Legal contract management software, also referred to as contract lifecycle management, has made significant headway in the world of in-house counsel, racking up impressive stats such as reducing the average sales cycle by 24% and saving 9% on annual average costs. But what happens when you combine legal contract management software with AI?
A panel of legal and AI experts from organizations including Adobe and Onit, presented at Legalweek on just this topic, examining the potential impact of AI on managing contracts and how to start implementing AI into your contract management workflows. The conversation touched on the business value of using AI in legal ops, the efficiencies AI can bring to your business and future trends in AI, among other things.
Here are some of the biggest takeaways for AI and legal contract management software.
- How to get started with AI: One of the easiest places for legal departments to start using contract AI and automation is in common use cases like reviewing NDAs and other routine contracts, because these are high-value but time-consuming activities. The need to increase speed is high, but the risk is relatively low.
- On the applicability of AI to law: AI has strong applications to both the business side of law and the practice of law. From a business perspective, contract AI can help with important, routine tasks like invoice review and billing. As for the practice of law, AI is ideal for tasks like tracking 20 different clauses in the 56,000 NDAs you handle each year, significantly boosting productivity and efficiency.
- Do your research: To get the most out of your AI tools, you want your relationship with your technology vendor to be a true partnership, and you want to apply your own judgment to why your solutions are doing what they’re doing. With both your vendor and your solution, you want to retain a certain level of control to ensure you’re getting the results you want.
- Have a strategy: When you start implementing AI with your legal contract management software, you don’t want to be thinking just six or twelve months down the road but further down the horizon. When you create a longer-term vision, you’ll be better able to take into account the needs of your various stakeholders and secure their buy-in for your chosen AI solutions.
- Laying the groundwork for adoption: Many companies find it easiest to start with a single use case or data set and train their AI models from there. Once you have your first success, it will be easier to roll out your new technology across other business units and the organization as a whole.
- AI and compliance: When you use AI for contract lifecycle management, your tools can help you stay on top of the constantly changing federal and state regulatory landscape. AI can assess your legacy contracts against new regulatory changes and ensure that any necessary updates are made.
- Contract AI and CLM: AI helps in the pre-signature phase of contracts by creating centralized workflows for contract management and templates that allow your team to draft, review and redline contracts with just a click. AI also assists in the post-signature phase by extracting actionable intelligence from your contracts that can serve as the basis for informed decision-making.
- On justifying spending money on AI to the C-suite: According to a recent study, users saw on average a 51.5% gain in productivity after using AI for contract review. That’s an almost-immediate gain in productivity, and some use cases saw even better results. Moreover, the efficiency continued to increase over time as users became more familiar with the tools and the tools got smarter. The data extraction capabilities of AI contract tools also help to reduce risk and stop revenue leakage, which has a positive financial impact on the business as a whole.
- Future trends in AI: While AI was originally targeted more toward law firms, the focus has shifted to in-house teams. We’re likely to see an even greater emphasis on using AI in contract drafting and CLM this year.
If you’d like to learn more about AI and contract lifecycle management, here are two helpful webinar replays:
- The Future of Contracting: CLM + AI Transformation at Lenovo – Every company needs a faster and more efficient contracting process that enhances risk and spend management, improves revenue and profit margins and increases visibility into counterparty relationships. The Lenovo Legal Department’s transformation journey is delivering value to the business by centralizing the global legal transactional support resources, standardizing the contract process across the company and optimizing the process with technology.
- AI Mythbusters: Deprogramming Misconceptions – Confusion and misinformation around what Artificial Intelligence is and how it works is widespread, particularly in the legal technology space. Watch this webinar to debunk ten common misconceptions and learn how to decipher marketing-speak to separate true AI from just software.