Contract Automation: Tips, Tricks, and More

Updated February 19, 2025
10 min read
Contract Automation: Tips, Tricks, and More

The legal industry is indisputably benefiting from significant advancements in legal tech. However, about 60 percent of lawyers are unsatisfied with their firms' tech tools. One of the most tedious daily tasks lawyers face is contract drafting and review. In this comprehensive guide, we'll explore the key benefits of contract automation, its operation, its impact on contract management, and the top contract review automation tools a lawyer should incorporate into their daily workflow.

What Is Contract Automation?

Contract automation uses artificial intelligence (AI) to create, manage, and safely store contracts. It's all about optimizing repetitive manual processes through automated contract lifecycles. Does every single mistake in a contract leave you frustrated? Does ensuring all clauses are up-to-date give you a headache? Do you need help collaborating on contracts effectively and ensuring everyone is on the same page? Do you have clause storage issues?

If you've pondered even one of these questions, it might be time to learn how automated contract automation can revamp your daily workflow.

Why Should I Automate Contracts?

Automating the contract management process, including implementing automated contract management systems, can aid in avoiding unnecessary costs, excessive hours spent reviewing contracts daily, a lack of transparency, and lost agreements. Any of these alone provides a solid reason to implement contract automation software.

Consider the following statistics as proof of how contract automation helps:

  • Drastically reduces associated costs: By utilizing contract automation software, businesses can save up to 2 percent of their annual fees.

  • Accelerates negotiation cycles: Contract automation can hasten negotiation cycles by nearly 50 percent.

  • Saves time: Contract automation can save lawyers up to 82 percent of their time.

These numbers clearly show the significant potential for improving efficiency and financial effectiveness offered by contract automation. Thus, adopting such technology is a strategic move to stay competitive and proactive in the ever-evolving legal landscape.

How Does Contract Automation Work?

Contract automation software significantly enhances the efficiency of the entire contract lifecycle. This specialized tool enables users to draft, oversee, and securely archive legal agreements within a digital environment. It allows contracts to move seamlessly through the system, necessitating less routine supervision, which results in streamlined operations and enables complete visibility from inception to execution.

Furthermore, this software minimizes the risk of human error, ensures uniformity in document formatting, and expedites the contract approval process. In an increasingly digital world, such automation tools are becoming indispensable for legal practitioners aiming at efficiency and accuracy.

How Contract Automation Complements Your Contract Management Process

The benefits of contract automation to the contract management process differ based on the software's unique features. Generally, the contract automation process can be broken down into three stages:

  • Contract generation: Once setup is complete, users can create new contracts by selecting a pre-existing template, choosing required clauses from a clause bank, and editing primary metadata fields with crucial details.

  • Contract management: After creating the contract, the software automatically fetches data and realigns the document's language to guarantee error-free contract creation.

  • Contract storage: Post-signing by both parties, the contract is stored securely in the cloud for future access. Typically, contracts stored within contract automation software can be accessed based on the contract name or critical details. Some software also allows the storage of personalized clauses.

Some contract management software also sets automatic reminders for renewals or sends alerts about necessary updates based on contract expiration dates or other custom fields (even contract templates).

10 Key Benefits of Contract Automation

If you're contemplating integrating automated contract management into your in-house legal team, these benefits may help convince them:

  • Better efficiency: The most apparent benefit of contract automation is improved efficiency. As stated earlier, it saves lawyers 82 percent of their time, enabling more client requests to be handled efficiently without additional effort.

  • Increased profitability: A firm's profitability can be improved mainly by saving time and money on negotiation cycles, reducing inaccurate payments, and processing more client requests in the time saved from other tasks.

  • More time for high-priority tasks: Contract workflow automation allows you to spend more time collaborating with potential partners and strengthening relationships with vendors, clients, and employees as negotiations become quick and straightforward. When fewer hours need to be spent on tasks, high-priority assignments can be completed faster.

  • Reduced business risks: Only 22 percent of businesses can track and manage contracts. Every mistake in a contract poses a risk, but the risks associated with security are even more significant. Both sort and retrieve contracts using tags and filters.

  • Meeting the growing demands of the legal market: The competitive environment has resulted in clients demanding more from legal services. Law firms prioritizing a client-centric approach will come out on top over time. 

  • Integration with existing workspace: Technology is more manageable than it seems. Most software can easily integrate with existing IT infrastructure. Contract automation is engineered to simplify life in your office, not complicate it.

  • Greater transparency: No error will go unnoticed with contract automation software. Using this legal tech, lawyers can explore the document's structure and track changes with a few clicks, heightening transparency at every phase of the contract lifecycle. Everyone involved can conveniently see the agreement details between the parties at any time using end-to-end visibility and workflow tracking. All stakeholders can always keep track of the project's status and view all contract activities and edited versions in real time.

  • Streamlined collaboration: With all contract activities conducted on a single platform, your team always has the most current information and quickly identifies and addresses setbacks and delays. The Clause Bank feature of some contract automation tools facilitates easy clauses-sharing amongst team members.

