Reviewing, editing, and executing contracts require a tremendous amount of effort, time, and resources for legal departments. Every contract review involves attorneys on each side reviewing and editing all the relevant clauses and sending multiple versions back and forth until each side is satisfied. Oftentimes, these contracts are semantically similar to those that have been already reviewed numerous times in other matters.
The traditional approach to the contract review process is not only inefficient and error-prone but also tedious and redundant – and yes, costly. Advanced technologies have increased efficiencies in other legal department operations, including aspects of the contract lifecycle management (CLM) process. Yet, the contract review and markup process has remained chiefly the domain of the frustrated junior attorney manually reviewing and marking up pages upon pages of contracts.
Thankfully, advances in AI have made it possible to instantaneously review and markup contracts saving companies hours, days, and weeks of time and money. This isn’t news to many legal departments. According to CLOC’s 2019 State of the Industry Survey, 45% of respondents explore the use of AI to reduce legal workload, gain more insight or improve performance, and 12% are currently using AI within their tools and processes.
Improving the Implementation Process
Many legal departments have integrated CLM tools into their processes with varying degrees of success, with some having fully mature CLM processes, while most are in the early stages. According to the 12th Annual Law Department Operations Survey, automating CLM processes lag other areas such as electronic billing, outside counsel management, and discovery management in terms of maturity and effectiveness. Unlike more commonly used technologies such as e-billing, 41% of respondents to the LDO Survey ranked themselves a “1” or “2” on a maturity scale of 1 to 5 regarding CLM. Only 4% ranked their CLM a “5” or fully mature.
Corporate legal departments must move further along the maturity model to reap the benefits of digitizing their legal processes. Legal AI should empower your business teams to increase efficiency with fewer resources but still provide complete oversight and input when needed. A critical aspect of any effective change management process involves implementing technologies that work the way your department and people work. By using malleable tools that provide statistically proven ROI you can minimize many of the negative impacts of introducing new technology and processes.
The Third Wave
Legal AI represents “The Third Wave,” as AOL co-founder Steve Case describes it in his book of the same name. According to Case, the internet is currently in its third wave. The first wave saw companies such as AOL lay the foundation for consumers to connect to the internet. While the second wave included Google, Facebook, and other similar companies that created search and social networking capabilities, while apps like Instagram and Snapchat were built on the smartphone revolution. The third wave involves technology that dramatically transforms real-world industries, such as health, education, transportation, energy, and food. As a result, changing the way people live their daily lives.
Third-wave technologies are dramatically changing the way that the legal industry works, especially the contract review process. AI-powered contract review tools speed up the process by instantaneously reviewing and marking up contracts according to your company’s playbook and edits to previously reviewed contracts. By using your company’s legal playbook during each new contract review, the tools grow smarter and increase efficiency with each additional use.
Maximize ROI in your Contract Review
How can you successfully implement legal technology tools and get the most ROI for your department? You must think of it in three buckets:
- Minimize the adverse effects of change management by seeking out tools that work the way you and your team works.
- Monitor and report the ROI, such as time savings in contract negotiations. Accuracy and consistency statistics can also quantify ROI.
- Implement AI tools that can be customized, are nimble, and do not require an extensive technical lift.
After you have implemented your contract review tools, your department will see additional efficiencies. Once your lawyers have been freed from the tediousness of redlining boilerplate contract language, they can think more strategically and concentrate on contract language that requires more in-depth review. Thanks to a powerful machine learning loop, contract review tools will continuously learn and drive even more results for your department.
By using legal AI and automating other legal processes, you can remove a lot of the burden and high cost involved in the contract review and markup phase. These tools allow you to address the inefficiency problems that are creating redundant work and costing you money.