108: Legislate Your Business with Charles Brecque

22
Apr

Charles Brecque is the founder and CEO of Legislate, a tech company that makes it easy for non-lawyers to safely create, manage, and search lawyer-approved contracts on a no-legal budget. We talk about advanced contract management, how business deals fall apart because of contracts, and what to do when dealing with one-sided contracts. 

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Listen to the podcast here

 

Legislate Your Business with Charles Brecque

Our guest is Charles Brecque, the founder and CEO of Legislate, a tech company that makes it easy for non-lawyers to safely create, manage, and search lawyer-approved contracts on a no legal budget. Wow, that sounds amazing. Welcome to the show, Charles.

Thank you, Steve, for having me.

It’s great to have you here. And you, I know that you probably hate hearing this, but you’re one of the youngest persons that ever came to the show, because I only invite CEOs and business owners. So congratulations for being top 30 under 30, I guess. And can you describe to us your entrepreneur journey, however short it has been, and how do you end up running a startup, you know, just after a handful of years out of college?

Well, yeah, it’s an honor, Steve, to be, you know, one of your youngest guests. So I, yeah, I graduated from uni and straight away started, well, joined a startup. And at that time, I definitely didn’t think I would be a founder straight away. I always had the ambition of maybe having my own company, but I definitely, when I started, I didn’t, I wouldn’t know where to start. And I started in business development. I was finding clients for the company, and I always found the biggest challenge not necessarily being finding clients, but actually getting contracts signed.

And in two occasions, we actually lost contracts post-negotiation because it had dragged on for so long that it was no longer a priority for the buyer, or the buyer lost their budget. And it was extremely frustrating. And I just felt that if I stayed at that company, even if it had only been three years, it would happen again. And I didn’t want to waste any more energy or time finding clients if I can’t actually close them because of contracts.

I just want to interject that I have had this experience as well, that contracts can really kill deals. And when I was an investment banker, we actually were really wary of lawyers who killed deals. And we made it took pains to partner with law firms who had a good business sense, who wanted to close the deal, who didn’t just want to demonstrate a million ways of how they can pull a contract apart, but actually were constructive. And we also had to make sure that we picked attorneys who matched the other party, because if there was a big, big mismatch then that could cause issues as well. take this deal as far as possible without being the attorneys, involving the attorneys, because there was always this risk element of dragging things out. So sorry, I didn’t want to interrupt you. So carry on.

Yeah, so no, that’s exactly, you know, what was happening with us. And if you think about a contract, a contract creates friction by design, because you need lawyers or people with legal expertise to safely negotiate it, make the amendments and, you know, sign it off. But if you’re not a lawyer, which is the case for most business users, then you’re really dependent on lawyers. So that doesn’t really scale very well. And in my case, it was why we were losing the contracts. So maybe naively, I thought that I could solve this problem. And for, you know, I need to start a company to make contracts machine readable so that we don’t need to get lawyers involved at every single step.

And me, the business user, I can, in a safe way, create contracts, get them signed, and then post-signature access the data in the contracts because that in itself is, I’d say, where a lot of energy post-contract signature is wasted, is in extracting payment terms, matching them to, sending them to finance, sending details about the implementation to custom success. There’s just a lot of energy which is wasted on extracting, sending data, and no one really ever does it, has ever really done it properly. So that’s also another key part of the problem that we’re solving is making that data usable and shareable within the business.

So, isn’t that the main problem that you’re solving, the shareability of data, or are you also making contracts somehow easier to negotiate?

So, we’re doing both. I’d say where my personal view is that the most value is on the data side of the business. But in terms of our actual contracts and the templates, we source them from the same libraries that law firms will source their templates from. But what we then do is we parameterize the agreements based on parameters which actually make sense. And then we simplify the options and the language so that the contracts are easy to understand, but very standard.

Because another thing, usually when you do engage a lawyer to work with you, they will always bias the agreement in your favor, which is great for you, but realistically is not where you end up post-negotiation. Whereas our approach is to start in the middle from the beginning, which means that there really shouldn’t be any negotiation of the actual language. And on top of that, we simplify the language, which means that business users who read the contract actually understand what they’re signing up for. So they’re less dependent on their lawyers to explain why they should have this or why they shouldn’t have this because the contracts are easier to understand.

