Legalweek Panelists Discuss the Future of Contract Lifecycle Management and AI

The emergence of Contract Lifecycle Management (CLM) as a powerful tool, especially with the integration of Generative Artificial Intelligence (Gen AI), opens new possibilities for corporate legal departments that traditionally utilize Enterprise Legal Management (ELM) systems like matter management and legal spend management.

The dynamic capabilities of CLM, coupled with generative and extractive AI, were addressed in a thought-provoking panel discussion at Legalweek 2024, sponsored by LexisNexis® CounselLink®. The prestigious panel for The Future of CLM: Use Cases for Artificial Intelligence in the Contract Setting, included:

• Matthew Lung, Deputy Head of Legal - North America at LexisNexis
• Jacqueline Petts, Partner at Greyhound Capital, UK
• Jeffrey Salling, Senior Director, Ethics and Compliance, Moderna
• Tal Unrad, Partner, Business Law, Arent Fox

The future trajectory of CLM, particularly its AI-enabled aspects, was summarized as follows:

Enhancing Contract Negotiations with Gen AI

The panel discussion revolved around Gen AI-enabled CLM presenting exciting opportunities for improving contract negotiations. The panel discussed how employing AI models to review and suggest revisions to redlined contracts makes the negotiation process more efficient. Additionally, for documents such as Non-Disclosure Agreements (NDAs), where redlining is minimal, business users could utilize self-service capabilities. This shift aims to streamline repetitive tasks, allowing legal professionals to focus on higher-value activities. Moreover, Gen AI can assist in identifying commonly used clauses, further expediting contract creation and negotiation.

Collaborative Approach to Product Development

Effective product development hinges on understanding user needs and solving real-world problems. Panelists emphasized the importance of collaboration between legal departments and product teams in refining CLM features. By iteratively fine-tuning product functionalities based on user feedback, organizations can ensure alignment with evolving requirements. This collaborative ethos reflects a departure from traditional perceptions of legal departments as risk-averse entities, showcasing their proactive engagement in driving business objectives.

Addressing Data Hygiene and Extractive AI

In addition to Gen AI's capabilities in contract redlining and clause identification, extractive AI plays a crucial role in tracking key contract data elements. Proper tagging of fields within CLM systems and meticulous implementation are essential for the effectiveness of extractive AI. Moreover, maintaining data hygiene and mitigating issues like hallucination through iterative processes are imperative for AI-driven solutions' reliability and accuracy.

Importance of Change Management and Adoption

While innovative CLM solutions offer immense potential, successful implementation hinges on effective change management and user adoption strategies. Before deploying CLM systems, organizations must undertake a holistic review of existing processes, identify bottlenecks, and define clear success metrics. Moreover, ongoing support and training are essential to ensure seamless adoption and maximize the benefits of CLM technologies.

Strategic Vendor Selection and Future Outlook

Panelists underscored the significance of aligning vendor selection with organizational objectives and use cases. Rather than seeking solutions for predefined problems, a thorough understanding of potential use cases is pivotal. Furthermore, the varying technological landscapes of clients highlight the importance of adaptability and scalability in CLM solutions.

In conclusion, while attitudes towards AI-enabled CLM may vary, from optimism to skepticism, its significance in modern contract management is undeniable. As organizations navigate the complexities of today's business landscape, embracing AI-driven CLM solutions offers a pathway to enhanced efficiency, productivity and strategic alignment. By leveraging the collaborative efforts of legal and product teams, addressing data integrity concerns, and prioritizing effective change management, businesses can harness the full potential of AI in contract lifecycle management.