The future of contract management: AI-driven efficiency and accuracy

The complexity conundrum

A common misconception is that low-importance contracts are inherently simpler to manage. In reality, these contracts can be just as intricate and time-consuming as their high-value counterparts. Legal teams often spend countless hours reviewing and negotiating terms, the implications of which can be substantial, diverting valuable time and effort away from more strategic initiatives.

Leveraging AI for contract review

AI has emerged as a game-changer in contract review by automating repetitive and manually heavy tasks such as contract review, contract drafting and data extraction/reporting. AI-driven tools can process vast amounts of contract data with speed and accuracy, reducing the likelihood of human error and ensuring that critical details are not overlooked. By freeing up legal teams from routine tasks, AI allows them to focus on higher-value activities that require human judgment and strategic input.

AI in drafting and negotiation

Beyond contract review, AI plays a crucial role in drafting and negotiation. By analysing playbooks and existing contracts AI algorithms can provide data-driven insights, suggest optimal negotiation strategies, and identify key terms and conditions. This not only means you can draft agreements at the touch of a button, but also accelerate the negotiation process and ensure that all agreements are structured in the same way allowing for quicker and simpler review.

The challenge of AI adoption

Despite its advantages, integrating AI into contract management is not without challenges. Many existing contract management systems lack built-in AI capabilities, and even those that do may not have the necessary legal expertise to tailor AI models to specific business needs.

One example of this is in the review process. Without proper training an AI model will provide different answers to the same question at different times. Structuring your AI model so that it answers the specific question takes the input of trained lawyers and legal technologists.

Another key challenge is security. Contracts, by their nature, contain a significant amount of confidential information and data. LLMs, by their nature, store vast amounts of information that is sent to them. Having an LLM read, store, and potentially learn off the information within your contracts can be quite the issue.

Having tailored versions of LLMs that are ringfenced and strict protocols around what information is sent out to LLMs is the only way to manage this challenge effectively.

Implementing new AI-driven tools also requires significant internal effort and investment, posing a barrier to widespread adoption.

The case for outsourcing

For companies looking to optimise efficiency within the contract management process and maintain a high level of legal expertise outsourcing contract review and negotiation to AI-powered legal service providers presents a compelling solution.

Partnering with law firms that leverage proprietary AI systems ensures that even the most complex contracts are managed with precision and efficiency. This approach not only reduces operational costs but also enhances legal accuracy and strategic contract management.

Final thoughts

The integration of AI into contract management offers numerous benefits, including increased efficiency, accuracy, cost savings, and enhanced strategic focus. As businesses continue to navigate the complexities of contract review and negotiation, embracing AI-driven solutions will be crucial to staying competitive and achieving long-term success. Companies that proactively adopt AI in their contract processes will position themselves for greater agility, reduced risk, and improved business outcomes.

Ready to optimise your contract management with AI-driven solutions? Our team at Fieldfisher Condor, combines cutting-edge technology with deep legal expertise to streamline your processes, reduce costs, and enhance accuracy. Get in touch today to learn how we can help your business achieve greater efficiency and success in managing contracts.