How Is AI Used In Contract Management?

Summary

Global economics, regulatory compliance, cybersecurity, and data security and privacy concerns shaping the legal world require continuous attention to the rule of law. Contract lifecycle management in the legal department must address these issues and corporate policy. AI-driven contract management, embedded in enterprise legal management platforms, enables law departments to enhance workflows, shorten the contract management process, manage higher volumes of contracts faster, and comply with various restrictions and regulations.

What is Contract Lifecycle Management?

Before we look at how AI-driven contract management benefits the legal department, we first need to look at the definition of contract lifecycle management. As mentioned above, contract lifecycle management is an application within the enterprise legal management solution. ELM software anchors the legal department with various necessary applications, including contract management, matter management, financial management, vendor management, and workflows and analytics.

Contract lifecycle management software establishes processes for the seven to 10 phases of the contract lifecycle and all the steps in between. A robust enterprise legal management solution, like LexisNexis CounselLink+, links matters to the respective contracts within a single dashboard. Legal and operations teams can more efficiently manage the contract workflow and reduce time to search for contracts stored in various places.

The contract management application in LexisNexis CounselLink enterprise legal management software features AI-driven contract management tools that help in contract drafting, clause review, version tracking, redlining, risk assessment and mitigation, compliance with regulatory obligations, and contract execution.

AI in Contract Management

Let’s review: How is AI used in contract management?

There are a variety of AI-driven tools that enhance the entire contract management process. Here are the primary benefits of AI-driven tools in contract management that legal departments can expect:

Automated Risk Detection and Clause Analysis

One surefire way to get in trouble in a contract is not identifying and assessing risk. AI algorithms can automatically review contracts in draft form for non-standard terms, any critical, missing clauses, and determine the overall risk of non-compliance. Traditional contract review methods require manual review, which takes an entire team to correct and pass on to the next stage. AI automatically detects risk and sends flagged issues to the legal team. It also suggests redlines of concerning issues, allowing the contract team to save time and reduce human error.

Use of Contract Templates and Clause Library

The robust enterprise legal management platform of LexisNexis CounselLink+ is a gateway to the LexisNexis ecosystem. ELM users can access more than 200 LexisNexis Practical Guidance® contract templates and an automated clause library for future use in contract drafting.

Contract review with AI-driven tools enables:

• Seamless linking of contracts to matters that reduces search time and matter management per terms and conditions
• Real-time collaboration among legal department teams, including operations professionals, and procurement and finance
• More efficient contract drafting and faster negotiations to contract execution

Work Intake and Collaboration

LexisNexis CounselLink+ offers a feature called "Ask Legal," a generative AI assistant that enables business stakeholders to self-serve legal help. If necessary, the tool can triage legal requests into the legal department queue so a lawyer can resolve the issue. This type of work intake and efficient collaboration enables improved management of the legal department with more streamlined operations. The benefit of generative AI in work intake creates more time for lawyers to manage their daily practice and focus on higher-level legal issues.

Improvement in Accuracy, Clarity and Consistency

AI tools can extract, generate and create documents from previous contracts and organizational playbooks, ensuring content is consistent and aligned with company policies. While oversight may be reduced, risk also diminishes as every contract meets legal and regulatory standards. This process eliminates versions and allows final contract execution to be completed faster and more accurately.

Data-Driven Insights and Reporting

The use of data in reporting to inform decision-making strategies is more critical as the complexities of the geopolitical sphere influence the practice of law. This is why data-driven insights critically impact legal department governance. The AI-driven review tools extract and structure contract data, providing dashboards and analytics on contract terms, renewal dates, obligations, and risk exposure.

Legal operations professionals can leverage these insights for better decision-making and proactive risk management, while company leadership can better forecast budgets, talent recruitment, matter management, and legal department value.

LexisNexis CounselLink

LexisNexis® CounselLink+™ integrates AI-driven contract review within its ELM platform. It also puts the LexisNexis ecosystem at the fingertips of lawyers, contract managers and other users, providing many benefits, including:

• Draft, review, and negotiate contracts directly within Microsoft 365 so that others can view in real-time
• Link contracts to matters for a 360-degree view of the terms and conditions of the contract during matter management
• Use AI to flag risky clauses and automate approvals.
• Generate analytics on contract performance and compliance.

Contact CounselLink to learn more about AI in contract management.

TL;DR

AI-driven contract review will revolutionize legal workflows by automating risk detection, accelerating contract analysis, improving accuracy, and integrating seamlessly with enterprise legal management platforms like LexisNexis CounselLink. Legal teams will spend less time on manual review and more on strategic work, resulting in faster deal cycles, reduced risk, and significant cost savings. This robust solution is at the forefront of legal technology, empowering legal operations professionals to meet the demands of the modern legal department.