The Comprehensive Guide to AI Digital Playbooks

Transforming Contract Negotiations with Automation

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Table of Contents

Introduction

Digitization of the Contract Negotiation Playbook

Chapter 1: The Arrival of Artificial Intelligence

AI is Leading the Digital Transformation for the World’s Largest Companies

Chapter 2: Legal Self-Service Via AI Digital Playbooks

Leveraging AI Digital Contract Negotiation Playbooks to Achieve Business Self-Sufficiency

Chapter 3: Acceleration Through AI-Assisted Negotiation

Industrialize Legal Brilliance

Chapter 4: Ensure Enterprise Compliance

Automate Processes and Eliminate Contracting Risk with AI Digital Contract Negotiation Playbooks

Chapter 5: Improving the Bottom Line with Accelerated Deal Cycles

Bring those deals in with AI Digital Playbook Negotiation

Conclusion: Grow with the Business and Create a Continuous Automation Cycle

Create A Continuous Automation Cycle that Scales the Impact of the AI Digital Playbook

Introduction: Digitization of the Contract Negotiation Playbook

It’s a new day for contract negotiation playbooks. As recently as a few years ago, having a slick and comprehensive contract negotiation playbook was a strategic advantage. But now, the digital transformation of contract negotiations means that reliance on static playbook documents is no longer a best practice. Companies can now transform their contract playbook with a dynamic and custom AI Digital Playbook that will save time and resources—delivering exponential value.

Contract negotiation playbooks are simple in their form and intent. Most organizations’ contract playbooks are PDFs or Word documents ranging from 20 to 150 pages (sometimes called “analog playbooks”). They are keyed to a specific contract type and provide guidance detailing how to respond to a counterparty’s revision of commonly negotiated provisions. The goals of playbooks, be they digital or analog, include:

  • • Removal or simplification of inefficient practices that eliminate process bottlenecks • Shared and preserved institutional knowledge
  • • Reduced risk and increased compliance
  • • Accelerated negotiation cycles and elimination of non-value added revisions • Delegation of contract negotiations to more cost-efficient personnel

Yet many enterprises struggle to adhere to their contract negotiation playbook. This, in turn, keeps them from benefiting from the playbook’s goals and may even result in suboptimal contract negotiations that actually harm the enterprise—say, if a contract negotiator doesn’t adhere to the playbook or accepts a term deemed unacceptable by the organization.

The American Bar Association Model Rules of Professional Conduct require that lawyers be competent—and that they keep up with new technology.

“To maintain the requisite knowledge and skill, a lawyer should keep abreast of changes in the law and its practice, including the benefits and risks associated with relevant technology.”

- The Model Rules

If used correctly, analog playbooks can help QUOTE encourage compliance, but the contract negotiation process is still time consuming and never fast enough for stakeholders operating in a digital world, expecting near instantaneous results.

Transitioning to an AI Digital Playbook eliminates the shortcomings of reliance on static playbooks during contract negotiations. Best-in-class, AI Digital Playbooks, like those offered by LexCheck, have a myriad of unique and powerful features:

  • • Deliver automated attorney-quality redlining and guidance
  • • Leverage AI to ensure strict adherence to the guidance in the Digital Playbook
  • • Make intake as simple as emailing the document to be reviewed
  • • Return a redlined and marked-up version of the document in minutes

This guide lays out the benefits of contract negotiations with an AI Digital Playbook.

50-percent

McKinsey found that digital transformations “lifts the likelihood of exceeding profit expectations to more than 50 percent—about five times better than transformations that involve none of these practices.”

 

Chapter 1: The Arrival of Artificial Intelligence

AI is Leading the Digital Transformation for the World’s Largest Companies

Contract negotiations can have significant impacts across the entire enterprise. Slow negotiations can impact every business unit, from sales to logistics. Early adopters to AI in their own work have faced competitive pressures that have forced them to be forward looking and embrace emerging technologies like AI that can transform the way their company does business. In addition to being wildly successful, global companies such as Intel, Koch Industries, Credit Suisse, RSM, and NetApp share another trait: they have embraced the transformative power of AI. For instance:

“The concept is really good. Simple automatic revisions and provision pick-ups are at practical levels of use. For even experienced members, it can significantly help avoid careless mistakes.”

