The significant role of legal tech in boosting the legal industry is already indisputable. However, around 60 percent of lawyers are not satisfied with the tech tools that are offered at their firms. One of the daily tasks that lawyers find most tedious is contract drafting and review. In this deep dive article, you’ll learn the key benefits of contract automation, how it works, how it boosts contract management, and the four best contract review automation tools to implement into a lawyer’s daily workflow.
What Is Contract Automation?
Contract automation is the use of artificial intelligence (AI) to create, manage, and store contracts safely. It’s all about optimizing repetitive manual processes with automated contract lifecycles. Can you quickly spot every single mistake in a contract? Can you make sure all the clauses are up to date? Can you effectively collaborate on contracts and ensure that everyone is on the same page? Where will you store all the clauses? If you have asked yourself at least one of these questions, you may want to learn more about contract automation and how it can transform your daily workflow.
Why Should I Automate Contracts?
Automating the contract management process can help with avoiding unnecessary costs, excessive hours spent reviewing contracts every day, a lack of transparency, and lost agreements. Any of these factors alone is a good reason to implement contract automation software. The following statistics provide a better understanding of how contract automation helps to:
- Drastically reduce associated costs — A business can save up to 2 percent of its annual costs by utilizing contract automation software.
- Accelerate negotiation cycles — Contract automation can accelerate negotiation cycles by 50 percent.
- Save time — Contract automation has saved lawyers 82 percent of their time (Reuters).
How Does Contract Automation Work?
Contract automation software is designed to optimize every step of the contract lifecycle. The software allows users to develop, manage, and store legal documents in a safe space online. Contracts move through the system on autopilot, creating end-to-end visibility without the need for constant supervision.
How Contract Automation Complements Your Contract Management Process
Contract automation complements the contract management process in varying ways depending on the unique features the software has to offer. The contract automation process can generally be divided into three stages:
- Contract generation — After set-up is complete, contract automation software allows users to create new contracts by selecting a pre-existing template, choosing the necessary clauses from a clause bank, and editing basic metadata fields with key details.
- Contract management (proofreading and editing) — Once the contract is created, the contract automation software automatically fetches data and realigns the document language to ensure error-free contract creation.
- Contract storage — After the contract is signed by both parties, it is conveniently stored in a secure integrated cloud location for access at a later date. In most cases, contracts stored within contract automation software can be pulled up based on the contract name or key details. Some contract software also permits the storage of personalized clauses.
As a follow-up, some contract management software also sets automatic reminders for renewals or notifications about the need for updates based on the contract expiration date or another custom contract (even contract templates) fields.
10 Key Benefits of Contract Automation
If you are considering adding automated contract management for your in-house legal team, the following key benefits may help you to gain their approval.
1) Better efficiency (by doing things right)
Improving efficiency is likely the most apparent benefit of contract automation. As mentioned above, contract automation already saves lawyers 82 percent of their time. You can handle more client requests more efficiently without extra effort when using contract automation software.
2) Increased profitability without extra input
Three main ways to increase profitability are saving time and money on negotiation cycles, reducing inaccurate payments, and processing more clients’ requests in the time saved from other tasks.
3) More time for high-priority tasks
Contract workflow automation will allow you to focus on collaborating with potential partners and building relationships with vendors, clients, and employees by making time-consuming negotiations quick and easy. When there is no need to spend hours on the entire process, there is a greater opportunity to complete those high-priority tasks.
4) Reduced risks for your business
Only 22 percent of businesses are confident in the ability to track and manage contracts. Every mistake in a contract can be risky, but what is even riskier is issues with security. Both of these risks can be easily addressed with contract automation software.
5) Meeting the growing demands of the legal market
Because of the competitive environment, clients have become more demanding when it comes to legal services. Law firms that prioritize a client-centric approach will be the winners in the long run. It is for this reason that there is a goal to reduce manual efforts for reviewing and drafting contracts by 50 percent by 2024.
6) Easy integration with your existing workspace
Technology is not as scary as it might seem. Most software is made to be easily integrated with existing IT infrastructures. Contract automation is designed to simplify life in your office, not complicate it.
