Automated Contracts 101
We’ve reached the point where contracting technology has outpaced awareness of what’s available on the market. The proof? A whopping 65% of businesses still manually manage contracts using clunky spreadsheets.
Only a third of organizational leaders are aware that automation can help them retrieve information more easily, flag risky language during negotiation, obtain clause-level recommendations, and extract analytical data to predict performance.
Legal teams can easily spend two hours or more just looking for a specific clause, let alone interpreting or improving it. When business is stalled by legal oversight, it’s time for a better and smarter way.
Automated contracts are soon to become the new normal, so it’s worth taking a moment to learn what they are and how they’re used in tech-forward corporate legal departments today.
What Are Automated Contracts?
Contract automation refers to the use of software to reduce manual labor and streamline the management of multi-party agreements from drafting through renewal.
Types of Contract Automation
Contract automation still requires a human touch, but software systems are equipped to handle many manual roles. Key touchpoints in contract automation include:
- Contract drafting: drag-and-drop editors and templates that insert boilerplate clauses
- Contract review and negotiation: platforms that compare drafts to legal playbooks for guidance
- Approval and signature: tools that allow for digital signatures and secure multi-party sending
- Contract storage and analytics: the ability to retrieve and analyze information quickly
- Renewals and expiration tracking: reminders when important due dates are approaching
- Contract obligation management: tracking dashboards to gauge contract performance
By building an automated contract system, organizations foster better collaboration between departments and create a scalable way to increase business productivity and revenue.
Artificial Intelligence (AI) and Automation: A Winning Combination for Legal
The best types of automated contracts follow specified workflows and learn to work more efficiently over time. AI is dedicated to mimicking human intelligence to recognize patterns, perform tasks, solve problems, and learn more efficient workflow processes. Increasingly, rigid, one-size-fits-all algorithms are being replaced by AI systems that can learn what to look for based on past experiences, aggregate data, and user customization. And it’s a welcome change in the legal sphere today.
Benefits of AI-Assisted Automated Contract Review
AI-driven automation in the contract review and management process is the future. Here’s why:
- It reduces lawyer review time by 30-80%, freeing up their time for other pressing legal matters.
- It ensures consistency across all contracts, reducing loss through compliance.
- It provides contextual notes, reducing back-and-forths while expediting negotiations.
- It redlines contracts in five minutes, not five days.
With faster review times comes the ability to take on more contracts to grow the business. Moreover, legal teams are better equipped to plug holes where revenue could potentially leak out.
Automation will never replace human beings in the workplace. It can, however, boost employee retention and morale as legal departments feel empowered with the right tools to work more efficiently and productively.
With the latest advances in AI risk assessment, contract reviews are not only fast, but efficient. Some AI-powered solutions can color code clauses based on risk to let lawyers know how to better prioritize their time and attention.
Automated Contracts with LexCheck
If you’re ready to take your organization to the next level with automated tools for the modern era, LexCheck is here to support you. Employing the latest advances in natural language processing, AI, and machine learning, our award-winning platform is ready to use out of the box.
Reviewing new drafts is as easy as sending an email. To get started, feed sample documents to the system, let LexCheck create a Digital Playbook based on them, email a document that needs to be reviewed, and receive a fully redlined version of it in less than five minutes. Changes can then be easily applied with a single click. By assigning “if/then” automation rules, lawyers can further train the system to suit the company’s unique positions and needs.
LexCheck is ushering in a new era of automated contracts, helping businesses accelerate pre-execution contract review and negotiation at scale. Contact us at email@example.com or download our 7 Steps to Optimize Your Contract Review Process to see how we can help you.
Gary Sangha | Founder & CEO
Gary Sangha is the Founder and CEO LexCheck. He's a serial entrepreneur and an academic. Gary previously founded Intelligize, a legal technology company that was acquired by LexisNexis. He's affiliated with the University of Pennsylvania and Stanford University and started his career as an attorney at Shearman & Sterling and White & Case.