8th September 2020
8th September 2020
By Sarvarth Misra, co-founder, and CEO at ContractPodAi
Contract standards are defined by the LawInsider.com dictionary as "the terms, conditions, requirements, methods, techniques, standards, and practices of (a) Applicable Law, (b) the System Policies and Procedures, (c) Prudent Utility Practice."
Actually, there are many definitions for the above - each applying to different industries, regions, and use cases. Either way, legal contract standards are especially useful for businesses that are automating contract processes and adopting data analytics to make informed decisions. And artificial intelligence (AI) can help with those, sifting through vast amounts of content and data, and selecting only the most apt terms and clauses.
In recent years, the International Association of Contract and Commercial Management (IACCM) has encouraged businesses to adopt more standards in their contract management processes. Standard clauses, and standardized contract language across industry segments and commercial lines, can enable businesses to streamline negotiations.
Some of the contract types, which are frequently cited as good candidates for broad standardization, include:
The IACCM found that the cost of managing everyday contracts is around $6,900 USD, with complex contracts costing an average of $49,000 from creation to negotiation and closing. That's because complex contracts are often as difficult to read and understand as they are to create - if not more so.
Unintelligible legalese and complex wording can cloud the intent of business agreements. So, a thorough, unbiased review of your contract repository, including templates and custom agreements, is a real opportunity to improve your business process.
Sometimes, businesses have to draft a more complex contract to mitigate risk. Say, for example, a commercial real estate lease agreement. A lease abstract can preface more complex clauses and highlight the key information, of which the landlord and tenant need to be aware. A real estate attorney, paralegal, or contract manager can review detailed clauses. However, a contract abstract can provide the “laypeople” in the burgeoning relationship with a high-level overview of the salient terms, responsibilities, and conditions of the agreement.
Better yet, an AI-based virtual legal assistant can analyze the entirety of the contract, and identify any clauses, terms, or conditions that may be problematic. Even if an abstract does not exist to begin with, contract analysis can be used as part of a summary document highlighting key details.
Avid researchers may revel in doing due diligence for hours and days on end. However, with the speed of business continuing to accelerate, it helps to have a virtual contract reviewer with machine learning functionality.
At this moment, your competitors are likely finding ways to leverage AI and contract lifecycle management (CLM) to accelerate their own contract authoring, review, and negotiation cycles.
So, can you afford to continue to manage contracts manually, given the typical mix of standard and non-standard agreements that flow in and out of your business?
Contract analysis is a key stage in the end-to-end contract lifecycle - or ecosystem. If you have amassed a large contract repository, finding the best clauses, terms, and conditions is essential to creating agreements - those that will instill confidence within parties to your negotiations.
With your existing contract management process, can you track the speed of workflow cycles and time-to-acceptance? Can you identify templates or clauses in your libraries that are not resonating with your prospective customers, partners, suppliers, or employees? How about capturing scanned paper contracts and adding metadata profiles, so they can be searched and analyzed along with contracts that were “born digital?”
To see why contract management should be a part of your legal automation initiatives, download our e-book, Three Stages of Legal Digital Transformation. It will also help your legal team to embark on a digital transformation journey more successfully.
ContractPodAi empowers your team to assemble, send, sign and approve all kinds of contracts – from NDAs to sales contracts – anywhere, anytime and using any device.
Automated contact & document assembly
Highly configurable approval workflows
Central collaboration & negotiation
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