How AI Contract Management Can Supercharge Agreement Workflows
Manual contract management is tedious and risky. It may even be the worst part of your job at this point. With so many tasks to juggle at your company, it’s challenging to find the time necessary to produce a perfectly crafted legal contract. Inefficient contracting can account for up to a 40% value loss on a given deal, depending on the circumstances.
When your contracting processes are inefficient, your entire business becomes inefficient. Using modern technology like Artificial Intelligence (AI) contract management can streamline these processes by automating repetitive, time-consuming tasks. AI has the potential to make your life easier and help your company grow, but not all AI solutions are created equally.
Tons of companies out there currently offer AI contract management solutions that they promise can take all the hassle out of the job, but unfortunately, many don’t deliver. Artificial Intelligence holds a lot of potential for in-house legal teams, but it’s far from being able to replace the complex work of negotiation, collaboration, and analysis.
Artificial Intelligence in contract management is best used in precise touch points to minimize everyday contracting busywork. With the right AI Contract Lifecycle Management (CLM) tools used in the right way, you’ll make yourself look like a contract superhero, saving the entire business time, money, and energy.
In this article we’ll cover:
- What contract management AI means for you and your business
- How AI operates in reality
- Why you should be using Artificial Intelligence
What contract management AI means for you and your business
Repetitive and manual tasks abound for General Counsels and in-house legal teams, making you feel like you’re pushing a rock uphill just to have it roll back down the other side. CLM tools can help businesses streamline the contract management process, from development to signing, using automation.
Unfortunately, these tools fall short of their promises, focusing on the symptoms of the inefficiencies rather than the deeper challenges. AI-powered CLM tools can solve some of those underlying issues if you focus on applying them in targeted areas of the contract workflow process.
AI uses Machine Learning (ML) and Natural Language Processing (NLP) to mimic human processes and learn on its own. Your AI-powered CLM tools can:
- Build standardized templates, streamlining the contract creation process
- Analyze data to identify risks, costs, and abnormalities, using NLP to determine the contract type
- Automatically send specific contracts to relevant legal bodies for review, and once approved, get a notification saying they’re ready
- Set reminders for contract expiration and renewal dates so that you never forget them again
- Automatically locate problematic clauses within contracts to allow you to resolve all issues before sending them out
AI-powered contracts free up you and your team to handle those higher-level tasks that require your personal expertise.
AI expectations vs. reality
AI-powered contract management can automate most of the menial tasks related to contract management. But AI technology is a long way from being able to manage the intricacies of negotiation and collaboration. People’s expectations of AI technology are big, but the technology often falls short of those expectations in a few ways:
- Promises of immediacy: Digital contract data is complex and requires sophisticated algorithms to analyze. Working with it takes time, so results aren’t immediate.
- Big data requirements: Big data—information that’s constantly collected in datasets for analysis—is usually stored on expensive infrastructure. While modern AI doesn’t need big data to function, many CLM vendors still insist on collecting and storing vast quantities of information.
- Continual upgrades: AI development progresses at a stunning rate and continues to make great strides year after year. Once your algorithms are working, you’ll constantly need to check for upgrades to get the most value out of the system.
The reality of artificial intelligence is that it enhances your productivity and makes you more efficient, rather than replacing you altogether. But choosing the best AI-based contract management solutions is key to up-leveling your team’s efficiency and giving you time to focus on what matters most. Ironclad is built on Google’s best-in-class technology, Google Cloud AI, which ensures your CLM stays current on AI advances. AI is improving at a rapid pace, and if your CLM can’t keep up, you’ll be left behind.
Execute your AI contract management solution intentionally
Imagine a technology that could review the clauses in an NDA for risks in a matter of seconds with nearly perfect accuracy. That’s what AI-powered contract management can do for your team. But it’s not enough to set it loose on all of your time-consuming tasks and hope for results. To fully benefit from contract management AI, you’ll need a clearly defined implementation plan.
Consider taking these steps before putting a new AI contract management system into effect.
- Assess: Check your current contract management systems, whether manual or automated, and see where you need improvements.
- Develop an implementation proposal: An AI contract management system will affect everyone in your company, from the lawyers to the accountants. Create a proposal to get the senior leadership on board with implementation, and remember to include internal business associates.
- Build an implementation strategy: It’s crucial to define clear goals whenever your team is switching to any new technological system, AI contract management included. Having a clear strategy will help everyone adjust.
- Choose software: Find contract management software, like Ironclad, and stick with it. Your AI algorithms need time to learn, so resist the temptation to jump ship when the results aren’t as fast as you expected.
- Maintain your systems: Be sure to include a maintenance plan to ensure your AI-based contract management system operates at maximum efficiency.
- Provide training: Make sure every member of your team feels confident using the AI-powered contracts within your new system. Your AI solution works best if everyone is on the same page.
You don’t have to do this alone. The rockstar legal engineers and best-in-class CSMs at Ironclad will make sure you have what you need to get a successful implementation rolling.
Benefits to powering your contracts with AI
AI has a host of benefits that can transform the look and feel of your contract management system. Here are just some of the things they can help you do.
- Automate compliance with AI-powered agreements: Contract regulations constantly evolve, making it difficult to manage everything manually. AI streamlines compliance tasks to effectively assist in risk management. Ensure your CLM vendor uses proper encryption to protect sensitive contract data.
- Shrink contract cycle times: Artificial intelligence in contracts can reduce time spent on the entire document lifecycle, from drafting to the review process. Eliminate errors while boosting efficiency.
- Save money: Mistakes can be costly. Your contract management solution will save you money by allowing fewer contract mistakes to slip by.
- Manage large datasets: AI-based CLM tools can analyze big data to recognize patterns, identify anomalies, and optimize business processes.
- Eliminate the most repetitive tasks: Contract development is repetitive by nature, but AI-based tools can handle tasks like information retrieval so you’re free to complete other work.
- Relieve administrative work while boosting organizational efficiency: Legal teams can spend an inordinate amount of time on administrative tasks like drafting and reviewing contracts. AI can take care of those tasks for you.
- Optimize finances: AI-powered contracts streamline workflows to ensure your team is working on the most relevant contracts, effectively reducing payment turnaround.
To get the most benefits, make sure you choose the right AI contract management tool. The right one can transform your team’s whole operation, while the wrong one will trap you in a cycle of frustration.
Wrapping it up
Contract execution is laboriously repetitive and time-consuming. Using AI in contract management solutions can improve efficiency and drive productivity. Each contract undergoes in-depth analysis to ensure compliance and mitigate risks.
Ironclad’s partnership with Google Cloud AI technology allows for a contract lifecycle management solution that’s years ahead of the rest. We provide AI technology that has a real, measurable impact on how teams conduct business contracting. To learn more about how Ironclad is powering the legal profession into the future, watch our keynote on the state of digital contracting today.