Understanding legal and business contracts can be very overwhelming at times. They can be filled with small details and legal jargon that can make even the most experienced of lawyers’ heads spin, and the process can take several days just for a single review alone.
But what if there was a way to ensure that the entire process of contract management was greatly simplified with automation, to the point that everything would be easy to understand and the overall time for analyzing the software reduced to a number of hours or minutes?
It turns out there is: AI-powered contract analysis software. AI is completely changing the game when it comes to how contracts are reviewed and analyzed.
Thanks to AI contract analysis tools like LexCheck, legal and procurement teams will no longer be subjugated to countless hours of sifting through volumes of dense and jargon-filled paperwork with seemingly no end in sight.
What Does AI Contract Analysis Mean?
In short, ‘AI contract analysis’ refers to the process of reviewing and interpreting contacts with the use of AI, which can greatly help to expedite the process of reviewing AI contracts and make it more time-efficient for legal and business teams.
The specific AI technologies that are most commonly used here are natural language processing (NLP) and machine learning (ML).
The primary purpose of NLP is to serve as the language of AI. Its primary function is to enable AI-powered contract analysis software to understand and interpret the language that is used in legal documents.
NLP tools can accomplish this by rapidly scanning thousands of contracts and identifying patterns of relevant contract data, clauses, and legal jargon to ‘calculate’ how to create a new contract from the ground up or analyze an existing one.
This is where ML comes into play. The primary role of ML in AI contract analysis is to improve the ability of the software to learn from past contracts and predict the likelihood of certain terms or clauses that could cause issues later on down the road. Overtime, the AI software will then become more accurate in identifying any potential risks or terms that could be unusual.
What’s more is that it does this all in a matter of seconds, versus the days or weeks that it could take for a manual review from a human lawyer.
The Benefits of Using AI For Contract Analysis
So, what are the primary use cases of using AI tools for contract analysis? There are several, but the big three are:
Time savings
Before the advent of AI-based tools, legal teams had to spend countless hours (if not days or weeks) manually reviewing a contract being negotiated. This takes away time and energy that could be spent on more complex tasks.
AI contract analysis significantly reduces the time that lawyers need to spend reviewing contracts because the AI technology automates much of the contract review process. LexCheck will create a standardized playbook that legal teams can customize and will then apply that playbook to all contracts that are run through it.
Improved accuracy
It’s not just the time legal and procurement teams will save from using AI contract review tools to actually review and analyze contracts. It’s also the peace of mind of knowing that the information being analyzed will be accurate and that the AI contract analysis tool is significantly less prone to making mistakes when compared to a human.
AI contract analysis tools are designed to consistently deliver accurate information by recognizing patterns. This includes everything from clauses to obligations and potential risks. This consistency of accuracy also means that legal teams can focus their attention on other things that require higher-level decision-making.
Risk management
Fundamentally, the use of AI contract analysis tools means that legal teams are taking less of a risk. This is perhaps the biggest benefit that AI has to offer law firms and legal/procurement teams as a whole.
AI contract review can also be used to identify problematic terms or inconsistencies present in legal documents. It can help legal and procurement teams mitigate potential risks by identifying issues in legal documents before they are submitted. These issues could include things like compliance problems, problematic or impractical obligations, or hidden risks.
How Can LexCheck Help?
LexCheck offers AI contract review software that greatly simplifies the process of analyzing and reviewing contracts.
LexCheck’s AI solution first creates a standardized playbook that can be easily customized by your team. That playbook will then be applied to all other contracts that are run through it.
Conclusion
In a nutshell, AI has helped to make the process of analyzing and reviewing much faster and more accurate. While it’s still very important to keep a human eye over the contract review process, there’s no question that AI has completely changed the game and made the process significantly less stressful for legal and procurement teams.
Sources:
Machine learning, explained | MIT Management Sloan School