  • Consistency in legal language: Keeping abreast of changes in legal language can be daunting. Contract automation software helps to maintain the consistency of language in your contracts.

  • Safe storage of contracts in one place: Since many organizations don't have a centralized repository, contract automation software lets users sort and retrieve contracts quickly using tags and filters.

  • Bonus: Improved Work-Life Balance — although work is essential, overall health matters even more. Thus, reducing stressful hours spent on contracts with agreements created and tracked using AI is a big plus.

​​With these significant benefits at your disposal, it's clear that contract automation is a strategic investment rather than a mere expenditure. It's time for law firms to embrace the future and leverage the power of automation to meet the evolving demands of legal practice.

What Is the Best Contract Automation Software?

Contract automation software, an automated contracting system, 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 simplify the contract lifecycle. The following are the most popular and peer-reviewed contract automation tools in the legal market.

Loio

Loio is an excellent 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. 

Advantages: 

  • Cutting-edge clause analysis.

  • Excellent contract risk assessment (Health Score).

  • Collaboration on clauses within Clause Bank.

  • A cloud-based solution that streamlines partnership with a team.

  • Style and formatting issues are fixed.

Disadvantages: 

  • It cannot be installed as on-site software (cloud-based solution only).

  • Standard clause templates in Clause Bank may need to be more specific.

  • A limited number of integrations.

Litera Contract Companion

Another Microsoft Word plugin based on AI algorithms is Contract Companion by Litera. This software highlights contract mistakes, names, dates, references, numbering, terms, definitions, etc. Users can click on any of the highlighted fields for more details about how to fix the errors in the contract. 

Advantages: 

  • 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. 

Disadvantages:

  • Does not fix style and formatting issues. 

  • Lacks clause management.

  • Has no access to the contract’s table of contents.

Donna

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.

Advantages: 

  • Simplified cross-references.

  • Placeholder highlights throughout the document. 

  • Organized overview of crucial contract information.

Disadvantages: 

  • Doesn’t optimize formatting and styling.

  • No clever clause analysis.

  • There are no tools for streamlined collaboration.

Henchman

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.

Advantages: 

  • Suggests clauses within Microsoft Word.

  • AI-powered clause analysis.

  • Finds & uses colleagues’ precedents.

Disadvantages: 

  • No essential data proofreading.

  • Doesn’t identify critical 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.

Advantages: 

  • Smart checklists.

  • AI-assisted contract review.

  • The ability to learn corporate standards from history and ongoing feedback.

Disadvantages:

  • Doesn’t identify missing or duplicate clauses. 

  • No overview of crucial contract details. 

  • Doesn’t identify critical contract mistakes.

Conclusion

The one-time effort of setting up and learning contract automation software can be worth it. Whatever software you choose, it will simplify your legal document creation tasks. As innovative technologies continue to improve with further integration, take the opportunity to find the right fit for you as your business grows.

