How AI Streamlines and Improves Contract Review
Businesses have used legal services to assist with drafting, reviewing, and negotiating contracts for years. Historically, the most common tool lawyers used for this job was contract management software, which contains simple storage and document assembly functions. While this can help with organizing information and provide shells for routine contracts, the software does not take into account the complexities and variances that often come with contracting.
Currently, there are artificial intelligence (AI) tools on the market that aid with contract review and negotiation. AI-technology is gaining popularity amongst legal professionals who have high-volume contract business because AI can significantly streamline the contracts process and provide superior results. In fact, while AI does not take the human element out of contract analysis, it can make those human reviewers faster and more effective, reducing overall costs as much as 50%.
Contract analytics software utilizes machine learning algorithms or models that users can further refine to find what they are looking for and organize their data, or in this case contracts, more effectively. The software can recognize patterns, extract key clauses, and identify core concepts within the set of contracts. Most commonly AI-based contracts solutions include hundreds of pre-built models to identify key clauses of interest. Those models improve over time as more contracts are analyzed and reviewed by the software and the human reviewers.
Why Should Lawyers Use AI for Contract Analysis?
Contract analytics software offers several attractive benefits. The technology is ideal for any lawyer in the contracts space, whether in the negotiation phase or litigation. Oftentimes contract lawyers lack the necessary tools to organize their contracts and streamline review, which can hinder them from identifying potential issues and ultimately, getting better deals for their clients or organizations. Applying the right AI solution can help lawyers overcome these contracting challenges. One of the major advantages to contract analytics software is that it can keep contracts uniform and identify any variances. Many lawyers struggle with this type of information organization because it takes a lot of staff and time to manually review and compare a stack of contracts. The AI software can generate data reports that flag varying provisions which then allows lawyers to determine if they need to update a certain contract or tailor a contract to reflect a specific client’s needs. For example, a company may have thousands of sales contracts that need to have the same penalty provision. A contracts analytics solution can quickly identify any outliers so the lawyer can amend or renegotiate those contracts. Having this tool at their disposal significantly reduces the review step of the contracting process.
Besides the time saving aspect, this feature helps lawyers stay compliant with applicable laws or deadlines. Lawyers can use contracts analytics software to identify clauses tied to changing regulations (such as LIBOR) or that don’t adhere to a new law, and then move to quickly remove these provisions from the contract and stay compliant. In regards to deadlines, this software can keep track of expiring contracts so lawyers stay on top of renewal dates, which lessens the risk of losing continued business for their clients. The ability to effectively maintain consistency and manage variations helps lawyers stay on top of risk assessment and avoid future legal disputes.
Using an AI solution for contracting provides the added ability to review and compare contracts that contain data in different languages, which is great for international companies. Other advantages include improved organization and storage and less room for human error.
Keeping High Value Work with your Attorneys
There is a concern that contracts analytics will jeopardize the jobs of corporate attorneys. However, this certainly isn’t the case. The history of implementing new technologies into the legal practice shows that technology creates efficiencies, allowing attorney to turn to more high level billable work. Instead, contract analytics will transform this aspect of legal practice in the same way AI solutions enhanced eDiscovery review. Using contract analytics software cuts out time-consuming menial tasks that lawyers can use for higher value work like risk assessment, client procurement and retention, negotiations, strategy, and compliance efforts. In turn, lawyers can provide better contracting capabilities and improved deals. Lawyers applying this technology will need to determine how it best fits in with their practice and restructure accordingly. Some considerations could include budgetary constraints and reallocating manpower to strategy-driven tasks. Generally, lawyers with high-volume contract business will gain a large financial advantage from using contract analytics software. However, as this technology continues to integrate into the industry, more organizations will be able use it for smaller scale projects to receive the same benefits and financial gain.
To learn more about how Epiq can help you to create efficiencies in contract analysis using AI, contact us here.