Kim Simmonds Live: Stop Letting AI Write Contracts (EP 1037)

[0:13] Hello, friends. Uncle Marv here with another episode of the IT Business Podcast

[0:17] coming at you live from Salt Lake City, home of Pax8 Beyond 2026. We are into day three, folks. It has been three glorious days here in Salt Lake City. I have been outside. I can tell you the weather has been fantastic. It actually is pretty nice. I still like Florida, though, but Salt Lake's not bad. Good place here. I am joined for our first conversation of day three by Kim Simmons. Yes, she was just on the show, but she's here at Paxi. She is the...

[0:49] Founder of Cloud Contracts 365, Law 365, and is here as Hack State partner. She's been at the booth having lovely conversations. So, Kim, thanks for stopping by. Yeah, thanks, Marv. Lovely to see you. Sounds good. So, I know you came in a couple days early and stuff, so let's get that part out. What did you guys do out in the city or out in the mountains? Yeah, we didn't explore too much, actually. We were so jet-lagged, so tired. We've been traveling like almost 24 hours and arrived Friday night. So Saturday we were quite spent, but we did go. We had a nice brunch. We did go to Liberty Park, had a little walk around there and, you know, had a nice lunch and stuff. But nothing too exciting, unfortunately.

[1:34] Okay. Nothing to write home about? No. Okay. All right. How's PAX 8 been for you this year? Last year was your first, right? It was my first. Yeah. Yeah, absolutely. So second year in, we obviously learned a lot from last year. So we've come back with more improvements to just the way that we sort of productize the demo and the rest of it. And it's been absolutely phenomenal. We've already had something like 200 leads through it, 40 booked meetings. So it's been an absolutely fantastic. Sounds pretty high compared to others. Absolutely amazing. I think people are starting to understand that they need proper legal contracts, not clawed legal versions or co-pilot. I bet you those were some fun conversations. They were some fun conversations.

[2:19] Yeah. So, yeah. So, I walked by your booth a couple of times. Yep.

[2:23] Swag. Yeah. It was a book this year. I have the book. I know, Marv. You love your swag. I know how much you love your swag. You loved my chocolates last year. Yes, they were good. You did like it. But food is not swag. No. But they were good. But what did you do other? No, I didn't see chocolates. I had a bag. I had a nice eco bag, yeah, that you can take to the groceries. If you signed up for a demo. No, you had it for free. It's fine. But actually the reason why we did the book it was a book by greg jones from caseya, it was it's all about helping msps be more operationally excellent and efficient and also really good sort of quotes from people in the community that have grown businesses or helped people grow businesses and sometimes i feel that that's more valuable than a bit of plastic no it's a good book i actually i actually he gave me he gave me two actually okay uh one is supposed i was supposed to give away on a show get rid of them well, i you know it's one of those i'll probably end up giving it to somebody who needs it who hasn't you know come to a conference yeah or know who greg jones is and yeah we'll go from there i do want to.

[3:29] Ask you a question i had a conversation last night with somebody that had talked to you guys at the booth yep and part of contracts 365 if they just look it up it's going to say it's an ai powered platform yep, so they're like well if they're using ai why can't i just use ai and i'll just go find contracts and and do this i thought i said that's not how it works it's yeah you know you don't just generate ai contracts.

[3:59] So can you explain that so that yeah it's a bit like me going to an msp and saying well i can just use ai to manage my it support right, Because what would an MSP say? Well, no, you don't know. How would you know how to use AI to do what we do? How would you know what the vulnerabilities are? How do you know how to secure your tenant? Which tools do you use? Which tools do you know how to use? How do you know to verify it? How do you know to check it? I think sometimes it's easy for me to explain why I think people can't just use AI themselves.

[4:32] So I think sometimes likening it to what they're doing helps them to understand that. But to answer your question, we only use AI on a certain area of our platform, which is the review. So when you go into the platform, you can review contracts for legal risk and you can redline it. And that's all verified by the lawyers. So we're always checking and prompting it properly and like putting playbooks behind it because we understand how to do that from a legal position. We're trained as lawyers. So we know how to work the AI product. But that's only one part. To build the contracts from our platform, we actually use verified templates. We don't use AI for that.