Also Read

7+ Strategies for Effective Contract Management
Contracts are important written or oral agreements that your company has with third parties such as customers, employees, partners, or suppliers. In this article, we will examine eleven contract management examples of best practices for managing contracts effectively. The primary purpose of strategic contract management is to streamline the work with agreements and decrease the number of possible risks, such as lost documents or missed deadlines. Thus, having these practices in place may help
How To Form Neat References and Citations in MS Word
Let’s imagine that you have to find a particular book or case to refer to in your day-to-day legal documents. Untidy cross-references and tables can make it difficult to read and understand the whole context of the doc. Web search for the wanted sources is a great idea but sometimes you need to find some info that does not exist online. Or it may just messily fly around the internet. Here come good old libraries where every material is sorted alphabetically, hence, it’s easier to find. Legal doc
Contract Renewal vs. Contract Extension: What’s the Difference?
Contract extension and contract renewal are two commonly used terminologies. Regardless of the type of legal contract, renewals and extensions are implemented when both parties agree to extend the existing contract. However, minor technical differences exist between a renewal and an extension contract. This post will explore the differences and understand what you need for your legal contracts.  A contract renewal refers to extending the duration of the existing contractual agreement beyond
How To Amend a Contract?
Every day, individuals and organizations around the world enter into millions of contracts. They range from the simplest to complex and highly negotiated arrangements that require an army of lawyers and other advisers to complete. These contracts do share a common feature. They reflect the parties’ agreement — a meeting of their minds — at a single point in time. Everybody who has experienced living and working through the events of 2020 will agree — situations can change. Contracts that mad
How to Review a Contract Like a Pro: Essential Guidelines
Contracts are the backbone of business operations, defining relationships, setting expectations, and mitigating risks. Inefficiencies in contract management can cost businesses up to 9.2% of annual revenue. This guide will help you review a contract, offering actionable advice and detailed examples to ensure your contracts are solid and beneficial. Why Reviewing Contracts Annually Is Crucial Your contracts change and evolve like your business. A business contract review is crucial to ensure they
Table of Contents in Legal Contracts
Legal contracts often get signed, then filed away, never to be looked at again. On the other hand, some businesses have contracts that they frequently need to refer back to. Finding the right bit of information in a contract can be difficult. There are a lot of clauses in there that might only be needed in certain situations. The parties' obligations can also be spread throughout the contract and might be found in different sections of a contract. All these factors can make contracts difficult t
What Is a Voidable Contract?
The reason individuals and businesses enter into contractual agreements is to protect themselves and ensure they receive the promised payment or service in full. Naturally, it is only fair to expect that every contract you enter into is legal and enforceable. If the other party fails to fulfill their duties, the contract will help you get paid or get your money back. However, not all contracts are enforceable. You may not know this when signing a contract, but several factors can influence its
What Is Contract Analysis?
In today’s digital age, the importance of big data cannot be overstated. It’s no longer just a byproduct of operations but a vital tool to assess market trends and consumer demands. Analyzing large volumes of data gives businesses a significant competitive advantage in delivering optimized products and services. However, amidst this push for more data, companies often overlook an untapped source of valuable information — their business contracts. Despite significant investment in drafting and ne
All Guides
    Business
      7 Reasons Solo Entrepreneurs & SMB Owners Should Use Legal Templates
      A Guide To Joint Venture Consulting Agreements
      Banking Law
      Bankruptcy Law
      Best Law Firm Marketing Tools in 2025
      Business Associate Agreement: Indemnification Clasuses
      Business Planning Law
      Commercial Law
      Contract Law
        How To Draft a New Construction Plumbing Contract?
        Master Use License: Letter of Intent
        A Cosigner’s Guide To Promissory Note Agreements
        Contract Drafting – The Path To Best Practice
        Contract Management Law
          7+ Strategies for Effective Contract Management
          Contract Automation: Tips, Tricks, and More
          Contract Renewal vs. Contract Extension: What’s the Difference?
          How To Amend a Contract?
          How To Form Neat References and Citations in MS Word
          How to Review a Contract Like a Pro: Essential Guidelines
          Table of Contents in Legal Contracts
          What Is a Voidable Contract?
          What Is Contract Analysis?
          What Is Legal Design, and Why Does It Matter?
        Contract Redlining Software: A Trend or Necessity?
        Contract Review Checklist
        Essentials of a Promissory Note Modification Agreement
        Exploring the Essentials of a Short Form Trademark License Agreement
        Guide To Vehicle Promissory Note Agreement
        How To Create Marketplace Vendor Agreement
        How To Draft a Certified Resolution and Incumbency Certificate?
        How To Ensure Contract Compliance
        How To Make a Drywall Contract in the U.S.?
        Protecting Your Rights When Selling Livestock
        Real Estate Photography Contract: A Comprehensive Guide
        Successful Contract Negotiation Strategies
        The Anatomy of a Contract
        The Dark Side of AI-Generated Contracts: What You Don't Know Can Hurt You
        The Must-Know Details When Buying a Motorcycle
        Types of Contract Clauses
        Understanding State Laws Regarding Buying Cars
        Waiver of Assignment of Inventions Provisions: Sample & Instructions
        What Is a Contract Agreement?
        What Is an Arbitration Agreement?
        What Is an Arbitration Clause in Retainer Agreements?
        What Makes a Contract Legally Binding?
      Corporate Law
      Elevate Your Business by Growing Your Online Presence
      Entertainment Law
      How Different Is It To Market a Law Firm From Any Other Business or Service?
      How To Grow a Law Firm: 8+ Marketing Ways
      How To Set Up Successful Vendor Contract Management
      In-House Counsel: The Essential Business Advisor
      Independent Contractor Law
      Inserting Legal Symbols in MS Word
      Intellectual Property Law
      Internet Law
      Is It Legal To Have More Than One Job?
      Labor Law
      Legal Guide for Oil & Gas Companies
      Legal Technology: Gateway to the Future for Law Firms?
      Litigation & Dispute Resolution Law
      Networking for Lawyers: How Does Being a Part of the Community Help Your Career?
      Networking for New Lawyers: Everything You Need To Know
      Oil & Gas Law
      Open Communication Transforming Strategy at Law Firms
      Running a Small Law Firm in Pennsylvania: Owners’ Perspective
      Smart Cities Collaboration: Agreements, Contracts, and Partnerships
      Sports Law
      Stock Redemption Agreement: What Must Every Lawyer Know?
      Tax Law
      The Anatomy of a Follow-Up Letter That Secures New Clients for Lawyers
      The Importance of Legal Portfolio Management
      The Key Legal Marketplaces Lawyers Should Join in 2024
      Unlocking the Benefits of Promissory Notes in Severance Agreements
      What Is a Boutique Law Firm?
      What Type of Lawyers Make the Most Money?
      Why Tomorrow’s Best Lawyers Should Have Basic Mediation Skills
      Why You Need a Business Community
    Personal
    Real Estate