Contracts are essential to ensure legal obligations are met by both parties (primarily businesses) with their mutual consent, which in turn maintains a healthy commercial relationship. It is therefore vital to keep contract-relevant papers secure and organized because failing to meet obligations can lead to costly fines in the long run. This reflects the difficulty level of a lawyer’s fundamental job responsibilities.
Most businesses rely on lawyers and law firms for contract management services to prevent contract-related issues, such as a contract breach. However, companies lose 9.2% of their annual revenue due to poor management of contracts, according to the International Association for Contract & Commercial Management. Here, lawyers and other legal professionals can embrace LegalTech to enhance contract management efficiency, helping their clients prevent this hefty damage.
HOW IS THE LEGAL INDUSTRY BENEFITING?
There are plenty of artificial intelligence (AI) tools on the LegalTech market that legal professionals can use to simplify various tasks. For example:
Clause identification & extraction – legal software can identify and extract specific clauses more precisely.
Contract review – this job has become easier with contract review tools and can be done in less time.
Contract management – software can be used to analyze a contract against a standard.
However, there are many firms that have not adopted new technology simply because of the lack of time and resources required to make the shift successful. Lawyers must realize the potentials of AI that can genuinely improve contract management. Instead of relying on traditional methods of drafting, consolidating, storing, and tracking contracts that consume a lot of time, legal practitioners can get better control with the help of AI tools by automating routine tasks and centralizing contract management.
Let’s now get into details of how legal technology benefits the industry.
For contract drafting, AI-powered software allows lawyers to use several standardized contract templates, ensuring the usage of the latest and most accurate language. Also, there are tools that are integrated with both AI and Machine Learning (ML) technologies that lawyers can use for language assessment, especially while adding new contracts to the system and screening existing contracts for confidential data.
Lawyers know how demanding the task of contract review can become. Considering the need for highly secured systems for contracts, many legal professionals are adopting new technologies to minimize their workload. Otherwise, since a contract is comprised of various important documents, many law firms depend upon an outside counsel or external, specialized document review services.
The latest LegalTech tools can automate the entire contract review process:
Identifying key information
Presenting the information in a certain way so that it can be easily read and understood
Moreover, many law firms are experiencing the benefits of such software, which makes the review process a lot easier – it can even be automatically carried out within a few minutes.
Many lawyers and law firms consider contract management an intricate and labor-intensive task that requires them to track terms, conditions, obligations, and deadlines for each contract they manage. However, with new technologies, lawyers can upload contracts to a central location where AI software adds tags to each document automatically according to a predetermined set of criteria (for example, contract’s starting and end date, parties involved, type of contract, etc.). This enables users to view a snapshot of ongoing workflows and upcoming events, which means monitoring important dates and deadlines becomes easier that used to be one of the most challenging jobs related to contract management.