Your Best Friend & Expert Negotiator: A Guide to Training Your Contract Review AI
Let’s face it, among the many tasks that legal, compliance, and contracting teams have today, manual contract review isn’t the most fulfilling or inspiring.
Fortunately, though, artificial intelligence accelerates contract review cycles, allowing these teams to engage with their interdepartmental colleagues and pursue higher-level, strategic work. With contract review, AI, legal and other professionals are freed up to discuss their goals, tactics, and obstacles during negotiations. They can follow up on non-standard terms and complex clauses escalated by AI, look at contract analytics data to identify trends and forecast future results, and create templates for frequently used contract types. They can also advise cross-functional colleagues on legal matters related to sales, M&As, procurement, and human resources, among other areas.
But to accelerate future review cycles, it’s important to train AI around your organization’s approved contract language. With this strong foundation in place, the AI can alert teams to critical items in your agreements. Think deadlines, obligation delivery timeframes, and language that conflicts with your company’s standard operating procedures.
Here are a few things about contract review AI to keep top of mind.
Growth of Artificial Intelligence
Legal digital transformation and business process automation have evolved to the point where they’re enhancing the skills and knowledge of professionals — and it’s not replacing them!) In fact, in 2017, Gartner predicted that AI will create more than two million jobs — in addition to the millions of jobs that already benefit from intelligence augmentation (IA).
Further, both Gartner and McKinsey say that combining proven AI solutions and intelligent automation optimizes business processes while reducing organizational complexity. Complex contracts, after all, are twice as costly to complete in the absence of automation, according to World Commerce and Contracting (World CC).
Time savings, Accuracy, and Transparency
An AI-powered contract lifecycle management (CLM) solution — when implemented effectively — allows teams to spend more time working with colleagues and negotiation partners. It also helps them find the right contract terms when authoring an agreement, and identify the language in third-party documents that create undue risk.
As a result, a reliable CLM platform helps teams navigate the common pitfalls that together erode contract value by 9 percent on average:
- Unclear contract goals and scope
- Late engagement of legal staff and other key organizational stakeholders
- Protracted negotiations, followed by clumsy handovers to delivery teams
- Focus on the wrong risks and contract terms
Limited understanding of contract obligations and related due dates
More specifically, AI is set up to review contract terms much quicker than lawyers or contract managers ever can. The latter can then intervene as required, by flagging anomalies within documents and holding contracts until they are addressed fully. These can lead to missed policy violations or terms that incur more risk than a company can tolerate. Instead, given the proper rule-set guidance, AI flushes out problematic terms that would otherwise evade detection.
Added Benefits of AI-Based Contract Management Systems
On top of leading to productivity and efficiency gains, AI-powered CLM platforms enable remote access and offer alerts around contract deadlines and other obligations. (Plus, AI platforms that are purpose-built for legal and contracting professionals don’t require a whole lot of technical expertise!)
Contract analytics also provide macro-level data visualizations of historical trends and predictive forecasts (with micro-level detail!) It quickly drills down into individual contracts and associated metadata and brings to light important contextual data. It provides pre-configured and custom reports, making it easier for teams to identify and communicate patterns and trends, like non-standard language, negotiation times, and contract obligations that are met or in jeopardy.
Contract Review AI
At the end of the day, every organization needs to be wary of the risks when they enter into business relationships. As such, they need to see digital transformation initiatives like contract review automation as the business opportunities that they are. AI-powered CLM solutions simply help legal and other teams be more efficient and effective without causing undue risks. They handle those high-volume, mundane tasks, like reviewing contract terms and identifying non-standard language. They also offer actionable insights on active and in-flight contracts (the kind that human minds can far too easily miss!)
At LegalWeek in New York City, in March, I discussed how contract review AI can be your legal team’s best friend and expert negotiator. If you couldn’t attend this year’s event or missed this session, stay tuned for our recap video.
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