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3 Approaches to Stop NDA Contract Negotiations Delaying Projects!

Now that data has become a valuable resource for companies, the importance of non-disclosure agreements (NDAs) is increasing in AI development involving data transactions, which is the source of corporate competition. On the other hand, if the NDA negotiation period is prolonged, the start of the project will be delayed accordingly .

This time, MNTSQ Co., Ltd., a representative of MNTSQ Co., Ltd. , which promotes “DX (digital transformation) of the entire contract business” by realizing visualization of negotiation processes specialized for large companies and knowledge of internal documents through services . Mr. Itatani contributed his know-how to streamline the complicated contract negotiations of NDA.


Hello, this is Itaya, the representative of MNTSQ Co., Ltd. Have you ever reviewed a non-disclosure agreement (NDA)?

It’s like this.

As a lawyer, I’d be embarrassed to say this, but when you were negotiating the NDA, what was your first thought?

Is it really useless if I don’t negotiate this one by one?

In this article, we will consider the question, “Can we create a world where we don’t have to negotiate contracts?”

I tried to make it easy for people with no legal experience to understand, but I have sacrificed some accuracy, so please bear with me.

Contents

  • Mechanisms that necessitate negotiating an NDA each time
  • Three Approaches to Streamline NDA Negotiation Efficiency
    • (1) the contract has social authority;
    • (2) A system in which the contract is naturally used by the company that becomes the trading hub
    • (3) that the fairness of the contract is supported by data;
  • in conclusion

Mechanisms that necessitate negotiating an NDA each time

In the business world, when starting a new transaction, it tends to start with NDA negotiations. It is not uncommon for the legal departments to start arguing over the details of the wording, ignoring the people in charge who want to start the project as soon as possible.

I think it’s not uncommon to say, “It took a month to conclude an NDA.”

Just to be sure, the legal department is working hard to eliminate its own risk at this time, and that is of course important. Knowing that, the person in charge of the business department just waits (while impatiently).

However, what kind of social value does this “one month before concluding an NDA” and “the effort to read the NDA from top to bottom” produce? Projects are slowing down, and the best legal departments don’t have the brains to devote to really important matters.

I believe that this month is a social loss.

It’s no one’s fault, so why are NDA contract negotiations taking so long? None of the people involved in this negotiation thinks otherwise of “Let’s deceive the other party and get our own benefit!” What I believe to be a key point when trying to unravel this problem is that everyone involved in the contract thinks that it is OK as long as it is a properly fair contract.

Our corporate value will not skyrocket just because we negotiated with the other party with an NDA and were able to win slightly better contract terms. Instead, starting the project as soon as possible is a win-win for both you and the other party. In fact, everyone’s interests are aligned.

However, as long as there is a suspicion that the company is being treated unfairly, it is not possible to say that. We all want the same thing, but we can’t come to an agreement.

In fact, there is no clear and common standard for what is “fair” in contract negotiations in Japan. The simple fact is that parties are free to enter into any contract. In the first place, a contract can be concluded with just a verbal promise, and everything is left to the parties.

That degree of freedom, on the other hand, is generating costs. In other words, it is necessary for the parties to think about “what is fair…?” Even if your company prepares a template for NDA, if the other party presents a different template, it will naturally be necessary to read from top to bottom and confirm, “Is this fair?” It’s going to end up.

In other words, I think that the reason why “1 month” occurs every time is as follows.

No “fair” standard

  • Differences of opinion begin with each project, saying, “This is fair!”
  • Negotiations occur for each project, and it takes a long time to conclude a contract

Three Approaches to Streamline NDA Negotiation Efficiency

Now, as you may have noticed, this problem will be solved in no time if there is a common NDA that everyone believes is fair! In other words, the point is to establish “contract fairness”. Business departments can start projects now, and legal departments can focus on doing more. From a social point of view, truly fair contracts will circulate, and everyone in society should be happy.

But here’s where it gets tricky. How can anyone create a “contract fairness” that everyone can agree on?

Well, MNTSQ, where I serve as the representative, is a company that is trying to create a common social foundation for this “contract fairness.” The issues I have written about so far are not limited to NDAs, but apply to all contractual work. Through a company called MNTSQ, I would like to build an infrastructure for making Japanese contracts fair (= minimizing the cost of reaching an agreement).

