Conversations about artificial intelligence (AI) and machine learning in a business setting are important. According to a study performed by MIT Sloan Management Review, over 80% of organizations see advanced AI as a vehicle for strategic opportunity. Additionally, 85% of organizations view AI as a means for competitive business advantages.1
This interest in – and implementation of – AI applies to legal professionals, in-house legal teams, and other contract managers as well. Manually managing and reviewing an ever-increasing number of contracts and legal documents of varying complexity is stressful and inefficient. But it does not have to be.
Organizations can improve contract review and contract automation with AI-powered contract management software.
What Is AI for Contract Review, & Why Does It Matter?
Contract AI supports contract managers with tools for drafting, reviewing, and executing contracts. It can help them decrease instances of human error during contract lifecycle management while ensuring that the best contract language and clauses are included in finalized contracts.
These AI-powered contract review software tools should be important to legal ops professionals because those who present the most accurate and favorable contract language can reap the most value from business relationships while maintaining healthy legal standing.
How To Use Contract Review AI
Let's go over key steps for getting started using AI contract review software tools in the most efficient way possible!
#1 - Upload Your Contract for Review
Start your contracting process by uploading your contract to AI contract review software.
Once you upload your contract, data mining and intelligent contract data extraction can begin. This process helps convert static contracts into dynamic, meaningful data with AI contract review software functionality.
First, AI contract review software can identify key data such as places, dates, financials, contact information, and more. You don’t have to waste time manually keying in contract metadata.
Next, intelligent contract data extraction can scan contracts and locate key terms, legal phrases, clauses and other important text. This process is powered by natural language processing (NLP) so that you can reap the most from purposeful, favorable contract language.
#2 Leverage Generative AI for Next-Level Insights
You can use generative AI for contract review for clause generation, advanced chatbot functionality, streamlined risk and language analysis, and other helpful features.
Users of generative AI contract review software tools can leverage user-friendly and powerful technology to draft clauses and ask contract-related questions - including those about applicable laws and compliance regulations such as GDPR, CCPA, and OFAC. What's more, chat history can be reviewed as needed.
Extracted key info about a contract can be effortlessly viewed, such as important clauses and sections. A filterable list of high-risk findings - such as clauses with non-standard language or uncommon clauses - can be brought to your attention with ease. You can dismiss clauses from the list that do not apply as high risk while restoring dismissed clauses to the list if needed. This central location in contract management software is helpful in identifying if contract language is safe and preferred.
If clauses, counterparties, and locations within a contract are unique and not already within your contract management system, you can quickly add the newly introduced data to your system if desired with the click of a button.
Generative AI contract review software tools also allow you to navigate through the list of clauses included in the newly introduced contract. You can take on the perspective of your company or the counterparty and call out clauses that are positive (in the selective company's favor), neutral, or negative (against the selected company's favor) so that you can enjoy risk-averse and proactive AI contract analysis over contract language.
#3 - Auto-Redline Your Contract
Now you can further enjoy an automated AI contract review process with auto-redline. Auto-redlining contracts allows you to automate the inclusion of clauses from your pre-approved library – if preferred – to virtually ensure that favorable clause language is included.
Depending upon the contract type, preferred types of clauses are included in the original contract drafts. However, these may include errors. Auto-redline can serve to fix up these clauses.
You can auto-redline documents as needed or configure your contract software system to redline documents upon upload. You can quickly see auto-redline in action while leveraging comments and comprehensive audit trails for each version.
You can use auto-redline tools within a native online document editor within contract management software or within MS Word.
#4 – Leverage Metadata Field Recommendations for Clauses & Sections
Your team likely has clauses and sections that commonly appear in your contracts. It only makes sense that you have metadata fields for those clauses – so that they are easily capturable and searchable.
Thankfully, AI contract review software tools for contract review support proactive CLM field recommendations so that you can enjoy visibility and governance for extracted, common clause types at a glance.
#5 - Streamline & Centralize Contract Review Collaboration
Contract analysis and review requires healthy and efficient collaboration. Thankfully, AI contract review software has you covered.
Configurable user permissions can allow you to make sure that only relevant personnel have access to certain contracts.
Online negotiation with clause ownership functionality helps ensure that internal employees and counterparties alike are on the same page with clause versions. Those assigned to clauses are alerted if anyone tries to make contract language changes.
With contract workflows, automated approval processes can be assigned to virtually any part of a contract’s life – including configurable electronic signature processes.
Contract analytics help your team to analyze a given contract and a legacy of contract data at a visually-engaging glance.
Closing Takeaway
In the end, the key takeaway here is that there are myriad AI contract review solutions at your disposal with AI-based contract management software. The data shows that the vast majority of legal ops professionals (74% according to CLOC) are embracing contract management software.
To get started with AI-based contract review automation and a streamlined contract lifecycle, book a free demo of CobbleStone Contract Insight® today.
*Legal Disclaimer: This article is not legal advice. The content of this article is for general informational and educational purposes only. The information on this website may not present the most up-to-date legal information. Readers should contact their attorneys for legal advice regarding any particular legal matter.
1Enholm, I. M., Papagiannidis, E., Mikalef, P., & Krogstie, J. (2021). Artificial intelligence and business value: A literature review. Information Systems Frontiers, 1-26.
This article was originally published on March 28th, 2023, and was last updated on October 10th, 2024.
