The problem with contracts and why founders lose.
Contracts are written by lawyers for lawyers. Founders sign agreements they do not fully understand, often under time pressure, without access to counsel. Lexicon is built to close this gap.
A 2024 survey of early-stage founders found that two-thirds had signed agreements without understanding key terms like indemnification, governing law, or limitation of liability.
Legal disputes arising from poorly understood contracts cost early-stage companies an average of $24,000 in legal fees before reaching resolution - often more than the contract's total value.
Traditional legal review takes 3 to 7 business days at $300 to $800 per hour. Most founders cannot wait and cannot afford it, especially for routine vendor or employment agreements.
What Lexicon detects
Backwards indemnification
Clauses that require you to indemnify the vendor for their own product failures, security breaches, or IP infringement. This is one of the most common and dangerous MSA traps for startups.
AI training on your data
Data use clauses that grant the vendor a perpetual, irrevocable license to train AI models on your business data. Often buried in Section 4 of SaaS agreements.
One-sided termination rights
Vendor can terminate in 7 days; you cannot terminate at all without cause. Combined with auto-renewal, this creates significant lock-in and negotiation leverage for the vendor.
Dangerously low liability caps
Liability capped at 1 month of fees. On a $5,000/month contract, the vendor can destroy your data and owe you only $5,000 regardless of actual damage.
Extreme non-compete clauses
Worldwide, multi-year non-competes in employment agreements. Unenforceable in California, heavily restricted elsewhere, but still capable of creating expensive litigation.
Missing security and data protections
No SOC2 requirement, no breach notification timeline, no encryption standards, no list of approved subprocessors. These omissions create risk even if no clause is explicitly bad.
Every analysis includes five structured layers.
Demo mode and live mode - built for every context.
In Demo mode, Lexicon uses three hand-crafted scenarios with pre-analyzed outputs covering low, medium, and high risk contracts. No API key, no setup - perfect for live demos and pitches.
In Live mode, users supply their own API key. The contract text is sent to the model with a structured system prompt that enforces our five-layer output format. The model's response is normalized and validated before display.
You are Lexicon, an AI contract analyzer for startups.
Output strict JSON with this schema:
{ summary, riskLevel, confidence,
warnings[], precautions[], suggestedEdits[],
missingClauses[], plainEnglish, verdict }
Each warning includes: title, detail,
whatItMeans, whatToDo, severity.
Be specific. Focus on warnings, missing
protections, and practical precautions.
Do not hedge excessively.