Why AI Will Take Over for Contract Review and Contract Management
Contracts are like the engines of businesses, driving growth and containing mission- and business-critical obligations and opportunities for organizations. But still, firms continue to struggle to do something that sounds so simple: connecting contracts to business value. Just take a look at the opportunities that can be lost in a typical Fortune 1000 company that manages between 20,000 to 40,000 active contracts at any given time. Legal Tech News says at least 10 percent of contracts are misplaced and hard to find, or that still remain in paper form, buried as an attachment in an email, or on a file share somewhere.
The sheer volume of contracts that any given company has to contend with on a daily basis is staggering. Contracting is indeed a common activity, but it’s also one that few companies can handle efficiently or effectively. In fact, inefficient contracting is estimated to cause firms to lose between five and 40 percent of value on a given deal, according to the Harvard Business Review. However, that’s all changing drastically thanks to recent technological developments in the form of artificial intelligence (AI), which is helping companies overcome many of the challenges that come with contracting.
The main challenge firms like yours may face in contracting stem from the huge numbers of contracts you have to keep track of. Not only do they lack uniformity, they’re hard to organize, manage, and update. Most firms don’t even have a main database in which to keep all the information in their contracts — let alone have an efficient way of extracting all that data. It’s nearly impossible to view complicated and detailed outsourcing agreements, determine how a certain clause is worded across various divisions, or locate renewal dates and renegotiation terms.