AI in the Legal Space Revolutionizing Contract Management

3 min read

The legal space is fast adopting AI tools that can complete hundreds of contract-related tasks, from contract review and management to clause extraction. While a few firms and departments are refusing to adopt new AI systems, either due to resource crunch or because of unfamiliarity, major law entities are taking the plunge to avail its numerous benefits.

Benefits of Legal AI Software in the Legal Space

By using AI, in-house legal departments and law firms are seeing a marked improvement in contract management. Traditional methods of storing, drafting, and tracking contracts are swiftly being replaced by AI, which not only increases practitioners’ control by bringing contract management to a single-window AI tool, but also automates routine functions across the lifecycle of contract management—everything from contract creation to review and securing of e-signatures and even archiving of completed contracts.

Drafting

For the drafting of contracts, AI provides standardized templates with accurate and up-to-date language. Machine learning (ML) is used to analyze the language of new contracts that are added to the system as well as to periodically assess old contracts for sensitive information.

Review

Manually reviewing contracts is a resource-intensive task that keeps mid-level and even high-level legal teams away from more productive work. It is also a sensitive operation that requires top-notch data security. To deal with this hurdle, practitioners are leveraging AI technologies that automate the review process. These solutions ‘read’ contracts, identify and analyze predetermined sections, and present a user-friendly report to human lawyers. While factors like unusually worded clauses or poor scan quality still pose issues, AI systems are still able to direct users to the relevant clause in those cases, from where they can analyze and refine the results themselves.

Management

Contract management is an intricate and laborious activity. Lawyers spend hours tracking the clauses, terms & conditions, considerations, and timelines for contracts assigned to them. With AI, contracts will be uploaded to a central database, where each document is automatically tagged based on predetermined parameters such as beginning and end dates, contract type, and contracting parties. Once this process is completed, the AI platform provides an overview of current workflows as well as upcoming events, easing the workload on human law practitioners.

How Lack of Familiarity is Impeding Adoption

Traditional document storage methods

AI in the legal space has several obvious benefits. However, legal teams across the world show reluctance in adopting automated contract management solutions. Concerns range from the accessibility, visibility, and safety of sensitive legal information stored in the cloud to the cost incurred for the implementation of new technology. The issue, however, simply boils down to the lack of awareness—contracts stored in a work computer, shared drive, or worse – filing cabinet, can be misplaced or damaged easily and take longer to find. Traditional storage methods may even breach data protection rules, something that AI solutions take full precautions against. Finally, unlike AI, manual processes are prone to human delay and error.

Contract management

AI-based contract management solutions improve users’ control over legal documents. Contracts can easily be found in automated databases, and the risk of documents being filed incorrectly and other human errors is considerably reduced. Automation is bound to reduce risks and costs when compared to traditional contract management solutions like Excel and email, which are not necessarily secure and also prone to restricting access to documents—either due to downtime or due to lack of ‘on the go’ availability. Law institutions and departments across the world operate on outdated platforms such as email folders, shared drives, and document management systems, thereby compromising on their security, access, and visibility.

Debunking Resource-related Concerns

Contrary to popular belief, the amount of energy and time required to introduce AI systems is minimal—numerous AI solutions are ready to go ‘out-of-the-box’ and require negligible in-house training or expertise. Adoption of AI is more like flicking a cloud-based switch rather than a complicated organizational shift.

Will AI replace lawyers?

AI-based legal solutions undoubtedly reduce the requirement of human effort. That being said, identifying the requirement of AI intervention, programming the AI by setting legal parameters, and monitoring its processes will remain the responsibility of legal practitioners. In short, AI is a replacement for the tools used by lawyers, not for lawyers themselves.

Solutions in this Space

CobbleStone VISDOM

VISDOM by CobbleStone conducts systematic analysis of contracts for increased oversight, swift identification of opportunities, and effective risk management. VISDOM leverages AI and ML to minimize the time and effort required to input new contracts in users’ systems. CobbleStone VISDOM also identifies critical data like dates, locations, phone numbers, emails, monetary values, and counterparties automatically. Finally, when a new contract is added to VISDOM, it helps detect potential risk by ‘reading’ document text, enabling the system to notify users of good as well as bad language in the contract.

Kira Systems

Kira is a user-friendly solution that uncovers key data from contracts and other legal documents. It leverages powerful AI and ML to provide users with access to flexible project management and real-time collaboration through an intuitive user interface. With Kira, users can import files in more than 60 formats, upload entire zip files or directories, gain an accurate overview of projects, edit documents easily, refine results,  compare documents, identify risks, and create customized summaries.

ThoughtRiver Lexible

ThoughtRiver Lexible is a contract database equipped with an advanced NLP (Natural Language Processing) engine. With Lexible, users are able to streamline the complicated legal relationships and logic that is present in legal agreements. This solution asks and answers thousands of questions in order to build a granular picture of rights and obligations within a legal document. Lexible is developed by ThoughtRiver’s lawyers as well as its domain-expert partners.

Takeaway

While several contract management solutions exist to meet the needs of different legal processes, it is certain that embracing AI-powered legal tech is a critical step. AI is streamlining legal processes, making contract management more cost-effective and efficient while allowing law practitioners to work on more productive areas of practice.

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