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In the world of legal contracts, AI takes on a number of forms and functions. One of the most useful (and most talked about) applications is reviewing contracts. It’s what happens when you use advanced technologies like natural language processing (NLP) and machine learning, to make the legal contract review process more efficient and accurate.
And certainly, with the world’s ever-increasing number of contracts, our need to more efficiently and accurately review them cannot be understated. To put it plainly, the growing number of contracts that will need review and management simply require more time and attention than human employees will be able to provide.
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Artificial intelligence (AI) tools can quickly find and understand the clauses, terms, and conditions that make up a contract. These tools can also be used to look for or analyze critical provisions, like termination clauses, indemnities, and confidentiality obligations.
Contract provisions can be evaluated by AI tools for inherent risks, inconsistencies, or non-compliance with established corporate or regulatory standards. This allows for the flagging of problematic clauses that might need human review, and consequently enables prioritization of the areas in contracts that might need more or less attention from legal teams.
The systems can assess many different iterations of a contract or measure a newly drafted contract against standard models, pointing out where the deviations lie and what improvements might be made.
AI can be configured to work with your organization’s unique policies, compliance requirements, and industry regulations, enabling it to adapt to the many legal environments in which your contracts operate.
Modern AI systems frequently engage with document management systems (DMS), enterprise resource planning (ERP) software, and collaboration tools, allowing them to act as integral parts of the systems they serve. This includes the contract lifecycle management systems, with which modern AI can integrate nearly seamlessly.
Manual contract review has long been a time-consuming task that could occupy legal professionals for hours or even days. Yet, AIs can perform the same manual tasks in mere minutes.
Human error is a common outcome of manual contract review, particularly when people are up against the clock. Contract review AI reduces these mistakes by performing the same task with unerring consistency and catching problems that humans might miss.
When companies expand, so does the number of contracts. AI services can manage a large-scale contract review process without adding people to the legal team.
By systematically recognizing problematic clauses and ensuring compliance with legal standards, AI helps organizations mitigate legal and financial risks.
Embracing this technology transforms legal teams and helps them serve the business with even more efficiency. When it comes to contracts, reviewing them is a core function of both in-house counsel and lawyers in private practice. These legal pros will only be buried further under ever-expanding contracts if an efficient, technological tool isn’t used to ease this burden.
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