Why spend 80 percent more time reviewing a contract than you need to? Why are your top-paid legal professionals spending 70 percent of their time in escalated contract editing rather than negotiating business terms or providing legal advice?
These questions often lead companies like yours to consider learning how to automate contracts using artificial intelligence (AI) and uncovering the multitude of benefits that come along with streamlining labor-intensive routine tasks.
Like the transportation and healthcare sectors, there is much room for AI disruption in the legal sector. While the legal field has historically taken a dubious stance on technology, the reluctance to change has started to fade.
According to a Deloitte survey, 76 percent of legal departments now trust AI systems to make decisions, and 72 percent believe AI could be a valuable addition to their organization.
This growing acceptance of incorporating technology into the legal process will begin as a competitive advantage for early adopters and eventually usher in a new status quo.
Why Now Is the Time to Learn How to Automate Contracts
A well-throughout system, like LexCheck, is intuitive, but not all systems are—some of them have these screens that look like the control panel of a jumbo jet. The more arduous task lies in understanding how to adjust roles and processes to take advantage of the new efficiencies. For every organization, the benefits of taking the time to learn how to automate contracts will be worth it.
Some of the benefits of learning how to automate contracts include:
- Decreased Workload
- Time Savings
- Sales Velocity
- Cost Savings
Let’s dive into each and see how contract automation accomplishes this.
Traditionally, a junior legal staff member may have spent a tremendous amount of time, days even, comparing documents, looking for information in past documents, applying playbook standards to a draft, and redlining errors.
With a contract automation tool, all this work can be done in a matter of minutes, allowing the employee to implement changes quicker, provide feedback to contract drafters, and research new best practices that can be applied.
Similarly, senior legal counsel will find there is less need for escalation and providing feedback to junior reviewers. The decreased workload frees up their time to provide legal advice, build relationships, negotiate renewals, and finetune the AI to automate even more tasks and accelerate the speed of business.
As Entrepreneur points out: “The speed at which AI can process and interpret enormous amounts of data is one of its main advantages.” A typical contract review process adds 10 percent more time (or 6.5 more days) to a product launch cycle. Now imagine how much more innovation a company could handle if this time were reduced to a single day.
The review cycle for a medium-complexity contract takes 30 days from review and negotiation through signing and execution. When multiplied across tens of thousands of contracts per year, that’s hundreds of thousands of legal staff hours devoted to the process. By preventing wasted hours, sales velocity will no longer be held back by the pace of due diligence.
A sluggish sales department can lead businesses to lose over 9 percent of their annual revenue. Deals may fall through if they take too long to complete and another competitor can do it faster. Renewal negotiation opportunities are often missed due to the overwhelming amount of new contracts coming down the pipeline. Contract automation software helps teams overcome many common obstacles and streamline their processes for an overall faster business pace—in fact, 80 percent faster.
Contract automation saves money in a variety of ways, including:
- Fewer specialized staff members needed to handle redlining and review
- The ability to pursue a greater volume of business opportunities
- A 99% decrease in new employee playbook training costs
- 70% fewer senior legal counsel hours devoted to handling escalations
- Reduced employee turnover due to more productivity, ease of work, and satisfaction
Deal velocity measures how long it takes to complete a sale—and how fast agreements are moving through your pipeline and earning your company revenue. You can think of this metric as one signal of business health and the ability to thrive.
How To Automate Contracts With LexCheck
Unlike full contract lifecycle management software, rolling out a contract automation solution can be quick and simple. In most cases, the process begins with a sales demo, where you get a brief overview of how to automate contracts and learn how it can benefit your organization.
LexCheck offers advanced artificial intelligence and machine learning that works beautifully with as little as a dozen past contracts loaded into its repository. The system also draws from proprietary best practices culminating years of legal research and the corporate legal playbook you upload or create using our cutting-edge software. We’ll help you stack the deck in your favor to customize the contract automation system to your contract types and unique business needs.
Next, you’ll email the system a contract draft to review. Within five minutes’ time, LexCheck will return a fully redlined and risk-analyzed document. Staff can then decide whether to escalate the contract, accept changes with the click of a button, or further negotiate certain areas. Suggested revisions include contextual notes to help prioritize and guide revision work. Senior legal can also implement advanced automation, applying “if/then” blockchain actions to autocorrect commonly discovered issues.
Learning how to automate contracts won’t replace the need for human strategy and labor, but these systems can provide a host of benefits to help your business become more competitive, saving time, money, and hassle while enabling teams to engage in more high-value work.
Gary Sangha | Founder & CEO
Gary Sangha is the Founder and CEO LexCheck. He's a serial entrepreneur and an academic. Gary previously founded Intelligize, a legal technology company that was acquired by LexisNexis. He's affiliated with the University of Pennsylvania and Stanford University and started his career as an attorney at Shearman & Sterling and White & Case.