7) Greater transparency
No error will go unnoticed with contract automation software. With this legal tech, lawyers can access the structure of the document and track changes in just a few clicks. This results in increased transparency at every step of the contract lifecycle. Everyone involved can easily see the details of the agreement between the parties at any time. Using end-to-end visibility and workflow tracking, all stakeholders can always be aware of where the project stands and can view all contract activities and edited versions in real time.
8) Streamlined collaboration
With all contract activities completed on one platform, your team will always have up-to-date information, and setbacks and delays will be easily identified and addressed. A feature of some contract automation tools like Clause Bank is a great way for team members to share clauses easily.
9) Consistency in legal language
Keeping track of changes in legal language can be quite stressful. Contract automation software helps to keep the language in your contracts consistent with up-to-date language.
10) Safe storage of contracts in one place
Because 40 percent of organizations do not have a centralized repository for storing contracts, contract automation software allows users to sort and retrieve contracts quickly using tags and filters.
Bonus: Improved work-life balance
Although work plays a major role in a person’s life, what matters more is overall health. Therefore, reduce stressful hours spent on contracts with agreements created and tracked using AI.
What Is the Best Contract Automation Software?
Contract automation software is an AI-based solution integrated into a company’s digital space. This type of software can be either on-site or cloud-based. Each software offers unique features and is designed to make the contract lifecycle easier. The following are the most popular and peer-reviewed contract automation tools available in the legal market.
Loio is a great risk assessment tool, a Microsoft Word add-in that can become your second pair of legal eyes. It significantly streamlines the contract drafting process with Clause Bank and boosts the contract review process to produce a flawless contract.
- Cutting-edge clause analysis;
- Excellent contract risk assessment (Health Score);
- Collaboration on clauses within Clause Bank;
- A cloud-based solution that streamlines collaboration with a team;
- Style and formatting issues fixing.
- Cannot be installed as on-site software (cloud-based solution only);
- Standard clause templates in Clause Bank may be too generic;
- A limited number of integrations.
Litera Contract Companion
Another Microsoft Word plugin based on AI algorithms is Contract Companion by Litera. This software highlights mistakes in the contract and highlights names, dates, references, numbering, terms, definitions, etc. For more details about how the errors can be fixed in the contract, users will click on any of the highlighted fields.
- Correcting tables of authorities and citations;
- Tracking recent changes in the file;
- Active drafting (helping users correct items as they go);
- Including lots of integrations.
- Does not fix style and formatting issues;
- Lacks clause management;
- Has no access to the contract’s table of contents.
Donna software highlights cross-references, terms, definitions, references, and cross-references in documents. Often, lawyers overlook small details like formatting and punctuation, so Donna identifies them and suggests ways to fix them.
- Simplified cross-references;
- Placeholder highlights throughout entire document;
- Organized overview of key contract information.
- Doesn’t optimize formatting and styling;
- No smart clause analysis;
- No tools for streamlined collaboration.
The Henchman add-in retrieves previously written clauses from users’ contract repositories and presents them within their trusted Microsoft Word environments, allowing them to draft new contracts faster.
- Suggests clauses within Microsoft Word;
- AI-powered clause analysis;
- Find & use colleagues’ precedents.
- No key data proofreading;
- Doesn’t identify key contract mistakes;
- Doesn’t optimize formatting and styling.
AI Review by Onit
With Onit’s ReviewAI software, contracts can be drafted, reviewed, proofread, and edited quickly and accurately in minutes. Using the self-service portal or email, non-legal business users can get a signed, reviewed, and approved contract in less than two minutes.
- Smart checklists;
- AI-assisted contract review;
- The ability to learn corporate standards from history and ongoing feedback.
- Doesn’t identify missing or duplicate clauses;
- No overview of key contract details;
- Doesn’t identify key contract mistakes.
Yes, contract automation can be worth the initial time and effort to get set up and learn the software. Whatever software you choose, it will help to boost your legal document creation tasks. Remember that innovative technologies are only improving as more people integrate them, so find the right fit for you as your business grows.