A guide to help you navigate AI contract analysis software - from the basics, to savings, to what's next.
The adoption of artificial intelligence (AI) in business, legal, and even personal matters has never been more ubiquitous than it is today. AI is considered one of the most transformational technologies in modern times, with comparisons to the steam engine, electricity, and the internet. While the thought of it may strike fear in many, well-trained AI can improve the lives of professionals in countless ways.
|How to choose the right AI contract analysis software|
Broadly defined, AI is technology that allows a computer to operate in a “human” way. It takes in data from its training and its surroundings and returns information based on what it learns or senses.
Imagine walking into a 5-star hotel. At your disposal is a concierge who can find whatever you may need. Tickets to a play? Tour information? Dinner reservations? With the proper training and connections, your concierge is equipped to find and deliver on your request.
As it relates to contract management, AI is like a digital concierge. An indemnification clause? A sunset provision? Liability issues? AI has the ability to find valuable legal and business data from thousands of documents simultaneously, retrieving results in seconds. It searches not just by keywords, but by analyzing the meaning, intent, and content of legal concepts and word patterns.
Like the hotel concierge, AI needs to be trained. Under supervision, it is fed large amounts of data that are pertinent to its purpose. Algorithms are used to set and adjust rules, and multiple iterations refine its knowledge. Through the process, it is able to learn and generalize to accurately perform the intended tasks.
For legal professionals, AI contract analysis technology can have a dramatic effect on workflow, risk management, and client satisfaction.
With hundreds or thousands of contracts to manage, legal professionals keenly understand the efficiency that comes with automating tasks that don’t require legal knowledge and experience. Why spend hours or days searching for an essential clause in all the contracts you manage, when AI can find it for you in seconds? AI-based contract analysis software can extract critical information pertinent to individual clients, client types, or matters.
AI can also help you manage obligations, payments, and deadlines, with automatic notifications. Think of the time savings (and improved accuracy) by moving from a hard copy calendar to a digital one. Now take that a step further by not having to enter calendar events at all. AI can pull these dates directly from their original source – the contracts – and auto-notify you when action is required.
The improved contract workflow is another efficiency bonus. From the initial proposal to fulfillment, AI contract management software can build and deploy workflows in minutes with pre-built connectors to your standard systems. Once again, by using AI to manage tasks that require no legal expertise, you can spend more time in areas where your value is at its highest.
With efficiency comes savings of all kinds:
When your highly trained and highly paid legal professionals spend their time chasing down documents or parts of documents, they’re not adding value to the firm or their clients’ causes. Automating those searches adds time back to attorneys’ overscheduled calendars.
See how AI contract review technology can ease the headaches that come with tedious tasks.
More time spent on matters that involve legal expertise means the ability to handle more clients and greater profits for a law firm.
Legal professionals appreciate tools that make their lives easier and help them focus on what they love – using their expertise to help their clients. An environment that embraces these tools is one that helps retain and attract top talent.
For clients, cost savings is not just a bonus – it’s an expectation. If your firm is billing time for document searches that could be automated, the reasonableness of fees could become a point of contention.
Every advance in technology comes with risks. If AI is trained on bad information, it will return bad information. If it’s trained on a specific, accurate set of data, that’s what it will extract and return. More is not necessarily better when it comes to data input. Here’s where human expertise comes into play. The team training the AI should be versed in both the technology and the law to ensure that AI retrieves the right information. The technology needs to be trained to understand the legal concepts and assign meaning to various contract provisions. For example, with proper training, AI can be trained to find things like a force majeure clause without looking solely at documents that contain the words force majeure – just as an attorney would.
And while it’s human nature to be intimidated by complex technology, firms should move toward it. “A big risk with AI-powered contract technology is not using it,” says Thomson Reuters’ Senior Product Marketing Manager Craig Vaughn. “Imagine walking into a law firm and seeing the lawyers using typewriters instead of computers. You’d be shocked and question the firm’s ability to handle your case. Very shortly, the same will be true with AI.”
