Why Innovative Businesses Automate Their Contracts

Key takeaways:

• Start your automation journey with high-volume, low-complexity contracts like NDAs or vendor agreements to achieve quick wins and build organizational confidence before tackling more complex agreement types.
• Recognize that inefficient contract management costs organizations an average of 8.6% of total spending annually through cost leakage, while AI-enabled automation can increase productivity by 21.7% according to industry research.
• Transform legal from a business bottleneck into a strategic partner by implementing automated workflows that enable self-service for routine contracts while freeing legal professionals to focus on high-risk, complex negotiations.
• Leverage modern contract automation platforms to create standardized workflows that automatically route contracts for approval, generate documents from templates, and manage signatures and storage without requiring IT support or coding expertise.

Contract automation is the use of technology to streamline and manage the entire process of creating, reviewing, approving, and managing business contracts. This technology transforms how organizations handle their contracting workflows, with platforms maturing from simple digital repositories to complete contract lifecycle management (CLM) technologies that reduce manual tasks and human error.

Those manual, administrative tasks consume valuable time and energy for operations professionals. Business contracts have become a major pain point due to their increasing volume, risk, and complexity. However, contracts represent the most important unsolved problem in modern business because they touch every revenue stream and partnership—organizations lose an average of 8.6% of total spending annually to cost leakage in contracts, according to The 2025 Contracting Benchmark Report.

Legal teams are so underwater with contracts that they slow down the rest of the business, which is why procurement leaders believe AI in contract management will be the most impactful on their business in the coming year, making the efficiency of your contract management system critical for future success. This is why getting a handle on your contracts will help reduce the time spent on administrative tasks across your entire business, and it’s a change that can originate right within the operations team.

What is contract automation?

Let’s get straight to it. Contract automation is about using software to handle the repetitive, manual tasks that bog down your contracting process. Think about all the steps a contract goes through: someone requests it, you find the right template, you chase down information to fill it in, you send it for approvals, you manage redlines, you get it signed, and then you store it somewhere. Automation takes over the grunt work in that process.

It’s not about replacing lawyers or contract managers. It’s about giving them a tool that acts like a super-efficient paralegal, freeing them to focus on high-risk, strategic work. This impact is tangible, with 57% of legal professionals reporting that AI frees up their time for strategic tasks, according to The State of AI in Legal 2025 Report. In fact, Gartner predicts that by 2027, half of all organizations will use AI contract risk analysis and editing tools to support negotiations. At its core, it’s about turning a series of manual steps into a streamlined, predictable workflow.

How does contract automation work?

It sounds good in theory, but how does it actually work day-to-day? It’s all about creating a digital assembly line for your contracts. You start by building your approved templates and conditional clauses directly into the system. Then, you design a workflow for each contract type.

Here’s a practical example: a salesperson needs a standard NDA. Instead of emailing you, they go to a self-service portal, fill out a simple form with the counterparty’s details, and the system automatically generates a compliant NDA. From there, the workflow you designed takes over. It routes the contract to the right people for approval based on rules you’ve set. Once approved, it can be sent for eSignature, and after signing, the final document is automatically stored in a central, searchable repository. The system handles the reminders, the version control, and the filing, so you don’t have to.

Key benefits of contract automation

So, why go through the trouble of setting this up? The payoff is huge, with Gartner research showing that procurement leaders anticipate a 21.7% increase in productivity from using AI in contract management. Here’s what you actually get:

• You move faster. This is the most obvious one. When you automate the manual steps, contracts get done faster. For sales, that means closing deals quicker. For procurement, it means onboarding vendors in days, not weeks.
• You reduce risk. Automation enforces consistency. By using pre-approved templates and workflows, you ensure every contract follows your playbook. No more worrying about someone using an outdated version or skipping a crucial approval step.
• You get visibility. For the first time, you can actually see where everything is. A dashboard can show you every contract in flight, who it’s waiting on, and how long it’s been stuck. That data is invaluable for identifying bottlenecks and proving your team’s efficiency.
• You make life easier for everyone. Your business colleagues in sales, marketing, or HR can finally self-serve on simple contracts without having to wait on legal. It empowers them while keeping you in control.

Problems contract automation solves

All of these benefits address a fundamental reality: legal is often seen as the department of “no,” or at least the department of “not yet.” It’s not because the team is lazy; it’s because they’re buried. The sheer volume of contracts, from complex master service agreements (MSAs) to simple NDAs, creates a permanent backlog. This is the core problem contract automation is built to solve.

