How Contract Redlining Software Simplifies the Task

Key takeaways:

• Recognize that manual contract redlining creates significant financial costs, with organizations losing an average of $215,000 daily to review bottlenecks and 9% of annual revenues to poor contract management practices.

• Implement dedicated contract redlining software to eliminate version control chaos and centralize collaboration, replacing scattered email chains and confusing file names with a single source of truth that automatically tracks every change.

• Leverage AI redlining capabilities to dramatically accelerate contract review, as AI can automatically flag non-standard clauses, suggest approved language from your playbook, and reduce review time from 92 minutes to 26 seconds.

• Evaluate contract redlining software based on practical adoption factors including user-friendliness, integration with existing business tools, security certifications, and AI capabilities rather than just checking feature lists.

Contract redlining software automates the process of reviewing, editing, and tracking changes in legal documents. This technology eliminates manual review bottlenecks that cost large organizations an average of $215,000 each day during contract processes.

The right redlining software provides accuracy without sacrificing speed. Legal teams can maintain close attention to detail while dramatically reducing negotiation times. This matters because important initiatives, or the work of entire departments, may be put on hold just because a contract negotiation is still ongoing. It’s crucial that you not only speed up workflows but have the right tech tools to help you do it. Otherwise, you may be missing out on opportunities to boost your bottom line, as poor contract management practices are costing businesses an average of 9% of their revenues each year.

The problem is that traditional document review methods create significant collaboration and security challenges for legal teams. Manual processes create multiple pain points that slow down negotiations and increase risk:

• Hard copy editing requires physical document management and manual consolidation

• Word processor tracking functions lack security controls and version management

• Email-based sharing exposes confidential contracts to security risks

• Collaboration becomes fragmented across multiple platforms and formats

In this article, we’ll cover what contract redlining software actually is, the top contract redlining challenges teams face, and what the right software can do to improve your contract management process.

What is contract redlining software?

Let’s start with the basics. Contract redlining software is a tool that helps you and your team make and track changes to a contract electronically. Instead of passing around a Word doc or, even worse, a printed copy with a red pen, this software gives you a central place to handle all your negotiations.

Think of it as a purpose-built environment for contract review. It goes beyond simple “track changes” by providing a structured workflow for approvals, a clear audit trail of every edit, and a way to make sure everyone is always working on the most current version. It’s designed to take the chaos out of the back-and-forth of negotiations.

What makes contract redlining software different from basic word processors is that these specialized tools handle the complex requirements of legal collaboration. They address specific pain points around communication tracking, document organization, cross-team collaboration, user accessibility, and workflow management.

Contract redlining challenges

Here’s why this matters: efficient contract redlining workflows prevent legal departments from becoming organizational bottlenecks. When contract management operates smoothly, legal teams can focus on strategic work rather than administrative catch-up.

The stakes are high. Research shows that 60% to 80% of business transactions are governed by contracts, and 18% of the sales cycle is consumed by contract processes. So, making the contract management process more efficient will impact many other business functions—not just the legal department.

But traditional redlining methods create several operational challenges. Legal teams using manual processes or basic word processors encounter significant limitations that impact efficiency and security. Contract redlining involves making tracked changes, comments, and suggestions directly within legal documents for review by all parties—a process that requires careful attention to ensure accuracy and completeness.

Here are things you might find yourself dealing with:

• Coordination difficulties: Multiple departments and team members across companies create complex logistics during contract negotiations

• Version control issues: With contract data often fragmented across 24 different systems on average, storing contracts in multiple locations makes it difficult to identify the final version and risks losing critical redlines

• Compatibility problems: Different tools and devices across organizations can cause comments and changes to transfer incorrectly

• Resource dependencies: Physical redlining requires printing supplies, red pens, and mailing time that slows the review process

• Document clarity: Heavily redlined documents become difficult to read, increasing the risk of overlooking mistakes

• Security vulnerabilities: Basic text editors like Word offer limited protection against unauthorized changes to locked content

• Sharing complications: Email-based contract sharing can cause changes to be lost and comments to be overlooked

• Access limitations: Critical contract information often isn’t readily available when teams need it most

These are the top challenges that companies across industries deal with when trying to negotiate and redline contracts. Fortunately, there’s a simple answer: using contract redlining software that handles all these issues for you.

How contract redlining software differs from traditional methods

You might be thinking, “I already have Microsoft Word. Isn’t that enough?” For a while, maybe. But as your contract volume grows, the cracks in that process start to show. Here’s the real difference.

Traditional methods, like emailing Word documents back and forth, create chaos. You end up with file names like “MSA_v4_final_JDs-edits_FINAL.docx.” Nobody knows which version is the definitive one, and important comments get lost in email threads. It’s inefficient and risky.