I love it. So basically you say that there is more benefits to be gained by having a fast closure, a win-win closure with the counterpart than perhaps negotiating better terms than the counterpart would be able to do. So it’s kind of an armistice agreement. They say, okay, we leave our lawyers at home, and we’re going to do this on a handshake basis or basically on reasonable terms. So does it mean that a legislate contract will bear the pledge of approval of a reasonable business actor? So if people choose something from legislate that it’s already negotiated the most reasonable contract for both parties and people can rely on signing this because it’s a neutral contract?

Exactly. That’s what we’re trying to do. If someone wants to change the actual language of the contract, well, they can’t actually do that within legislate. They can contact us and explain why maybe something needs to be changed, but we would add an option if it was not covered already in the contract, or we’d explain why what they’re requesting is unreasonable or not possible. So I appreciate that right now, you know, it doesn’t necessarily fit all businesses, but I’d say for 90% of businesses and 90% of the contracts that they create,this is a great solution to create contracts without faffing around.

I love it. Because ultimately, contracts are there to create certainty and protection to people. It’s not there to essentially pull a fast one on the other party, right, because that destroys trust in the long term. And there are companies that make their living on basically playing a power play because they are maybe in a position that they are bigger, they have more deeper pockets, they can pay for more expensive lawyers, they’re going to create contracts which are one-sided and they want to get away, they want to have an advantage.

And I love that you kind of democratize this and say, okay, this solution is for people who don’t want to abuse contracts, who just want to use that for the proper use, basically. I love that. So what are the opportunities? I mean, this could be a huge opportunity for a business to essentially scale the reasonable contract and build relationships on a fair basis with other parties.

So what do you recommend if I’m a business owner, I’m starting this business, or maybe I’m in an early stage and I’m getting out of this position where I’m working in the business, I start to work on the business, I start to build a leadership team and I realize that now we are becoming a real business. I want to kind of handle my contractual issues and kind of have a starting package of all the most important contracts that I need in the business. Do you offer that and what would that look like?

Absolutely. So I think the earlier you start with good contracts or a system like legislate, the more you’ll save in time and money down the line, in our case legal, because, you know, even if you just have one employee, you want to have the right employment contract to protect your business. want them developing a competing product. And if you have just hired an employee on a handshake, you don’t have that protection.

So even if you are very early stage, you should have, you know, start with your internal agreements, make sure that they’re covered. And then, you know, as you grow, then you want to, you know, use, for example, confidentiality agreements to whenever you are discussing with partners, any potential partnerships or engagements or even clients. So I think it might seem like an additional piece of friction to create that contract. But if you are using a system like Legislate, the friction of creating the contract goes away.

Yeah, I love that. So other than employment agreements, what kind of other agreements lend themselves for being legislated, I guess?

So right now, we’re still very early stage. So we’re typically going after contracts that wouldn’t necessarily require much negotiation. So where we have customers outside of employment, they will be working, for example, they’ve got maybe a terms of business agreement, which is specific to their business, but there are lots of parameters and data points that they need to track. We also work with recruitment, recruiters, you need their own terms of business agreements. We work in property with landlords and letting agents. So those are areas of focus. We also work with freelancers, consultants.

Any contract which, you know, requires some tailoring but not too much negotiation is the sweet spot right now. And we are growing our legal team so that we can, you know, add more contracts more regularly, but we’ve also been growing quite organically with our clients. So we’ve started with employment and property. We’ve got clients in those two industries and based on their requirements, they’ll say, well, we need this new contract. We need this new document. We need this new letter. Really, we want all our, we want our clients to be able to create all their contracts, all their documents in one place, so that they just have that compliance as a service by having all their documents in one place.

That’s really interesting. So you are based in Oxford, UK, right? You’re in the UK. So I assume that your default law is English law, perhaps, or common law, or whatever it is?

So right now that’s the case, but over the next 12 months we will be expanding internationally into other jurisdictions, including the US.

So how do these contracts translate to different jurisdictions? Is it going to be pretty much the same thing because these are basic ideas and you just need to put some language referencing the different jurisdiction? Or is it international law? these agreements and what happens if the two parties are in different jurisdictions?

So maybe the easier question is around the jurisdictions. Again, this isn’t legal advice, but you would usually choose a jurisdiction based on what happens if something goes wrong with a contract. the procedure and you need to have faith in that jurisdiction that you can trust the legal system. So, you know, again, for example, you wouldn’t necessarily want to do a contract under North Korean law, you know, as a very absurd example.

