Is the Future of Contract Management Already Here?

Contract management technology has been advancing at warp speed. To avoid the same fate that law firms are experiencing with  massive associate turnover, legal departments are turning to high-tech tools to achieve greater operational efficiency while reducing costs and organizational risk. Implementation of the latest contract management software not only boosts employee morale by optimizing their workflows, but also improves customer experiences and allows businesses to scale their growth. Things are moving quickly, so let’s take a step back and look at how we got here.   

The Evolution of Contract Management

The most primitive contracts were drawn up with ink and quill, sealed in wax, and sent by carriage. While the rise of computing technology thereafter brought along with it products like word processing programs, legacy storage systems, and tracking spreadsheets, these workflows still relied heavily on manual labor.

While legacy on-site databases replaced traditional paper filing cabinets, it wasn’t until cloud-based storage repositories became mainstream that contract management software really began to take off. The earliest programs offered ways to build standard templates, clause libraries, and corporate legal playbooks of preferred positions which staff could then use to create contracts faster. The work was still largely manual, but now there was a way to ensure some level of uniformity across a portfolio of contracts. Plus, e-Signatures and virtual access capabilities were moving businesses forward.

Going a step further, the introduction of artificial intelligence (AI) and machine learning allowed these systems to perform the work of a junior-level attorney, automating activities such as redlining, color-coding risks, comparing contract drafts to company playbooks, finding context for negotiations, and forwarding contracts to parties for signing. As Gartner estimates, half of a legal department’s workload is taken up by contract generation, review, negotiation, and approvals. So the implications of freeing up more time to focus on strategic growth and customer relations are too significant to ignore.

Why The Future of Contract Management Is Already Here

Contract management has come a long way over the past couple of decades, arising from the increasing complexity of contracts and recent developments in AI.

Here are six other reasons why the future of contract management is happening right now:

• Big data: High-volume, high-velocity, and high-variety information has become much more cost-effective, thanks in part to tools like Hadoop. Consider that Hadoop processes a terabyte of data for $300, which previously cost $10,000 through IBM or $14,000 through Oracle.
  
  
• Processing power: The computing power of processors has increased dramatically over the last 50 years. Newly developed graphics processing units (GPUs) now contain thousands of more cores than the traditional central processing units (CPUs) of old. Outsourced cloud computing is another acceleration as companies are no longer limited to the processing power they have access to on-site. Collectively, these innovations have greatly improved the capabilities of contract management software.
  
  
• The global economy: Access to shared information and knowledge via the internet, social media, and smartphones has allowed for collaborations that may not have been possible before. Data scientists and top legal minds, for example, are particularly interested in developing technology such as natural language processing (NLP), AI, machine learning, and automation to fundamentally change how legal work is accomplished. 

• Open-source software: Once source code is released to the world, anyone can inspect, modify, and enhance it. Linux is the most popular open-source operating system and has been used to develop machine learning libraries like Scikit-learn and TensorFlow. Programmers (and by extension, legal teams) are now able to focus on conceptual problem solving to execute complex tasks automatically.
  
  
• Algorithm improvements: Deep learning mimics the way a human brain assembles information, makes predictions, learns, and adapts. All of the aforementioned shifts have led to algorithmic improvements that enable machines to push the envelope in terms of industry applications. Previously, systems could only act as glorified spell checkers and nothing more. Now, the latest algorithms allow systems to interpret context and extract relevant data instantly.
  
  
• Accelerated returns: Increasingly, companies have recognized the power of AI and deep learning to increase their productivity and gain a competitive advantage. As more companies adopt AI-powered legal tech, software developers receive more input on their pain points, needs, and recommendations—thus leading to even more advances that better address users’ needs. 

Today, contract management is so much more than it used to be. With the right technology and processes in place: 

• Contract management becomes a process of learning about each parties’ capabilities, needs, values, and priorities. 
  
  
• It becomes a way to operationalize data to make smarter, risk-adjusted decisions. 
  
  
• It becomes a way for General Counsel to function as lawyers, management leaders, and organizational change-makers who are knowledgeable of data-driven decision making. 

These are foundations every corporate legal department should aspire to if it wishes to grow.

Automation: The Future of Contract Management, Today 

AI-powered solutions like LexCheck are at the forefront of legal innovation, leveraging automation to drive organizational efficiency and change. Its software already goes above and beyond with automated contract redlining, review, and playbook compliance—but that’s not all.

Lawyers can also input custom “if/then” rules that train the system to make sound judgments and changes without human intervention. In other words, LexCheck envisions a future where a truly automated system intuitively understands your organization’s needs, approaching contracts with laser-like precision and keeping business moving forward.