In contract negotiations, where the interests of the parties are inherently conflicting, establishing a “fairness” that everyone can trust is not an easy task. If a law can be perceived as fair, it is because it is enacted by a parliament that embodies democracy. How can a platform run by a for-profit company called MNTSQ make you believe in contract fairness? The approach I believe is:

(1) the contract has social authority;

Even with a single NDA, different people have different preferences (which is why contract negotiations are taking place). In such a situation, it is very difficult to convince people by suddenly saying, “Use what I made!”

I believe that in order to overcome this hurdle, the contract must be of the highest quality, and that quality must be communicated at a glance. The best way to do this is for the legal department to be backed by a 100% trusted brand.

For example, if the legal department asks for advice (paying a lot of money lol), a law firm that is said to be first-rate among them, creates it by hand, and if it embodies that quality, it will be a corporate practice. But I think that you can use it with peace of mind and positively.

MNTSQ has a capital and business alliance with Nagashima Ohno & Tsunematsu, one of Japan’s “Big Four Law Firms.” That’s why we publish their contracting best practices exclusively on our platform, MNTSQ.

MNTSQ publishes an NDA that asks top law firms, which are trusted in the industry, to make it, so if it is that far, we can expect users to use it voluntarily. increase.

(2) A system in which the contract is naturally used by the company that becomes the trading hub

Even if there is a socially trusted “best contract”, in order for it to become a common foundation of society, it is necessary to have a mechanism for actually using that contract.

And it would have to be used by a large company that would be a trading hub. Some of MNTSQ’s demonstration test partners and companies that have already introduced it are listed here, but it is used by companies such as Toyota and Komatsu, which are truly the top hubs in the industry.

However, there is a real difficulty here. It’s actually quite difficult for such a large company to make a formal decision to “use this contract!” For example, I think that the approach of “wouldn’t it be nice to agree on an NDA for a specific format in advance” is actually quite a high hurdle. This is because some transactions also require room for individual corrections.

For this reason, it is important to come up with ideas and systems that allow each user of a large company to naturally use the “best contract” as they use the product. MNTSQ provides a “contract dictionary” (a database of contract knowledge), and we propose operations that use MNTSQ when the legal department “searches for contracts, thinks about contracts” every day. Among them, we have prepared a mechanism that naturally uses the MNTSQ template.

(3) that the fairness of the contract is supported by data;

From here on out, it’s a bit of a future story. The essence of what we’ve talked about so far is that “in fact, each person in charge of contract negotiations has a different way of thinking about ‘what is fair’, and negotiations are occurring to fill those differences.” did.

Now, can this question of “what is fair” be solved not only by socially trusted entities (top-law firms in the case of MNTSQ), but also by “data”?

For example, you can’t show a party who is arguing that “This clause is normal in NDAs!” Uka

Of course, I don’t think this will solve everything. The “90%” is not always correct, and in light of the nature of the deal the parties are negotiating, it may be fair to take the “10%” instead. However, as expected, the side that is trying to adopt the “10%” may reconsider their position (= negotiations will disappear), and even if not You will be responsible for properly explaining “Is % more fair?”

In fact, I think the legal world has been one of the fields farthest from such a quantitative way of thinking. However, I believe that the concept of “fairness” cannot be separated from “what is normal”, and statistical data show that “normality”.

And with the advent of natural language processing technology (a type of so-called “AI” technology), the terms of a contract should not be “something that cannot be understood unless an expert reads it from top to bottom”, but rather “data that can be statistically processed”. ” (classification and labeling).

MNTSQ is also a company that utilizes natural language processing technology to realize the digitization of contracts. In a world where contract fairness is digitized, not only will some NDA negotiations disappear, but it will also become more difficult for the socially powerful to take advantage of the ignorance of the weak and impose unfair terms.

in conclusion

Could you imagine a society where contract negotiations, not just NDAs, are overwhelmingly speeded up and only fair products are distributed?

I am launching a company called MNTSQ because I want to build a platform that inherits the “best practices of contracts” of top law firms. We hope that through MNTSQ, the cost for everyone to obtain a “fair contract” will be minimized, and that fair contracts will naturally circulate in society.

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