Companies have long relied on corporate legal playbooks as gatekeepers for essential clause inclusions and preferred negotiating positions. While many of these playbooks have since transitioned from a paper to digital format in many corporate legal departments today, legacy manual review processes face a new wave of change with the widespread adoption of contract review automation technology based on advances in artificial intelligence (AI).
What Is Automated Contract Review?
Automated contract review platforms use AI to scan uploaded agreements for any inconsistencies, errors, omissions, and risks. They deliver attorney-quality redlining in minutes and can even create AI Digital Playbooks that ensure adherence to company standards.
Over the last five years, contract review automation software has advanced significantly due to the incorporation of AI, Natural Language Processing (NLP), and machine learning.
The most advanced programs not only flag risky or missing clauses, but also offer revisions based on context and company playbook guidelines.
Modern technology can perform the first pass review work of an experienced associate and then auto-forward drafts to appropriate parties based on the amount of redlining—all in a matter of minutes.
How Does Contract Automation Work?
There are several moments when automation can save corporate legal departments precious time:
- Once a document is uploaded, contract redlining is automated using the company’s playbook and historical negotiating positions as guidance.
- Once complete, the draft is sent to relevant internal personnel.
- Changes can be incorporated at the click of a button.
- Attorneys can automate changes by setting custom “if/then” rules.
Business-Critical Reasons for Contract Review Automation
Automation software isn’t here to replace attorneys and legal staff, but it is becoming an essential component of leading corporate legal departments. Businesses stuck in slow, menial, and error-prone workflows will find it difficult to boost their sales velocity and compete in the future.
Here are few reasons forward-thinking legal departments are making the switch:
Contract management is tedious. It’s getting harder to attract and retain top talent. No one really wants to spend hours reading until their eyes glaze over when AI-powered contract review platforms can perform the same task faster. Employees like being in a position where they feel like they’re making a difference. Building client relationships, informing business decisions, meeting around the negotiating table, finding innovative ways to decrease risk—these are the activities that energize legal teams.
Manual contract review leads to mistakes. Mistakes happen, whether due to a new employee who is unfamiliar with company standards or an experienced employee who is distracted. It’s all too easy for contracts to get lost or sidelined into the bottom of the to-do list. Multiple versions of a contract can result in duplications of effort, wasted time, and revision tracking issues. Subtle omissions or simple spelling errors can jeopardize the integrity of the entire agreement. Often, renewal renegotiation opportunities are missed due to not tracking dates properly.
- Manually reviewing contracts is expensive. Time is money, and a company can pay weeks’ worth of a junior associate’s salary devoted to reviewing a contract, whereas AI-powered contract review platforms can perform contract review in a matter of minutes.
How Does Contract Review Software Work?
With a contract automation platform like LexCheck, corporate legal departments simply email or upload a document to the platform to initiate the following automated contract review processes:
- The platform extracts relevant entities, categorizes clauses, and compares content for adherence with the AI Digital Playbook.
- NLP technology scans the agreement for any omissions, errors, and deviations, applying playbook-compliant standards to the document while ensuring consistency.
- A fully redlined contract with context-based markups is returned to the appropriate party in minutes.
Approval time delays are a very real problem in most corporate offices where one or two key personnel have a backlog of agreements to review. These bottlenecks can be expensive as they stall business and prevent the company from exploring new opportunities. With the help of an AI-powered contract review and negotiation platform, legal departments can overcome these bottlenecks and accelerate the contract approval process.
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.