27th February 2020
27th February 2020
By Sarvarth Misra, co-founder, and CEO at ContractPodAi
Today, nearly every business has a contract repository in place. The contract lifecycle management (CLM) journey is well-known although most businesses have not ventured past the first few phases.
According to a recent Forrester Wave Research study:
Innovations in artificial intelligence (AI) over the past several years enable businesses to progress further along the CLM spectrum. The Forrester report shows that few of the traditional CLM vendors (24 percent) have AI functionality beyond analytics and change approvals. Still, many experts agree that the future will see AI playing a much bigger role.
A recent Gartner report predicts that by 2024, AI-based contract management solutions will handle half of the contract review process. This will lead to increased efficiencies and reduced costs for corporate legal departments. In fact, by 2023, 90 percent of multinational companies will have CLM solutions in place.
In essence, this change means that businesses will need more skilled staff on hand. The later will help configure and train AI bots on the sorts of contract terms and conditions that businesses deem acceptable. Meanwhile, corporate legal personnel will be freed up from repetitive, high-volume reviews of Ts and Cs.
This adoption and trust of intelligent CLM solutions require significant shifts in both thought and culture. Nevertheless, CLM solutions are empowering businesses, even across regulated industries, including:
To many, legal technology and revolution may seem like contradictory terms. But rapid data growth, and evolving regulatory and governmental standards all increase the need for automation in the realm of contract management.
Historical precedents, time-tested terms, and data-driven decisions are contracting strategies that corporate legal types appreciate. AI review bots can review contract terms at blazing speed, as instructed by their programming. They can identify non-standard, potentially problematic clauses, and alert their human counterparts to study complex terms, as well as crawl through a records repository to identify search terms.
And as contract repositories grow, AI engines learn more through machine learning. The opposite is true for humans because of information overload.
So, as legal professionals approve or deny clauses or terms in their AI-assisted review, AI bots embed those decisions in their “memory banks" and become more efficient over time.
A report on legal innovation by Raconteur discusses how outside law firms will have to evolve their services and billing models as it pertains to document review. A part of this change will be a move to 'Alternative Fee Arrangements', while other law firms will have to focus on providing more strategic advisory services around mergers and acquisitions, and globalization.
Have you ever heard the technologist’s mantra, “To err is human; to automate, divine?”
In any case, there are many benefits of automating contract review and assembly:
Most human beings, particularly millennials, like to be challenged, and handle a variety of tasks and duties in order to perform at our best. So contract management applications, powered by AI, allow attorneys at all stages of their career to spend less time on menial document review and more time learning new skills.
Much has been written about how AI-driven CLM adds value to the corporate legal department. But the benefits extend throughout organizations, including:
Driving efficiencies and standardizing processes across the organization benefit all of these stakeholders, not to mention individual investors.
Contracts are classified as records because they are evidence of business transactions. They include private, sensitive data that should only be accessible to employees on a need-to-know basis. They, and their metadata, have defined retention requirements.
Contract review based on robotic process automation helps to preserve permission-only access to contracts while allowing bots access to a broader set of files to approve newly-signed agreements.
Many contracts include details about a relationship between two businesses - or individuals - whether or not it goes as planned. Much of the “non-compliance” terminology is standard across many agreements. Yet if non-compliance language isn’t included in the satisfaction of regulatory auditors, businesses could be subject to fines or other penalties.
Compliance regulators also like to see defined decision-making and business process structure - and for it to be adhered to. They want to see how contract terms are escalated whenever issues or anomalies occur. Intelligent CLM applications can provide comprehensive, time-measured reports, which identify what happened whenever irregularities occur, and who did what when alerted to it.
Because AI review bots follow specific rules in their programming, they mitigate an organization’s exposure to liability and penalties. They also create incredibly accurate reports.
In summary, AI-augmented CLM platforms empower businesses to increase productivity while reducing overall risk. Many contract management solutions in the marketplace are too focused on the core repository and offer little in the way of process automation or machine learning. Businesses, instead, need advanced contract reporting to understand historical trends, make decisions based on predictive analytics, and demonstrate compliance.
ContractPodAi offers an intuitive solution built on the IBM Watson platform. Users in legal, sales, and other business departments don’t need advanced technical skills to capture, process, and execute contracts, or find the insights that they need. Natural language searches and programming make all of the difference.
Want to better understand the opportunity of ContractPodAi’s intelligent CLM platform? Request a demo from one of our CLM experts today.
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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.
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