Overcoming Challenges in Contract Drafting and Negotiation Using AI

January 26, 2021
January 26, 2021
Gary Sangha | Founder & CEO

Contract drafting and negotiation are closely linked and are often the most time consuming and costly aspects of the contract lifecycle. Today, much of the negotiation process occurs in the document during the drafting phase, as parties add terms and clauses while exchanging the draft. Alternatively, negotiations can occur separately, in conversations and emails, with the expectation that the final written agreement will reflect any adjustments. In either case, juggling multiple drafts and ensuring that all agreed-upon terms are captured in the final contract is easier said than done.


In addition to contract drafting challenges, contract negotiation—an interpersonal process replete with nuances and ambiguities—can present its own unique challenges. Artificial intelligence (AI) solves many common issues inherent in contract drafting and negotiations.

Challenges in Contract Drafting and Negotiation

The close relationship between contract drafting and negotiations can make it easy for challenges in one area to affect the other. A draft omission, for example, could cause negotiators to overlook a vital clause that requires resolution. So, while drafting and negotiation have difficulties unique to their domains, it’s important to remember those issues will likely impact both processes. 

Drafting Challenges

Negotiation Challenges 

Ambiguities: Contracts leave room for many ambiguities when defining offers, consideration, and acceptance.  

Alterations: In some cases, negotiations occur through contract alterations. If not outlined, attorneys may accidentally accept unintended changes.

Omissions: It’s easy to forget deal-specific clauses that provide necessary protections, especially when working from a template. Attorneys may trust the template to include all needed provisions and only notice unintended omissions after execution of the contract. 

Technical errors: Simple errors like misspellings, inverted dates, or incorrect headers could be enough to void a contract if they create a material change. 

Short-term focus: A short-term victory can lead to long-term losses. Attorneys who focus only on immediate gains without considering the future impact put themselves in a dangerous position. 

Inequitable bargaining positions: Rarely do both parties enter negotiations on equal footing. One party often has more leverage than the other. The individual with weaker bargaining power may struggle to gain agreement to their terms. 

Rapid exchanges: There is always outside pressure to finish negotiations quickly. Individuals being pushed to close do not always have the facts, figures, and paperwork to justify their reasoning and concessions. This can cause them to miss crucial details that may have improved their bargaining power. 

An additional impediment—experienced in both contract drafting and negotiation—is anxiety. In one study, individuals who entered negotiations anxious walked away with deals that were 12 percent less financially attractive than the deals less anxious negotiators secured. And that anxiety can likely be traced to one of the above challenges. 

By leveraging AI, negotiators are able to harness machine learning to ensure they approach the bargaining table from the most advantageous position.

Preparing Better Negotiations With AI

Artificial intelligence has gained attention among corporate legal departments and law firms because it allows attorneys to model multiple negotiation scenarios. For example, when a deal with short-term benefits could cost a company over the long term, AI software can point the negotiator in a more strategic direction. Likewise, attorneys can enhance their bargaining positions through AI-powered technology by discovering areas where they may have increased leverage. 

By compiling data from prior deals and contracts, an AI-powered contract negotiation platform can provide the attorney with a guide that highlights successful agreement characteristics. And since the AI can read and digest an entire contract within minutes, the software can significantly reduce project timelines. 

AI-Enhanced Outcomes  

Attorneys and legal staff can more easily and effectively navigate contract drafting and negotiation difficulties with AI Digital Playbooks. Likewise, corporate legal teams can rest assured that emotions like anxiety will not compromise their bargaining position or cause them to overlook essential details. Instead, AI’s advanced technology empowers legal teams to conduct negotiations confident that they’ll achieve the best outcome for their clients. 

LexCheck can help you overcome challenges in contract drafting and negotiations with our intuitive AI. To discover the benefits of AI in contract negotiations, contact our team at sales@lexcheck.com or request a demo.

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