy, technology, business, and operations, ranging from top Am Law firms and $B+ AUM investment firms to idea-stage startups.

Qualifications Bio

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Daniel Martin Katz Chief Strategy Officer

Co-Founder

J.D. + Ph.D. - University of Michigan, Ann Arbor.

Associate Professor, Illinois Tech - Chicago Kent Law.

Affiliated Faculty, Stanford CodeX Center for Legal Informatics.

Legal Rebel - ABA Journal / FastCase 50.

Daniel is co-founder of LexPredict and a technologist, scientist, and law professor. He blends thought leadership and vision with analysis and execution, and is renowned in the field as a speaker and educator.

Qualifications Bio

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LexPredict is an enterprise legal technology and consulting firm, specializing in the

application of best-in-class processes and technologies from the technology, financial

services, and logistics industries to the practice of law, compliance, insurance, and risk

management.

Empowering the future of legal decision-making Mission Statement

We focus on the goals of prediction, optimization, and risk management to enable holistic

organizational changes that empower legal decision-making. These changes span people

and processes, software and data, and execution and education.

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contraxsuite - why we’re open-sourcing contraxsuite and product overview

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