How to Ensure 100% Compliance With Contract Negotiation Guidelines

icon-contractThe legal industry currently experiences a 17% annual turnover rate—with more than half of all departures initiated by the legal staff, much to the chagrin of the companies that hired, trained, and oversaw their development. High attrition rates remain a critical challenge for corporate legal departments, particularly. Large law firms as well, report an annual expense of $250,000 for recruiting and hiring one first-year associate. When an employee leaves, that figure increases to $400,000 to account for lost training costs and institutional knowledge. As a result, legal departments with more than 400 staff members lose approximately $25 million in turnover-based expenses. 

Legal AI technology aids in training for 100% compliance with contract negotiation guidelines

With 57% of lawyers leaving their jobs by their fifth year, legal departments can find it difficult to maintain standards of excellence while bringing new associates up to speed. While “best practice” contract negotiation guidelines can aid with compliance, technology is now available to reduce most, if not all, of this training. An AI contract solution allows legal departments to ensure full compliance with their preferred negotiation positions without the high cost of training attorneys or legal staff.

Traditional Contract Negotiation Guidelines Training Tips

Many legal departments have already taken great strides to improve training in contract negotiation guidelines. Some of these steps include:

  • Creating Standardized Templates - Getting started is easier if you know which sections and provisions to include in an agreement and when boilerplate language is acceptable. However, while templates undoubtedly save time, they need to be reviewed annually, as industry standards, company positions, and regulations change over time. 

  • Establishing Clearer Workflow - Often, contracts are delayed while waiting for next-level reviews. A firm grasp on the contract review hierarchy is imperative, as is process transparency. A centralized dashboard displaying the contract’s status and team members with signing authority can help maximize efficiency.

  • Communicating Deadlines - Document reviewers should communicate their expectations for turnaround time deadlines to minimize confusion. Maintaining work logs will reveal whether a suggested deadline is reasonable.  

  • Contract Performance Monitoring - How long does the average contract take from draft to approval? Which parameters are most likely to be approved in first-round negotiations? Which clauses require the lengthiest negotiations? How many agreements are terminated vs. renewed? Answers to these questions can help legal departments establish “best practice” standards.

  • Conduct Compliance Audits - Companies should regularly audit their contracts to identify recurring compliance issues. Although auditing can be expensive and time-consuming, the results can shed light on training inefficiencies that may be improved to reduce review time and improve outcomes.

Tips for 100% Compliance with Contract Negotiation Guidelines

Compliance training is a worthwhile investment. Companies that rank in the top 20% for contract management performance are more likely to excel in other areas, according to a study by the Aberdeen Group. 

Top 20% in Contract Management Performance

All Others

Review 56% of their contracts annually

Review 25% of their contracts annually

Renegotiate 49% of their contracts annually

Renegotiate 20% of their contracts annually

Purchasing transactions are 85% compliant

Purchasing transactions are 30% compliant

Store 78% of contracts in a central database

Store 34% of contracts in a central database

However, leading-edge technology that has emerged in the last five years warrants a fresh look at compliance training. 

Contract review powered by Artificial Intelligence (AI) offers:

  • Time and Cost Savings: The traditional training process for junior-level associates and legal staff can take weeks, months, and even years. AI contract review accelerates that process—not because it eliminates the need for the associate, but because it helps automate training while ensuring contracts comply with company standards.   

  • Digitized Playbooks: AI Digital Playbook guidelines assist with training and adherence to company positions. These guidelines assist with training and adherence to company positions. An AI-powered contract negotiation platform ensures that contract provisions fall within parameters established by the playbook.

  • AI-Powered Review: The AI platform quickly and consistently compares current drafts to past agreements and the digital playbook, looking for errors, omissions, and clauses that could be optimized. Even experienced contract reviewers appreciate the oversight because it helps them avoid careless mistakes.

  • Contextual Negotiation Training: Clauses requiring attention are not only highlighted; they are corrected automatically for common errors or omissions. And context-based suggestions can help guide associates to the most favorable negotiation positions. Senior contract review attorneys can also set parameters instructing the AI to make specific changes or recommend suggestions if defined conditions are met. The latest advances in artificial intelligence, machine learning, and natural language processing can perform a contract review and risk analysis in less than five minutes. 

LexCheck helps legal departments train new employees on contract negotiation guidelines while ensuring company standards are satisfied. And considering the high turnover rate among legal staff, an AI solution that can reduce the pressure on new associates can help companies retain their best and brightest new hires.

LexCheck's AI-powered platform accelerates the contract approval process while ensuring compliance with your contract negotiation guidelines. Request a demo to experience the technology first-hand, or contact us at sales@lexcheck.com to learn more.

gary-sanghaGary 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.