Contract redlining software, on the other hand, creates a single, secure environment. Everyone—your legal team, your sales reps, the counterparty—works on the same document. Version control is automatic. The entire negotiation history is captured in one place. It’s the difference between organized collaboration and digital anarchy.

Here’s how the two approaches stack up:

• Version control: Traditional methods require manual file naming and tracking. Redlining software automatically saves every version and lets you compare changes instantly.

• Collaboration: Email chains scatter feedback across inboxes. Dedicated software centralizes all comments, suggestions, and approvals in one interface.

• Security: Word documents can be easily copied, forwarded, or edited without a trace. Redlining software provides permission controls and a complete audit trail.

• Speed: Manual processes add friction at every step. Software automates routing, notifications, and approvals to keep deals moving.

How contract lifecycle management (CLM) includes redlining software

Contract lifecycle management (CLM) platforms function as comprehensive redlining software solutions. These systems integrate document editing, collaboration, and workflow management into a single platform.

CLM technology transforms traditional redlining by automating manual processes and centralizing contract management activities. Contract lifecycle management platforms now include redlining software tools that help you collaborate, communicate, and negotiate more efficiently than you might have thought possible. Contract automation helps you refine practices by eliminating time-consuming tasks, which leads to an average 55% improvement across value metrics, according to The 2025 Contracting Benchmark Report. According to Gartner, 25%-40% of a lawyer’s time is spent on non-legal tasks like data entry and document review.

Let’s walk through some of the key benefits of using a contract redlining software like Ironclad when you go to redline legal documents:

• User-friendly interface: No matter what tools contract negotiators are used to, Ironclad Editor is easy to master. There are no steep learning curves—everything is intuitive and straightforward. These tools make it easy for all team members to improve review and management, regardless of experience level.

• Integrations with other tools: Ironclad’s contract redlining software easily pairs and integrates with your other business tools, including Microsoft Word. You no longer have to worry about losing information or comments in document transfers.

• Tracking capabilities: Ironclad’s redlining software allows you to track every change you make to a contract, just like Track Changes. But with Ironclad, there’s only one version to keep tabs on, since the document isn’t saved on personal devices or desktops.

• Shared platform: Collaborate with colleagues and departments by sharing one tool to redline contracts in Ironclad Editor. All they have to do to see the most recent version of a document is use the shared platform.

• Tagging capabilities: With Ironclad, you can tag colleagues in comments or changes so they can see them right away and respond in moments.

• Real-time updates: Any changes you make to an agreement are instant, and anyone looking at the document can see them in real-time with the Workflow Designer. You never have to worry about someone editing or referencing an out-of-date version.

• No version confusion: When the living document is the only version of a contract to manage, there is no confusion about which redlines are old or new. Everyone is on the same page, literally.

• Import and export Word docs: With a DocX-native software like Ironclad, you can upload Word documents and start editing, and then export them again as Word documents.

• Cloud-based: Cloud storage and collaboration are becoming the norm for modern companies. When your colleagues are working remotely, the cloud offers much-needed flexibility. They can access company information from anywhere with an internet connection and on any device.

• Facilitate signatures: Finally, you can redline the contract, accept all changes, and send the document for signatures, all in one place. You don’t have to worry about converting a file and uploading it to a signature tool—this is all done for you in the software.

Key features of modern redlining software

When you’re looking at different options, the number of features can be overwhelming. Here are the ones that actually matter for your day-to-day work:

• Centralized collaboration: All internal and external parties can comment, edit, and approve within a single platform. No more emailing documents back and forth.

• Internal and external redlining: The ability to make private, internal comments that the counterparty can’t see is critical for negotiation strategy. You need a space to discuss your approach before sharing your position.

• Automated version control: The software automatically tracks every version, creating a clean audit trail so you can see who changed what, and when. This is essential for compliance and dispute resolution.

• Conditional approval workflows: You can build rules that automatically route contracts to the right people for approval based on things like contract value or non-standard clauses. This stops legal from being a bottleneck on routine agreements.

• Seamless integrations: The software should connect with the tools your business already uses, like Salesforce, Slack, and your cloud storage, to keep data in sync and reduce manual entry.

• Clause libraries: Pre-approved language at your fingertips speeds up drafting and ensures consistency across all your agreements.

AI contract redlining capabilities

This is where things get really interesting. AI is no longer just a buzzword; it’s a practical tool that’s changing how we handle redlines. In fact, a Gartner survey found that more than a third of GCs are focused on adopting AI, and 28% of respondents identify contract review as their most impactful AI use case, according to The State of AI in Legal 2025 Report. Good redlining software now layers in AI to make you faster and smarter.

For example, AI can review an inbound contract from a counterparty and automatically flag clauses that don’t match your standard positions or playbooks. It can even suggest fallback language from your clause library to speed up your response. This doesn’t replace your judgment, but it does the heavy lifting of that initial review, freeing you up to focus on the high-risk issues that truly require your expertise.