So I say that the jurisdiction is definitely something where you might have a client in a different state and, you know, as long as you have confidence and faith in that state, then there shouldn’t really be an issue with working that jurisdiction. The other thing about jurisdictions is if, for example, it’s a foreign jurisdiction, then you might want to ask for translation costs or some protection because maybe there’s a different language that you speak. So I’d say the jurisdiction aspect is more of a strategic and, to a certain extent, personal decision.

But when it comes to legislate and how we plan to enter all these jurisdictions, from a technological perspective, there isn’t, it isn’t really a bottleneck or an issue. those parameters searchable and the data searchable. But the bottleneck for us really is on the legal side. So our legal team needs to be qualified to review those templates. And even if as a company, we don’t give legal advice, we owe our users and customers a duty of care that their contracts are good and lawyer approved.

So I reckon when we do expand into the US and into other jurisdictions, we will either partner with local law firms or local lawyers who can help us, you know, certify that these contracts are good. I think the other way we’re going to partner and scale our templates in different jurisdictions is also by working with early adopter customers in those jurisdictions, because not only, you know, is it important to have a contract which is lawyer approved, but it’s important to have a contract which meets real-world requirements, which are not often things that lawyers think about.

So that’s why we really like, whenever we add a new contract to the platform, to have that early adopter who will provide us the feedback, explain what’s reasonable, what’s standard, what’s market standard, so that we end up creating a contract which actually meets their requirements.

So basically, you are going to leverage legal firms in different jurisdictions. So you’ve got to make sure that they are valid and fully working. And maybe at some point, you’ll have the optionality on the legislate websites for people to choose, OK, I want a cross-border contract between Virginia and Massachusetts or Virginia and England and, you know, give me a template that is optimized for these cross-jurisdictional relationships where perhaps the employee is in Virginia but the company is in England and how that might work?

Absolutely.

So, going a step further, so I understand that basically you’re starting from a pretty plain situation where someone needs to hire people and hire contractors and have vendors and maybe lease a piece of property for the office or for the factory or whatever it is. they’re going to acquire another company or sell a business, or they’re going to divest some things, they could get into more trickier situations, they will develop intellectual property that they are going to license to other people or start the franchise. So how do you see this concept being able to expand to cover other areas?

So on the topic of due diligence, using legislate as a business owner really makes due diligence really easy and really quick because contracts are standardized, you know what they contain, and we can automatically generate the typical M&A spreadsheets where you have what’s in the contract, yes, no, et cetera. So that’s one aspect which we really simplify. I feel like in terms of how do we enter maybe the domains or areas of contracts where there is negotiation, I really feel like it will be by partnering with maybe some of the players that have influence and power.

I feel like in terms of how do we enter maybe the domains or areas of contracts where there is negotiation, I really feel like it will be by partnering with maybe some of the players that have influence and power. Click To Tweet

So, for example, partnering with a big corporate and doing all their supply agreements because that’s a great way of all of a sudden getting a bunch of vendors on legislate. So, I think it’s really as soon as we kind of get more and more market adoption and become more of a standard, using legislate will be questioned a bit less, if that makes sense. And even if we, for example, we do have some customers who use legislate, even if they are doing some contracts which need to be negotiated, for example, software license agreements, we have some customers that have software license agreements from Legislate.

These are contracts which are negotiated. However, it can also be used by our customers as a way of saying to their own clients, look, you can either go through the three-month negotiation route with our lawyers, or we can sign a contract today using Legislate. And I feel like, you know, not everyone will want to, you know, do that, but enough people will that in time, legislate can become a standard. And we can really just do a bunch of contracts, which maybe today would not even be you know, thinkable.

It’s interesting. This is an interesting challenge, because when you deal with big companies that have power of size and market position, they tend to want to have contracts with the smaller suppliers, perhaps that favors them. An example could be retail food retailers who often have very long payment periods with small, small producers. But because they own the brand, they write label the products, they can replace them easily so they can force them.

And in my past as an investment banker, we represented some of these people that basically were in a very difficult position because they couldn’t build their business because the payment terms were so onerous that they could not grow. They couldn’t finance the growth of their business and they regularly went out of business. And so my question is, how are you going to be able to hold these companies to more middle positions when they already have the one-sided contracts? How do you bring them on and convince them that, hey, it’s in your interest to be more reasonable with these contracts and be on legislative? What’s going to be your argument there?

