The Digital Transformation of Contract Management
The first contracts date back 4,000 years to the “cradle of civilization” in Mesopotamia. Since then, legal teams have come a long way from these rudimentary tablets, with recent technological advances greatly accelerating the pace of change. In response to the digital transformation, contract management has experienced an enormous amount of change. This brief survey of legal innovations over the past 20 years culminates with an overview of artificial intelligence (AI) technology that is revolutionizing today’s leading-edge corporate legal departments.
Customer Relationship Management Software
One of the fastest-growing companies of 1999 was Siebel Systems, a customer relationship management (CRM) startup. Their stock price grew by 1,200 percent over the preceding three years as they commanded nearly half the business market with their innovative method of managing sales prospect interactions.
The same year, Marc Benioff founded Siebel’s eventual replacement, Salesforce, now worth $240 billion. Innovations continued apace across industries for customer and client management. Contract processes, however, remained stuck in the past.
The federal government allowed eSignatures to become legally binding in 2000. As a result, legal departments no longer had to wait days or weeks for a simple signature; they could complete processes in-house. While this change added efficiencies to the contract approval process, it represents a small piece of the contract management puzzle.
In the early 2000s, some companies began moving legal document storage from local storage devices to the cloud to encourage greater collaboration and faster retrieval.
Still, legal departments wasted time copying customer information from CRM software into new contracts, researching past versions of a contract, and negotiating back-and-forth between parties over email and in physical meetings. The potential for human error and miscommunication loomed large over every agreement.
Specialized Contract Management Software
By 2010, Software-as-a-Service (SaaS) became the standard. Rather than making a capital investment with yearly maintenance fees, legal departments could depend on all-inclusive SaaS subscription solutions for ongoing updates and support. Contract Lifecycle Management (CLM) delivered via SaaS emerged as a new category of tools that could handle agreement management from start to finish.
Although CLM software delivered many benefits, it also left corporate legal departments with a hard choice: invest hundreds of thousands of dollars in an enterprise-level solution or invest in a small stack of tools that could create silos and data inefficiencies. It turns out there was no effective “end-to-end” solution that could take lawyers from contract creation through negotiation, approval, and execution.
AI implementations mark a contemporary milestone in contract management innovation. In the last few years, corporate legal departments have harnessed AI solutions to read and understand contract language, make risk predictions based on past analytics, and respond to updated company standards.
Companies that leverage the power of AI can:
- Upload legal playbooks and contracts into a central cloud repository to assess agreements for adherence to company standards.
- Maintain clause libraries, store templates, and set up pre-approved conditions to streamline contract negotiation.
- Track revisions to discover persistent contract bottlenecks.
- Automatically assess and flag contract clauses for risk.
- Receive a fully red-lined and negotiated draft, condensing days of work into minutes.
- Automatically corrects errors, omissions, and vague language.
AI has enabled corporate legal departments to automate and streamline contract review and negotiation while ensuring that legal teams do not diverge from their playbooks.
Although some legal professionals remain skeptical of the rapid pace of recent legal technology innovations, Thomson Reuters reports that 74 percent of legal departments are interested in adopting AI technology.
LexCheck leverages AI and the digital transformation of contract management to optimize the contract review, negotiation, and approval process. To learn more about our AI-powered platform, reach out to us at email@example.com. Request a demo to experience the technology first-hand.
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.