Corporate legal teams are under intense pressure to keep up with an ever-expanding number of contracts. Yet, at the same time, they must maintain the accuracy, compliance, and speed demanded by today’s business environment. Contract lifecycle processes that rely on human review, siloed systems, and manual data entry simply cannot scale to meet modern business demands. To bridge this gap, many legal departments are now looking to artificial intelligence (AI) to enhance their management of legal agreements and drive greater value across the organization.
AI contract management brings automation, intelligence, and scalability to the inherent workflows of legal departments. Leveraging NLP, machine learning, and predictive analytics, these platforms can ostensibly streamline the workflow of contracts from creation, through review and negotiation, to tracking compliance. Here are some of the most commonly discussed advantages of using an AI-powered contract management platform.
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1. Accelerated Contract Review
Legal teams can review contracts much more quickly with the help of AI. This is because AI can help people identify the key components of a contract more quickly and efficiently than human reviewers. These key components include clauses, risks, and deviations from standard terms and conditions, in particular.
And what is the significance of identifying key components? It gives legal teams speed, which translates to better responsiveness to business demands and, inevitably, faster deal cycles.
2. Improved Risk Management
Detecting and flagging risks early is one of the most influential benefits of AI contract management. It can identify language that is not in compliance, clauses that are unusual, or terms that are missing entirely. This is done with the use of defined legal standards and historical data.
These standards and that data serve as the foundation for AI, and is the proactive aspect of using it in contract management. Minimizing exposure to legal and financial risk is the down-task protection that benefits from early risk detection.
3. Enhanced Data Visibility and Reporting
Vitally important business intelligence is present in contracts. But it often goes underutilized in conventional systems. They might as well be filing cabinets. Contract AIs understand where the must-know stats and clauses are buried. They even use natural language processing to understand the meaning behind the words.
These systems then go above and beyond the human ability to analyze by actually serving up the insights in easy-to-understand reports. For some organizations, that’s a dream come true.
4. Consistency Across Legal Documents
Keeping contract language and structure consistent is an ongoing challenge, particularly for companies that do business across multiple jurisdictions or that have several business units.
AI tools can help by standardizing templates, comparing new contracts against company-approved clauses, and ensuring that everything aligns with internal policies. This should reduce discrepancies, improve quality control, and make the whole process simpler.
5. Scalable Legal Operations
The complexity and volume of legal demands increase as organizations grow. AI provides the needed scalability to handle this growth without a corresponding increase in headcount.
Automated workflows, smart contract categorization, and intelligent searching allow legal teams to manage more work with greater efficiency, freeing up resources for all-too-rare strategic initiatives and high-impact legal advice.
AI Contract Management Streamlines and Organizes Legal Functions
Reducing risk, extracting information, ensuring consistency, and transforming contracts into a data-driven process are four major areas in which AI is benefitting enterprise legal teams that are modernizing and trying to streamline operations. It does this by rapidly accelerating the review timeline and unearthing the all-important, often-confined knowledge contained within contracts.