It tackles the bottlenecks head-on. Instead of legal being a chokepoint, automation creates parallel tracks. Low-risk, standard agreements can move on a self-service, automated path, while legal focuses its attention on the high-stakes deals that truly need a lawyer’s eye. It also solves the “black box” problem, where business users send a contract to legal and have no idea when they’ll see it again. With automation, everyone can see the contract’s status in real time, which builds trust and reduces friction between departments.

Who benefits from contract automation

This isn’t just a tool for the legal team. When you fix contracting, you improve how the entire business operates for a wide range of corporate stakeholders, including procurement, tech executives, and risk professionals.

• Sales teams can generate their own agreements and close deals faster without waiting for legal review on standard terms.
• Procurement teams can make vendor onboarding faster and have a single place to manage all supplier agreements and obligations, which helps explain why 80% of procurement teams use AI during contracting, according to The State of AI in Procurement 2025 Report.
• Human resources departments can automate offer letters and employment agreements, creating a better experience for new hires.
• Finance gets a clear view of all contractual obligations and renewal dates, which helps with forecasting and prevents surprise expenses.
• It’s one of the few initiatives that provides a distinct advantage for almost every department.

Types of contracts you should automate first

When you’re choosing which contracts to automate first, you want to look for high-volume, standardized agreements that follow predictable patterns. These are the contracts that create the most administrative burden but require minimal customization for each use.

The best contracts to automate first include:

• Vendor agreements with standardized terms
• Non-disclosure agreements (NDAs) with routine language
• Employment contracts with consistent structures
• Service level agreements with measurable metrics

These contract types are perfect candidates because they don’t need extensive legal review for every instance, but they still take up significant time to process manually. Take vendor agreements, for example—they are ideal starting points that lend themselves perfectly to a contract workflow that automates the process. They follow standard terms, have predictable approval paths, and once automated, give your team more time to work on more complex, high-risk projects that actually need human expertise.

Getting started with contract automation

Alright, you’re convinced. But where do you start? The key is to avoid trying to do everything at once. Don’t attempt to automate every single contract type on day one. Start small and get a quick win. Pick one high-volume, low-complexity contract that causes a lot of administrative pain. NDAs are the classic example for a reason.

Map out the current process for that one contract type. Who requests it? Where do they get the template? Who needs to approve it? Once you have that clear, you can build the workflow in an automation platform. Launch it with a small, friendly pilot group, get their feedback, and then roll it out more broadly. That first successful project will provide the support and confidence you need to tackle more complex agreements later.

Transform your legal team into a business partner

Here’s the bigger picture: contract automation isn’t just about making your current processes faster. It’s about transforming how your legal team operates and how the rest of the business sees them. When you eliminate the bottlenecks and administrative drag, legal stops being the department that slows things down and starts being the team that helps the business move faster.

Modern contract lifecycle management platforms help solve contract management challenges through:

• Creating a single, central repository for all your contracts
• Being an end-to-end system that manages every step of the contract lifecycle
• Hosting internal and external collaboration within the platform
• Making the data within your contracts accessible and searchable, which helps you find efficiencies and new opportunities
• Providing customizable workflow templates for each contract type
• Making the contracting process faster for all departments without losing flexibility

By implementing contract lifecycle management software, your counterparty vendor contracts become an asset that helps close deals instead of a hurdle that slows them down. To see how Ironclad can solve your organization’s contract management process problems, request a demo today.

Frequently asked questions about contract automation

How is contract automation different from contract lifecycle management (CLM)?

Think of it this way: CLM is the whole strategy, and contract automation is the engine that makes it run. A CLM platform manages the entire lifecycle of a contract, from creation to renewal, and analysis. Contract automation is the specific technology within a CLM that handles the workflows, approvals, and other automated tasks. You can’t have a modern, effective CLM without strong automation capabilities.

How long does it take to automate our first contract?

This is the “it depends” answer you hate to hear, but it’s the truth. For a simple, standard contract like an NDA, you could be up and running in a matter of days or two weeks, especially with a user-friendly platform. More complex agreements with lots of variables and approval steps will take longer. The key is starting with something simple to get a feel for the process and build confidence.

Do we need our IT team to implement contract automation?

Not necessarily. Modern, no-code platforms are designed for legal and operations professionals to build and manage workflows themselves with drag-and-drop tools. You might need IT’s help for complex integrations with homegrown systems, but for the core setup and day-to-day management, you should be able to handle it without writing a single line of code.

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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.