Artificial intelligence is here, and it’s what’s necessary for growing firms.
How to choose the right AI contract analysis software
With reference to AI everywhere you turn, how do you narrow down the options to find the best fit for your contract management needs? Weigh these considerations in your selection:
What’s your use case?
If you can clearly define the purpose of AI in your firm’s contract management, you’ll have an easier time identifying a solution.
Here are some areas where specific AI contract analysis software may already be available:
Energy practice areas often deal with complex and specialized contracts, such as power purchase agreements, renewable energy certificates, and leases. You need software that can handle the nuances and variations of these contracts, as well as provide insights into market trends and risks. Look for software that has a dedicated energy module or can be customized to fit your practice area.
In real estate, you deal with a high volume of contracts, such as leases, purchase agreements, mortgages, and deeds. You need software that can help you review these contracts faster and more accurately, as well as identify potential issues and opportunities. Look for software that can extract key data points, such as parties, dates, clauses, and obligations, and compare them against your standards and best practices.
In mergers and acquisitions, you face tight deadlines and complex negotiations, as well as the risk of missing important details or making costly errors. You need software that can help you conduct due diligence, draft and review contracts, and manage post-closing integration. Look for software that can analyze large volumes of documents, such as NDAs and disclosure schedules, and flag any risks, inconsistencies, or deviations. You also need software that can generate summaries, reports, and insights that can inform your strategy and decision-making.
What’s the onboarding experience?
Does the software need to be installed on-premises, or is it available on the cloud? Find a solution that provides a bulk upload option and auto-categorization of documents. If installing and using the software requires extensive training, your firm is less likely to take full advantage of it.
What’s the total cost?
Some vendors charge a fee for the initial upload of your documents and an ongoing fee to house your documents in their software. Find a solution with a transparent commercial pricing policy.
What’s the time-to-value?
Pre-trained AI is a huge benefit. If your firm needs to ‘train’ the AI in-house, that requires time, expertise, and motivation you may not have. Even add-on training kits mean someone has to finish building the solution in-house.
What happens if something happens?
Look for a solution that is backed by a solid customer service program. To get the most from your contract management solution, find out if the vendor offers chat or phone responses, a database of questions and answers, and a robust tutorial program.
Is it intuitive?
Software that sits on a (digital) shelf is a poor investment. It needs to operate seamlessly in the workflow of legal professionals. Look for tools that allow you to utilize your software with other programs such as Microsoft Word and Practical Law.
Whom do you trust?
With AI being the ‘it’ technology, many new players have entered the market. Look for a vendor who has a history of development with AI and language models. Does the vendor also have proven legal expertise? The most effective AI solutions are developed by data scientists in conjunction with experienced attorneys. This combination may also bring proprietary content into the solution that can be invaluable for legal professionals.
While AI has been around for decades, the 2022 introduction of ChatGPT into everyday vernacular has put it squarely in the eyes and ears of anyone paying attention to common culture. ChatGPT is arguably the most well-known of current generative AI applications. Ask it to write a limerick, record an original video, create art, or doctor images, and it can. This is the part of AI that both excites and terrifies people. Guardrails and forgery detection are important considerations in general usage.
Generative AI is here for contract analysis and review. At Thomson Reuters, generative AI is a natural progression in product line development. Like ChatGPT, you’ll be able to ask it to draft a contract, and it will return one that bears a remarkable resemblance to one written by a qualified attorney. Also, like ChatGPT, the product of your request should be carefully reviewed to ensure accuracy and integrity.
Finally, the unceasing buzz of AI in our lives can make it tempting to try to tune it out entirely. Rarely has technology held the possibility of such dramatic change. Does that mean future lawyers will be robots? No. In its nascent stage, AI can’t do what a lawyer can. Legal analysis and strategy, provided by humans and proprietary to individual clients, aren’t available through bits and bytes. They require educated, experienced legal professionals who know how to use the tools available to them.
AI contract analysis software to provide answers in minutes, not months.