Here’s what AI redlining can do for your team:

• Automated clause detection: AI identifies key clauses and compares them against your approved standards, highlighting deviations instantly.

• Risk scoring: Some tools can assign risk levels to specific terms, helping you prioritize which issues to tackle first.

• Suggested redlines: AI can recommend alternative language based on your playbook, so you’re not starting from scratch on every negotiation.

• Faster third-party paper review: When you’re working off someone else’s template, AI can dramatically cut the time it takes to review and respond, with one analysis showing AI review takes 26 seconds versus 92 minutes for a human.

The result is that teams can handle a higher volume of contracts without sacrificing quality or increasing headcount.

How to choose the right contract redlining software

Choosing a tool can feel overwhelming, but it boils down to a few practical questions. Don’t just look at a feature checklist; think about how your team will actually use it.

• Is it easy to use?

  If the software isn’t intuitive for both legal and business users, people won’t adopt it. Your sales team should be able to use it without needing a week of training. Request a demo and see for yourself.

• Does it work where you work?

  Can you redline within the platform, or does it force you to download and re-upload Word docs? A truly seamless tool keeps you in one place.

• How strong are the integrations?

  Make sure it connects to your critical systems like your CRM. The goal is to reduce manual work, not create new data entry tasks.

• Is it secure?

  You’re handling sensitive information. Ask about security certifications (like SOC 2 Type II), data encryption, and access controls.

• What’s the AI story?

  Even if you’re not ready for AI today, you’ll want a platform that’s investing in these capabilities for the future because AI greatly expedites the redlining process.

• How does onboarding work?

  Understand what support you’ll get during implementation and ongoing. A responsive customer success team makes a real difference.

Get the right contract redlining software

Ready to improve the way you approach redlining a document? Ironclad is a comprehensive contract management platform used by major companies like L’Oréal, Fitbit, DoorDash, and many more. Learn about Ironclad’s pricing options.

We recognize that, to run an efficient and successful business, you need to speed up the contract negotiation, redlining, and coordination processes. Our software does just that. With the right tools, your team can redline contracts more efficiently and with greater confidence.

Ironclad is built to handle any type of contract you’re working on, whether it’s an NDA, a new sales contract, or new hire paperwork. Our technology refines your contracting process with tools that are designed for how legal teams actually work.

Request a demo today to learn more about how we help companies cut contract processing time by 80%.

Frequently asked questions about contract redlining software

What’s the difference between redlining software and CLM platforms?

This is a great question because there’s a lot of overlap. Think of it this way: redlining software is a focused tool for the negotiation and review stage. A full contract lifecycle management (CLM) platform is an end-to-end solution that handles everything from intake and drafting to redlining, approvals, e-signature, storage, and analytics. Most modern CLMs include powerful redlining capabilities as a core feature, giving you a single, comprehensive solution. For instance, while it can take an average of 3.4 weeks to approve a contract, studies show that CLM software reduces that time by 82%.

Can AI really redline contracts accurately?

Yes, but it’s important to understand its role. AI is not meant to replace a lawyer’s judgment. Instead, it acts as a powerful assistant that can accurately identify clauses, compare them against your approved playbook, and flag deviations—achieving an accuracy rate of 94% in NDA review tasks, for example.

How does redlining software integrate with existing tools?

Good redlining software should integrate seamlessly with the tools your business already relies on. For example, an integration with Salesforce allows your sales team to generate and track contracts without leaving their CRM. An integration with a cloud storage provider like Google Drive or SharePoint ensures that all final, signed contracts are automatically archived in the right place. These connections are key to encouraging adoption and eliminating manual data entry.

Is redlining software secure for sensitive contracts?

Security is non-negotiable. Reputable platforms are built with enterprise-grade security measures. Look for vendors that have certifications like SOC 2 Type II, which validates their security controls. Features should include role-based access permissions, so you can control who sees what, and a full audit trail that logs every action taken on a document.

How much does contract redlining software typically cost?

Pricing varies quite a bit based on your needs. It usually depends on factors like the number of users, contract volume, and the complexity of your workflows. Some vendors offer tiered plans, but many, like Ironclad, provide custom pricing. This ensures you’re only paying for what you actually need and can scale as your company grows. The best way to find out is to talk to a vendor and get a quote based on your specific situation.

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Ironclad is not a law firm, and this post does not constitute or contain legal advice. To evaluate the accuracy, sufficiency, or reliability of the ideas and guidance reflected here, or the applicability of these materials to your business, you should consult with a licensed attorney. Use of and access to any of the resources contained within Ironclad’s site do not create an attorney-client relationship between the user and Ironclad.