[5:08] So it's very much you're guaranteed that the terminology that's in those templates, is all written by lawyers rather than AI. So it's only a small component of the platform that's AI-powered. So the review, though, if you're building the contract off of templates that you've done over the years, is this where somebody uploads their current contract and can review it against what you guys are doing? No, it's a slightly separate part of the product. So it's when you have, let's say, a vendor contract or you have a customer that says, we don't accept your MSA, we want you to review our MSA, then you can use the platform and upload it. And then it will check to see, obviously, the customer is going to have more customer friendly terms. It's going to look at that against our playbooks that we have specifically written for MSPs. And obviously, we check all the verification. So we've built the whole platform of machine learning, NER, NLP, to begin with, and then use LLMs to supercharge that. But it's only off the back of verified legal positioning. All right.

[6:14] So he's a bit more involved. It is, it is. But MSPs, you know, we like to push back. We think we can do it on our own.

[6:20] We'll figure out the right prompts for our jurisdiction and all that stuff like that. What has been, let me see if I can ask this in a way that you won't embarrass somebody, but what's been like some of the craziest things you've heard at the booth? So the craziest thing that I heard at the booth is what can you, if somebody tries to sue me for your contracts? Do you guarantee that we won't be sued?

[6:46] And I think I was a bit baffled a little bit at first, taken aback by this. Before you answer that, I'm going to say, we have been told in our industry that we cannot guarantee that a client won't get cyber attacked, ransomware, fished. We can't guarantee that. So it's odd that somebody would ask you that. I know. And it is a strange thing. And I think people forget the world that they're, I mean, MSPs, they're in the world where there's definitely no guarantees. There's always vulnerabilities and they'll continue to, you know, morph because we just don't know what the future is going to hold. You know, we're in a common law system here. That just means that, you know, all of our law is regulated on, you know, statute, legislation, but also case law. So you can go to court, you can challenge the current law. The judge can develop a new law. That's what common law is, right? So you've never guaranteed that the legal position today is going to be the legal position tomorrow, but certainly case law evolves slowly. It doesn't evolve very quickly. So really, you're dealing with contracts that have current law in them that's going to protect you as much as the law can actually protect you.

[7:52] And if people sue you, it's not because of the contract, it's because of the services that you're delivering. And it's whether the contract can support your position at that exact moment. But there could be a billion different ways that you could, you know, ruin a service. The contract's not going to give you a billion different ways that you're going to, how it's going to deal with that exact situation. It's going to go a little bit more generic about that situation and it's interpreting what that means in that current situation. So I'm trying to explain this in really simple ways to people. Like, you know, this is as good as it gets. This is as thorough as you can get for an MSP. It's built only for your industry. So we are really conscious of exactly what you're delivering and how you're delivering it. And we've been doing this for 20 years. So we know, like, we've seen all the issues that come up and we've tried to plug those gaps in the contract. So this is as close as you get to a watertight contract, but you can never give that full 100% guarantee. Very interesting. Hello officer.

[8:53] In case you hear that on the uh recording later the so we before with the show we talked about the fact claude legal yeah i didn't realize it was claude legal i, i mean i know you know claude and grok and yeah perplexity there's so many out there, what, I don't even know how to ask this question. I mean, can Claude Legal really help somebody draw the contract? No. Short answer. Okay. And I'm quite passionate about this, as you can probably see. Because, look, Claude Legal probably... Your face is all red, I can tell. Yeah.

[9:34] Got my fight face on. No. So Claude Legal will build a contract for you. And depending on how well you've prompted it, it will build as good a contract as you can prompt. Now you have to know exactly how to prompt it. So I would advise that you become a lawyer of 20 years experience to know exactly all the ways that you need to prompt that tool to make sure that you're covering your base for everything that you need, like NC, cyber, you know, all these AI terms, what's going to happen when you build agents, you know, all of that kind of stuff. But then you also have to have the experience to know to verify what the actual output of that AI tool has generated for you. And if you don't have both those things, I'd say that you're running a little bit of a risk of whether or not that contract's going to stand up in court, whether it's got a sneaky term in there that you have no idea. Let me give you an example. I had who now became a customer. They actually created their own contract through Claude Legal. I had another one that did it through Copilot. Both of them had termination for convenience rights. That means that they gave the customer the right to come out of the contract with 30 days notice at any time, and they had absolutely no idea that's what they had in their contract. And they thought they had a three-year committed term, and then that customer came out of it.