- Senior Legal Specialist, Panasonic

Intel offers an AI Developer Program that enables its clients to create world-class artificial intelligence projects.

NetApp consistently wins coveted awards for innovatively deploying artificial intelligence solutions.

Credit Suisse issues an Artificial Intelligence Sentiment Index to create quantitative investment strategies from news analyses leveraging AI algorithms.

Koch Industries recently deployed an artificial QUOTE intelligence platform to maximize asset utilization, optimize production, and better meet customer needs.

RSM’s Technology Experience Center uses AI and augmented reality to help its clients visualize their new realities to prepare for an increasingly dynamic future.

These leaders in their respective industries have also turned to artificial intelligence to digitize their contract negotiation playbooks. By doing so, they recognize that AI Digital Playbooks are both mature and robust solutions, capable of transforming their contract negotiations. Embracing AI is the first step in best practices for developing a transformative modern contract negotiation process.

35-percent

Alternative Insights reported that 35% of in-house legal departments see completing digital transformation as the biggest opportunity facing their team as a result of the COVID-19 crisis.

 

Chapter 2: Legal Self-Service Via AI Digital Playbooks

Leveraging AI Digital Contract Negotiation Playbooks to Achieve Business Self-Sufficiency

Self-service in contract negotiations is still a novel concept, but it’s rapidly taking hold in the corporate world because of the advantages it provides. The process is easy for lawyers to embrace while preventing unnecessary bottlenecks for business users who rely on the timely negotiation and execution of commercial contracts.

True self-service contract negotiation means giving employees outside of the legal team (like procurement or sales representatives) or a legal team’s junior members the tools to initiate contracts with pre-approved language and the ability to make slight modifications, while still giving legal team members the ability to maintain a floor on legal risk and exposure. This allows business teams to move more quickly and freely, while liberating corporate attorneys to focus on more sophisticated and strategic agreements and other tasks.

Self-service contract negotiations require AI technology that can apply pre-configured contracting guidance to a playbook, eliminating unnecessary mistakes that come with static playbooks. Additionally, the AI can monitor the nature of changes being made and automatically notify and involve legal and other business executives when those changes exceed the acceptable parameters of the AI Digital Playbook.

A New Era for Contracts

“..it has been estimated that inefficient contracting causes firms to lose between 5% to 40% of value on a given deal, depending on circumstances. But recent technological developments like artificial intelligence (AI) are now helping companies overcome many of the challenges to contracting.”

- Harvard Business Review

A self-service system benefits general counsel, providing them a way to transform the contract negotiation process within their organization. As the overseer of contracts, general counsel and their teams can be active participants in the deployment of AI Digital Playbook guidance and best practices. Once an AI Digital Playbook is deployed, legal teams can turn their focus to playing the role of business partner that has become a crucial benchmark of success in a modern in-house legal department. Through the digitization of the contract negotiation process, organizations have a newfound level of insight and control that empowers users but still provides legal teams with the ability to protect the business against unnecessary risk or compliance gaffes.

Implementing self-service will help all facets of the business, not simply legal counsel. It makes better use of everyone’s time. It frees up resources. And it helps mitigate unnecessary risk. The transition to AI Digital Playbooks isn’t coming; for forward looking enterprises— it has arrived.

Chapter 3: Acceleration Through AI-Assisted Negotiation

Industrialize Legal Brilliance

AI Digital Playbooks make General Counsels stronger. They provide everything a static analog playbook does—rules, guidance—but give negotiators flexibility when necessary. The true game changer? AI Digital Playbooks are bespoke, which means organizations of all sizes can build out—and constantly adjust as required—their negotiations.