Well, I think the first argument is by using legislative to have access to the data. And when you have access to the data, you can justify payment terms. You can justify, you know, what’s reasonable or not reasonable. So I do think that maybe, and this is just an opinion, but if they’ve adopted payment terms or any contractual term which favors them, it’s out of, you know, yes, it’s maybe because they can, but it’s also maybe to manage a risk or part of the business that ultimately, if they had the data, maybe having the data gives them a better clarity of what that risk actually is, and maybe they can choose payment terms which make more sense.

So let’s switch gears. We are getting close to the recording. I’d like to ask you more of a strategic questions. You know, I love to explore with other businesses what the strategy is. And there’s this concept of the single phrase strategy, which this tells down your strategy into a single concept that everyone in the company understands, and then they can action it on a daily basis. And an example could be maybe MasterCard who came up with this idea that being in the credit card transaction business is super competitive, but only about 15 percent of all transactions go through credit cards.

So why not go and try to capture more of the market outside of that? And they call it kill cash. So their one phrase strategy is kill cash and convert cash into credit card transaction. And another example could be IKEA, who have this flat pack concept. So if the furniture can be disassembled, put in a flat package, fits in the boot of your car, that’s the kind of furniture they want to sell. And everyone understands what it requires. So given this concept, how would you articulate your strategy, your one-phase strategy for legislation?

Kill paper. I don’t think that would be, you know, suitable for the podcast because, you know, in all fairness, we’re not trying to replace lawyers, we’re trying to empower business users or help lawyers delegate to business users, the type of negotiational generation of contracts that lawyers don’t actually enjoy doing because it’s very tedious, it’s low value, and lawyers are much better at advising on, you know, what should you do as a business in this specific situation.

I completely agree. I mean, same thing happens with accountants. You know, bookkeeping is great, but it’s not at high value. And if you think about how to, you know, maybe how to plan your business, how to manage the business, it’s a much better job for accountants to do and much more intellectually challenging. So killing paper means that standardizing contracts and kill unnecessary negotiations, I guess, and paper shuffling, where you can get to a good solution and move your business forward and not be tied down by administrative trivia.

And then killing unstructured data at the end of the day, because when data is unstructured, it requires humans in the loop to do anything with it. And by making contracts machine-readable, then you can really open up contracts.

 

Okay, so explain a little bit more. What does it mean opening up a contract?

So if you think about what open banking has done, it’s created fintech, it’s created neobanks, it’s created money apps. How? Because with APIs, they can connect to bank accounts and they can communicate between bank accounts and send money from A to B. If you think about a contract, that’s not possible or that’s not been possible to date because contracts are either in paper or PDF form, which by definition is unstructured and requires a lawyer in the loop to process that data or do anything with that data, or a human, you know, a clerk to review and get that data.

So with legislate, our focus is making contracts machine readable so that not only can that data be stored for our clients so that they can answer questions like how many employees are on a 30-day notice period, but we can also start to offer services based on the data in those contracts. So, for example, a landlord can collect rent or collect deposits based on the data in the contracts. We can automate that. When you’re hiring an employee, we can automatically connect payroll, pensions, insurance, benefits, because all of those services are described in the contract. But right now, it requires someone to manually set those up. So when we talk about open contracts, it’s facilitating that communication because we have access to the data.

So when we talk about open contracts, it's facilitating that communication because we have access to the data. Click To Tweet

I love that. That’s huge. So probably we could have another episode on the implications of that. But for now, this is what the episode is going to be about. So if you want to legislate your business and you want to make it have open contracts that are easy to make, and then the information can be used electronically to cut down on administration and grow your business, then definitely check out legislate. So where can people find you guys and you personally as well if they want to learn more?

So our website may be the best best place www.legislate.tech and we can be found on LinkedIn, I can be found on LinkedIn, just search my name and there aren’t that many Charles Brecque in the world.

We spoke with the top one, the youngest entrepreneur, probably you’re the youngest CEO. So congratulations for that. And thanks for coming to the show and sharing a really interesting management blueprint which you can use to grow your company faster, cheaper, with less noise and less administrative hassle. So do check out the show notes and do check out Charles Brecque’s website. And if you liked what you heard today, then stay tuned for next week. Yes, I’ll bring another exciting entrepreneur onto the show to explain their management blueprint. to explain their management blueprint. Thank you, Charles, for coming on the show.

Thank you Steve.

 

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