[10:47] Did they have three years in one place and then 30 days in another place? No, they thought they committed that customer to three years. They put it in the order form. But because the contract allowed the customer to come out of it at any point with 30 days notice, that's not a three-year term that's a 30-day rolling term.

[11:08] Because anyone's got the right to come out at any point in 30 days. So your three-year revenue has just gone out the window because you haven't protected yourself. And then you come in and you think, oh, I want to get an investor in. I want to get a buyer to come and take over the business. But they're going to look at your contracts and go, you don't have three-year committed revenues. You've got 30-day rolling terms. I'm not going to take this business because I don't have the guarantee of that cash.

[11:32] So there are things like this that I'd say, it's a bit like me going, like I said before, like going to an MSP and going, I know nothing about tech, but I'm going to use AI to monitor, my environment, to tell me where my vulnerabilities are, to do all my first line, second line support. And I don't need you. What would you say? So, so when, if somebody ever said that to me, which they haven't yet, but I imagine there will come a time, my question is going to be,

[11:59] if you're using that, what's going to happen if it's wrong? He's gonna call me to want me to come in and fix it because it's not going to be any cheaper yeah for me to do it it's just easier to let me do it now yeah and i could be putting things at risk in my own environment that i had no idea i was doing because i don't know how to prompt it properly and it's only responding to what i'm asking it to do, yeah well here's how i've been thinking about it and i i haven't fleshed out the thought yet so you're going to be the first one is if somebody does an AI contract and doesn't get it verified by an attorney, and then they come up against a lawsuit or a dispute...

[12:41] Who's going to, you know, represent them? Yeah. You can't bring in the AI to court. No, exactly. This is what we did. This is how we built it. Exactly. They can't represent themselves most of the time. Exactly. I think I asked you this. If somebody came to you and said, hey, I got sued, can you defend me? You, if you didn't write the contract, what do you do? I mean, it's a lot harder, right? Because, of course, you can defend, you know, but then you're working off something that is basically not very good. It doesn't protect your client so now all of a sudden you're on the back foot as a lawyer because you're like well I can represent you however you don't have a very strong case, so you know what I can do what I can but I can't guarantee an outcome so you're going to be spending then you have to decide do I spend that money on the lawyer when they're telling me it's not a great case just to try and, somehow mitigate what the loss that I'm going to you know have, to be honest with you at that point. It's not a great, not a great view. And a lot of lawyers will come back and say, why did you use AI to do this? This is your business. Why are you not taking it seriously? Why are you thinking that, you know, who's given you assurance out there? I guess this is a really important question. Who's given you assurance out there that using things like co-pilot and Claude for legal is absolutely the way you should do things? Who's given that assurance to you? Or is that something that you have assumed? Yeah.

[14:06] I'm guessing that somebody has used it and has not had any issues so far. Yeah. That's the same with like no contract. If you haven't had an issue, I probably won't have an issue either, which is the same as saying, oh, you're breaking into houses and stealing stuff and you haven't gotten caught yet. Oh, I'll do that too. Yeah. You don't need a lock, right? But the thing is, you know, with all of this, it's like, it's the same argument of someone saying, well, I've been in business for 20 years. I've never had a contract. I've never had a problem. Why do I need you now? And it's the same as someone, an MSP saying to me as a customer, well, you've never had, you know, me saying to them, I've never had a cyber incident. I've never been attacked. I've never had that in the whole 20 years I've done business. Why do I need cyber now? You know, what would you say to that? If I said to you, Marv, as if you were my MSP and I said, I've never had a cyber incident, Marv, why do I need it? So I always go to the example of, have you ever been in a car wreck, but you have insurance yep you have homeowners insurance have you ever been broken into it's the same type of thing right just because it hasn't happened doesn't mean you shouldn't plan for exactly if it does or when it happens exactly and legal isn't exactly the same category as that it's not about, if it's about when now especially more than ever.

[15:28] One more question that i got last night yep and i don't think i've ever talked to you about how are your contracts work, but the question came up that.

[15:38] You guys were telling people that, you could have a different MSA for every state for every, state state yeah so the MSAs are the same but they vary state by state depending on state law okay so it's not per customer it is but I mean you create it per customer so it's the same template you just change the customer name in the platform, so you have customer a then you have customer B. You go in the platform and you can easily change it. Oh, because they made it sound like you were doing a completely new MSA. No, no, no. It's a template that you go in and just change the customer name. But then it is, there are categories per state. Yep. Categories. So every single state in America is covered. They're all backed by U.S. Council in every single state. And also we have a button in the platform that takes you to a human, you know, a U.S. Council. So they can give, it's a different fee, of course, because you don't know what you need, but you've got someone in the states that can help you with negotiations and other things that you need yeah.