Certain types of contracts do not lend themselves to an automated self-service approach. Instead, bespoke playbooks include guidelines enabling the flexibility to accommodate specific circumstances of the underlying transaction on a case-by-case basis. For example, an organization may decide that the contract underpinning a key customer or vendor relationship—with high risk or value attached to the contract—is worth giving the contract negotiator discretion to push for an array of terms, rather than providing a singular path to pursue.

Alternatively, a contract may relate to a subject matter area that is changing rapidly, such as Data Processing Agreements and the increasingly regulated world of data privacy. In these scenarios, as the regulatory framework changes, so too should the playbook. In these situations, historical institutional knowledge that would form the basis for a typical, pattern-based and highly repetitive AI-approach cannot accommodate newly passed statues, regulations, or business priorities.

guidelines-graphic

The implementation of an AI Digital Playbook provides significant benefits through automating the negotiation of appropriate provisions and presenting organizational guidance as required to complete the remainder of the negotiation. When constructing review guidelines, many organizations encounter what one might call a “playbook paradox,” due to the following contrasting interests:

One such benefit is to drive down the cost of review and/or free up resources for higher value tasks. As organizations strive to “right-source” work by putting it in the hands of less expensive resources, a well structured AI Digital Playbook can facilitate such goals.

In other words, more work can be handled by lower-cost resources and less by expensive escalation teams. An AI Digital Playbook reduces the number of escalations required and empowers those same resources to negotiate transactions with higher value or risk. And by automating the negotiation of standard provisions, there is a significant reduction in the number of hours needed to pore over a single contract.

A key benefit is a reduction in the average time needed to go from the first draft of a contract to execution. Escalations of negotiations carry built-in lag time, with one team member waiting on the escalation team to have an open window of time to opine on the given negotiation. By reducing the number of escalations required, these lag time periods no longer contribute to delays in getting contracts executed.

An AI Digital Playbook further accelerates execution time by reducing the back-and-forth between the parties. Even the most experienced of contract negotiators sometimes encounters a tendency to optimize for the present scenario and push for low-value negotiation points. This is often the case even if the negotiations were consciously omitted from a playbook due to the low-value of winning the negotiation point outweighing the anticipated cost of pushing for it. AI Digital Playbooks provide guard rails for a negotiator. If the playbook does not suggest an edit, the contract negotiator must think twice before pursuing the edit.

Chapter 4: Ensure Enterprise Compliance

Automate Processes and Eliminate Contracting Risk with AI Digital Contract Negotiation Playbooks

Even the most well-considered and comprehensive legal playbook is limited as a risk mitigation tool. The interpretation and application of any playbook by multiple individuals will lead to variance and human error that will ultimately result in increased legal risk. This is true if the personnel reviewing the document are in-house and even more so if they are offshore and/or from an alternative legal service provider. The increased potential risk exposure when reviewing counterparty paper necessitates significant attention by senior personnel, which can be an enormous expense to the enterprise and take them away from higher-value negotiations.

AI Digital Playbooks help eliminate that risk and lower the cost. The automation, suggestion, and presentation of guidance helps to ensure consistency in the resulting provisions of the executed contract. This guidance, in turn, reduces the need for expensive post-execution internal diligence processes, such as the analysis of force majeure clauses that many organizations undertook during the Covid-19 crisis. Guard rails help ensure compliance with the playbook so that overly risky terms leading to revenue leakage are not included in contracts. An AI Digital Playbook helps to ensure escalations are made (and facilitates them) where needed.

AI Digital Playbooks reduce the risk of human error in contract negotiations by automating the application of organizational and industry standards. Additional benefits of an AI Digital Playbook like LexCheck include:

  • • Enabling attorneys to spend more time assessing and mitigating risk and providing counsel, rather than routine and rote document review
  • • Raising the floor on compliance for the rest of the document; high/medium/low risk issues can be detected by the Digital Playbook with playbook guidance presented, removing human error as a source of additional legal risk
  • • Organization playbook standards, compliance matters, and risk assessment can be controlled at scale
35-percent

As much as 9.2% of revenue leakage occurs within organizational sales operations as a result of poor contracting practices, per IACCM.

