Law firms have gone on somewhat of an efficiency binge since the resistance to innovative technologies caved. An hour saved, a process automated, or a competitive edge gained are more appetizing than ever. Firms are willing to invest in areas they see holding them back from unfettered customer satisfaction and heightened profitability. Hence, the countless additions to the contract software market.
Contracts remain the core of all legal and financial exchanges but also remain the most cumbersome. Large firms and corporations are losing millions of dollars every year because they cannot afford the time and attention to optimize all contracts—the necessity to have the contracts conflict with the exorbitant effort required to optimize their efficiency. Something had to be done.
Thankfully, artificial intelligence (AI) has come to aid the ailing process and is making sweeping adjustments from all angles of the contract life cycle. Let’s take a look at the possibilities afforded to contract AI users.
1 Contract Creation
Creating contracts can be frustrating, to say the least. Formatting, branding, and presentation must be perfect without even touching on the accuracy of the details. Creating contracts that is new every time is a complete waste of time and resources, so contract template software was invented. Fortunately, these innovations were just the minimal viable products, and the latest iterations go much further.
Modern AI contract software allows you to create customizable, branded contracts consistent in design and features, but they don’t stop there. Through contract creation, AI provides proofreading and one-click term suggestions that drastically reduce the opportunities for human error. The highest-end AI tools can even identify clauses and terms that typically feature in particular types of contracts. For example, if you are drawing up a vendor contract and have forgotten to include an indemnification clause, your AI will make intuitive suggestions.
The most modern AI provides end-to-end services that streamline the process eliminating repetition, inconsistencies, and errors.
2 Contract Review and Analytics
One of the biggest time consumptions of contract generation is the hours it takes all parties to review and analyze contracts. AI contract review software can drastically reduce the inefficiency of the process whilst also improving contract accuracy.
The latest AI tools operate as a plug-in to your document creation software and provide a second set of eyes to ensure meticulous contracts. The AI highlights grammatical mistakes, consistency issues, and all-line editing discrepancies. One-click solutions can fix genuine human errors that could easily be missed in seconds.
Beyond grammar, contract AI saves considerable time in reviewing the crucial terms and fundamentals. It highlights the most important facts and figures to ensure consistency and accuracy as standard. The contract AI scans the important terms and clauses of a contract, and where ambiguity or inconsistency is discovered, it alerts the reader to act accordingly. This may seem trivial to begin with, but contracts are often disputed over technicalities due to ambiguity.
Having an AI remove the opportunity for conflict allows all parties to progress efficiently and effectively with a clear understanding of the individual responsibilities and expectations. It clearly defines what is a contract agreement and what was implied by the individual parties so everyone can move forward harmoniously.
3 Contract Progression
Since the emergence of blockchain as a recognized business platform, Smart Contracts have become a feature of innovative businesses. If you have yet to encounter a smart contract, they are contractual agreements drawn up using digital code. The coding allows the contract terms to be self-executing which effectively means that once the deliverables have been carried out and approved, the contract can pay out the recipient.
While Smart contracts are quite new-school and not yet fully trusted, the benefits are impressive and can be replicated using AI. Savvy contract AI provides actionable notifications for all terms of a contract. This means that when deliverables deadlines are falling due, the responsible party is issued with an alert.
Furthermore, many AI tools like Kira Systems and Evisort allow you to teach the AI what to do with specific contracts. For example, an attorney presiding over an NDA can train the AI to send the NDA to general counsel for review. Once the edits and conditions have been rectified, the AI can approve the contract autonomously.
Features of modern contract AI allow attorneys to automate more steps than ever before. By teaching the AI, carrying out every step of the contract is drastically reduced.
4 Contract Reporting
Senior leaders in most organizations are stretched for time and once a contract is drafted and signed, they rarely check in and see how it is going. The problem with this is that assumptions of progress are made and unless you have a staff member monitoring every contract, problems may not get noticed until it is too late.
Contract AI has meets this problem head-on by providing easily accessible reporting as part of the contract management lifecycle. With the click of a button, leaders and team members can request progress reports and review the performance analytics. This feature can even be automated to issue performance reports periodically which helps to avoid missed deadlines, failures, and mishaps.
5 Contract Renewals and Renegotiations
Large corporations and big law firms sign thousands, if not millions, of contracts a year with vendors, staff members, landlords, courts, opposing counsel, and clients. It can be tough to keep track. Most contracts will roll on without exercising an option to renegotiate or make running changes. This is often where size becomes your enemy. Large firms rarely have the workforce to keep abreast of every signed contract.
AI has fixed this inefficiency and given large firms the agency to renegotiate and optimize contracts by sending reminders of expiry and renewals dates, issuing progress reports, and assessing the overall performance. Rather than having contracts auto-renew on legacy terms without an appropriate appraisal, the AI compiles the relevant performance and compliance data to empower negotiations.
For large organizations, having an AI that optimizes contract negotiations and prevents unintentional contract lapses can save millions of dollars and avoidable headaches.
Contracts remain a necessary part of our transaction-based economy but overhauling traditional contract management is long overdue. AI is the way forward as it streamlines all elements of the contract lifecycle.
No more wading through individual contract reviews, missing deadlines, overlooking renewal dates, and all the risks that come with poor contract management. As contract AI tools continue to improve, early adapters will drastically reduce risk and increase contract efficiency.