Growing up in a working-class neighborhood in South Brooklyn, Gary Liskovich and Jonny Greenspan saw friends and family who owned small businesses struggle to understand the legalese in the numerous contracts and documents that impacted their businesses.
“Small businesses look at their contracts and say, ‘I don’t know what this means.’ Legalese feels overwhelming and that often leads to limited negotiations and quick signatures, which is bad for these small businesses in the short and long term,” said Gary Liskovich, co-founder of Legal Hat.
Vendor and supplier contracts are often plug and play boilerplate with one-sided unfavorable business terms, liabilities, and hidden penalties built into them.
After working in the tech industry for years, Liskovich and Greenspan circled back to create a way to help small businesses clear the legalese hurdle using AI. “What we’re building is a solution that closes the legal gap so many growing businesses experience daily.”
After working in the tech industry for years, Liskovich and Greenspan circled back to create a way to help small businesses clear the legalese hurdle using AI. “What we’re building is a solution that closes the legal gap so many growing businesses experience daily.”They created a company called Legal Hat. It went live in 2023.
Educating on Contracts
Legal Hat allows businesses to analyze NDAs, service and purchase agreements, warranties, and other documents that use legalese.
“We believe business owners should be focused on running their companies — not trying to learn legalese and contractual law on nights and weekends. Legal Hat uses cutting-edge AI to shine a light on all potential contract issues and monitor contracts for ongoing obligations,” said Liskovich.
“Legal Hat is built around the philosophy of ‘3 clicks and 30 seconds.’ Our product is designed to allow any company to quickly upload a contract, receive guidance, and then either accept and sign the contract or quickly escalate to a professional lawyer for additional counsel,” he added.
The company is building a network of attorneys nationwide who can assist these small and growing businesses.
Legal Hat does not create contracts from scratch, or directly edit existing contracts. “We review customers’ agreements against pre-defined contract playbooks, then we educate clients about elements they may want to edit or add based on how their contracts differ from their desired playbook.”
“The AI is trained to decode legalese. As it reviews a contract, it’s checking each clause against the playbook’s expectations, which can be a potential issue if misaligned. For example, Legal Hat might flag a cancellation clause that only allowed one party the right to end the agreement,” explained Liskovich. “Our AI finds the relevant text on cancellation in the contract and compares it against preset expectations and desires. It’s not simply summarizing the contract, it’s reading all text to answer very specific questions. Ultimately, Legal Hat identifies possible risk factors, but it’s up to the client whether those are acceptable or not.”
Legal Hat is also helping businesses monitor their contracts. While a business may have an external lawyer who handles contracts on an as-needed basis, small businesses often don’t have someone monitoring their contracts on an on-going basis. This can be problematic because, for example, some industries are notorious for contracts that automatically renew if action isn’t taken by a certain date.
On Boarding
Once clients are onboarded, they pay a monthly fee to use Legal Hat. “On-boarding starts with a really quick 15-minute conversation so that we understand the unique aspects of their business and can build any custom contract review playbooks if they are required. To do this, we ask them to send over some strong contracts from the past that form the basis of a playbook template.”
“Our primary goal is to reduce the time small businesses spend on reviewing, negotiating, and managing routine contracts, while making sure all their interactions with legal professionals feel incredibly valuable. This way, they can get back to doing what they enjoy most — running their business, not managing contracts.”