 

Chapter 5: Improving the Bottom Line with Accelerated Deal Cycles

Bring those deals in with AI Digital Playbook Negotiation

AI Digital Playbooks automate the contract negotiation and markup process, delivering attorney-quality redlining and guidance in full compliance with an enterprise’s analog contract negotiation playbook and training instructions. The former is an enterprise’s aspirational negotiation positions while the latter reveals how it actually negotiates.

In near real time, AI Digital Playbooks deliver contracts negotiated like an actual attorney in conformity with an enterprise’s directives. Offshore alternative service providers might offer the promise of labor-arbitrage savings, but come with countless headaches: they often fail to complete the negotiation on their own, have difficulties with escalation, and lead to prolonged contract negotiations which frequently leave internal teams and counterparties frustrated.

Enterprises that have transformed their contract negotiations with an AI Digital Playbook can look forward to:

  • • Dramatically shortened times to get from contract creation to signature, with negotiation review and markup cycles completed in near real-time.
  • • Ability to have personnel focus on higher value deals as well as reallocate contract negotiations to more cost efficient personnel.
  • • Accelerated reviews and cost savings to the bottom-line through expedited sales closures and frictionless procurement contracting processes.
95-percent

RSM, a leading global audit, tax, and consulting firm reported that using LexCheck’s AI Digital Playbook allowed them to eliminate 95% of the effort associated with the negotiation of standard agreements.

 

Conclusion: Grow with the Business and Create a Continuous Automation Cycle

Amplify the Impact of the AI Digital Playbook; Continually Improve

When implemented correctly, AI is a powerful enhancement to running virtually any contract negotiation more consistently, efficiently, and predictably. Deploying your first AI Digital Playbook in your organization is an exciting and and financially rewarding experience. Errors have all but been eliminated. Productivity and efficiency soar.

One frequently overlooked benefit in the digital transformation process is how AI Digital Playbooks can increase opportunities for further improvement in contract negotiation processes. Metrics collected by an AI Digital Playbook can identify sticky playbook rules and/or template clauses that, when looking across all of an organization’s contract negotiations, cause significant delays in contract signing. AI Digital playbooks can also assist with the identification of opportunities to create new playbook rules through analysis of trends in “extra-playbook” negotiations.

ai-on-paper-airplaneIn order for an AI Digital Playbook to be effective for a large enterprise, different teams and departments must work together toward shared goals. In many organizations, it’s necessary to establish a designated team with the purpose of collaborating on and contributing to the development of policies and procedures that will deliver continuous improvement of AI initiatives.

At NetApp, Connie Brenton, Chief of Staff and Senior Director of Legal, has embraced an ethos of cross-organizational collaboration. Balancing priorities and inputs from multiple stakeholders requires clear channels of communication and transparent decision making, which contributed to a longer implementation timeline than would otherwise have been expected. But involving all stakeholders—both internal and external—led to a universally accepted solution developed by LexCheck. The entire team’s familiarity with the solution led to minimal adoption hurdles. Moreover, stakeholder comfort with the product and procedure means that starting and implementing additional LexCheck automation efforts is a smooth and highly repeatable process, which helps to drive a continuous automation value creation process.

“We’re excited by the promise of LexCheck,” Brenton says. “Its software is revolutionizing not just our sponsorship review process but many other aspects of our contracting business as well.”

A Digital Enterprise must work continuously to not only keep things running smoothly, but also optimize its strategy over time and continuously look for additional ways to leverage the efficiency and consistency delivered by the AI Digital Playbook. Doing so will enable the enterprise to maximize the benefits of artificial intelligence and keep itself continuously a step ahead of the competition.

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