[16:38] That's not like a referral service is it you are you it is a referral we partner with them they're not they're not part of cloud contracts so they they have their own law firm but we've found technology lawyers in every state yeah so, so so council that can actually and they actually know the contracts they've developed the contracts with us so that cuts down a lot of work what you're saying before about a lawyer coming to see a contract and going well we didn't write this, you don't have that problem because they all know the contracts okay yeah interesting, didn't know you had that big a network yeah it's it's one particular u.s council that works across all of the states so he's got the network i only have one contact and then they've got, they themselves have the networks within the u.s okay yeah it's less work for me yay all.

[17:31] Right so outside of what you've been telling everybody what you've been doing at the booth and stuff What have you actually gotten out of being here? Oh, some amazing conversations that I've had and actually some really interesting potential partnerships in the future. So what we're trying to do this year is more integration work with other platforms. So looking at how MSPs, you know, obviously we've got integration with Halo PSA that's already in place. So it makes workflows a lot easier when you're.

[17:58] Quoting on the quotation tool and then linking your terms and conditions. We've already got that in place, but we're looking at other platforms to link with them. Just to give you guys ease of business, you know, to make it seamless for your customer, but seamless for you operationally as well. When you get those partnerships, you will let me know and talk about them and announce them? Yeah, of course I will. Yeah, thank you. Okay. Yeah. All right. Anything else? Just that. It's a pleasure. Yeah. I know that you're just now getting acclimated to the time change and stuff. Yes, about to go back. Just in time to go home. I know you came in a couple of days early and didn't get to do stuff. Are you staying a couple of days after? Actually flying to New York for a few days. My brother lives in New York with his family. I'll have you to visit your old farm and say hello. Yeah, I might go to Midtown and visit the good old Sherman and Sterling building there. My brother lives in Purchase just outside of New York. So we're going to go and have a little barbecue with him. And then flying back home on Friday. So I've got a few days of some fun. And then I'll go back.

[18:58] Fun. What do you do for fun? Oh my God, I don't know more. I was asking myself that the other day. It's like, what is my life? It's all like legal contracts, platform tech.

[19:09] So I've got two kids. I've got a 12-year-old and an 11-year-old. So they do keep me really busy at the weekends. And aren't they doing activities and stuff and need car service? They always need car service. So it's a lot of like them time rather than me time. But when I do get me time, I just, you know, I've got a little doggy. I love walking. I love like, I live in the countryside. So really boring, but I love it. Lots of cows around. It's really nice. Very peaceful. And I like that. Yeah. Nothing wrong with that yeah i hide away from people when i am not working yeah it's very full-on isn't it i think life is very full-on now as well so finding your carving out a bit of peace and quiet and and time for you i think is so vital, yeah i don't think anyone any of us really do it enough but yeah well especially these days when we're just, we're so geared to getting more done in less time, which is why AI is such a hot topic now, right? It is. And it is really efficient for that. But then it just generates more work, doesn't it? Because then you have more time on your hands to do more. But you don't sort of stop your day. You don't stop working for half the day because you've done a whole day's worth of work. You just fit two days worth of work in one.

[20:24] So I described it the way that when you buy a house and you think it's, oh, we'll never fill this up. Yeah. You always fill up the house. Yeah, exactly. With stuff that doesn't need to be there. You're always going to fill time with something. Exactly. So I think the next thing for all of us is discipline to try and move away from that as much as we can and to carve that important me time or that time for family, because I think life is going to get too stressful very quickly. And there's a lot of mental health issues out there. And I think we've got to support our own mental health and we've got to understand that technology is amazing and it's so important to be part of it. But to what extent is an important question.

[21:06] All right well we'll go ahead and end on that and make sure folks that you go to cloud contracts 365 you can i'll have everything in the show notes again, access to kim her linkedin and, stop doing your own contracts that's all i can say there, thank you kim thanks for stopping by and hope you enjoy the rest of the time here enjoy your time in new york thank you and we will talk soon definitely thanks all right folks we'll be back with more we'll see you soon Holla!