Regardless of industry, there’s no arguing that business has become more competitive over the years. While the barrier to entry for startups has decreased, rising inflation and shifting technology have made it harder for companies to succeed. Earning year-over-year profits is always the goal, yet achieving it requires trimming expenses wherever possible while concurrently pursuing new deals.
When it comes to the legal industry, contracts are the lifeblood of business. In these documents, positions are forged, promises are made, and risks are vanquished. Review and negotiation processes can be slow and tedious, costing legal departments anywhere from 5% to 40% of the value in a given deal. But new advances in Artificial Intelligence (AI) technology is helping companies extract greater value from their contracts by accelerating deals, reducing risks, and freeing up time for strategic pursuits.
True Contract Value Begins with Time Conservation
Time is a company’s most precious and valuable resource.
Conserving it is, in fact, one of the main reasons why more and more enterprises are turning to AI in law. And it’s easy to see why; the average company’s contract review turnaround time adds 10% more time (6.5 days) to the launch of a new product, amounting to $7 million in revenue losses.
Another data point worth noting is that poor contract management delays revenue for nearly 60% of businesses. Half of all businesses say they’ve lost business opportunities due to slow contracting. In fact, the average company loses 9% of their annual revenue this way.
Incorporating AI in law means the difference between a 30-day and a 5-day turnaround time. A contract draft’s initial round of review—which ordinarily takes multiple team members days to redline—can be completed by AI within five minutes.
What does that mean? A few things:
- A contract draft can be automatically reviewed for errors and omissions based on a Digital Playbook
- Full redlining is conducted and contextual notes are added for all recommended changes by the AI
- Sections of drafts can be color-coded based on their risk levels, enabling lawyers to focus their attention
Now let’s consider business use cases and how AI capabilities can boost bottom lines.
More Ways AI in Law Helps Legal Teams Extract Greater Contract Value
AI-powered contract review has far-reaching effects, such as the following:
More time and attention for high-impact tasks
A team’s effectiveness is hampered by mundane, menial, and repetitive review tasks. With AI, contracts can be reviewed in record time and changes can be implemented immediately. When companies opt for the latter, not only do deals close faster, but senior counsel is freed to focus their attention on valuable work, including bulk contract analysis, developing strategic positions, and improving relationships with clients, customers, and vendors.
Improve legal team training and consistency
How much contract value leaks out due to poorly-enforced company standards? With preferred negotiating positions, boilerplate language, and standard templates to worry about, ensuring all three are utilized to their full potential isn’t possible without consistent oversight and compliance enforcement. AI is especially good at comparing drafts to templates, playbooks, and best practice guides. What’s more, AI has been shown to reduce new employee training costs by 99%.
Clear Out Queues and Reduce Risks
When business is good, contracts naturally pile up in the queue. Often, businesses will consider outsourcing contract work to Alternate Legal Service Providers (ALSPs) to help get through these deals faster. But ALSPs don’t truly know the business—and they aren’t cheap either. A better way is to insource the work to AI, which allows businesses to finetune and customize the review work to their preferences.
Decrease Human Errors
No matter how experienced or talented team members are, they are still only human. Fatigue, stress, distraction, illness—all are battles that people face at one time or another. Newer staff members may encounter steep learning curves or require assistance from team members who are unavailable. AI technology gets its job done every time—ensuring legal teams maintain compliance, even when high-pressure stakes or heavy workloads are involved.
Search Faster and Leverage Data
Every contract represents an opportunity to improve. With AI-powered contract review, businesses gain greater visibility into clauses and can leverage that information to further optimize how drafts are written. With a cloud-based contract repository, for example, they can draw comparisons between certain contract clauses and answer questions while strategizing.
Increase Deal Velocity
Efficiencies achieved by adding AI in law saves teams days and weeks over the course of a year. Closing deals quicker allows for more business growth, as businesses can now handle greater contract volume and focus on negotiations that may land higher value clients.
Extract Value from Your Contracts with LexCheck
Ready to make 2023 your year for explosive growth? LexCheck offers award-winning AI-powered technology that helps businesses like yours unlock the true value of every contract they create.