How AI-Powered Contract Review Solutions Transform the Law Firm Business Processes
Contract review is a time consuming and often arduous task, with a process that involves fact-checking contracts, identifying any risks, deciding how feasible a contract is and various other jobs.
These are demanding undertakings and tend to tie up legal teams for extended periods of their work weeks. The development of artificial intelligence (AI) tools has greatly alleviated the tedium involved in the contract review process, with AI contract review systems working in tandem with legal professionals to streamline operations.
How Does AI Contract Review Work?
While tools will vary their function on an individual basis, the general process is the same.
AI-powered contract review solutions use machine learning in order to help you identify documents, maintain due diligence and save time. This works by using statistics to see patterns in large amounts of data. With every interaction that you have with the AI, it cultivates a deeper understanding of exactly what your needs are. Over time, the AI will begin to determine exactly what you need and retrieve information intelligently.
With contract review, this can take the form of simple queries or keywords that the AI processes before producing the best results. The human element of this is informing the AI of what results are useful, and what results fall short. The AI then takes what you've taught it and improves its results for future searches.
How Can Law Firms Use AI Contract Review?
The use of AI can intrinsically change and improve how law firms carry out their contract reviews. AI software will read contracts, provide analytics and extract data far quicker than a team of lawyers. While, at a glance, this might seem detrimental to the business, it actually provides an opportunity for lawyers to focus on their primary role, with an article in the Harvard Business Review detailing that:
doesn't necessarily mean companies will need fewer lawyers, but rather their roles may transform. For example, lawyers will spend more time in assessing risk and providing counsel, rather than in document review.
This transformative aspect of AI contract review is important; the way in which law firm business processes are conducted is changing, with automation playing a key role in this change.
What are the Benefits?
Lawyers can focus more attention to council and new clients, with a shift towards efficiency versus tedium.
Contracts can be updated more frequently with no impact on lawyers. This results in a more client-focused service and economical improvements. This can serve to improve law firms' revenue, while providing a superior service for clients - a win-win! Many clients are unwilling to pay premium law firm rates when carrying out routine contract work. Using AI significantly reduces the cost of this process (which can cost £1,000 per document on average when done manually), meaning that services can be offered at a lower rate, and more revenue will be generated overall.
AI can also have an impact on law firms' due diligence processes. Many law firms hold the unfounded belief that manually reviewing contracts is more accurate. In actuality, AI has an accuracy level matching or exceeding experienced lawyers. Not only this, but an AI will take seconds to accomplish a task that might take hours manually (and the AI doesn't need coffee to get it through!).
Throughout a contract review process, AI can automatically categorise your documents. By doing this, it can 'red flag' any documents that are problematic, while collating similar documents into groups. Doing this makes it easier for lawyers to evaluate, process and manually review any potential issues.
Law firms no longer need to prioritise by material elements - an AI can extensively review an entire document in moments. This allows dealmakers to reduce risk by carrying out a far more comprehensive contract review process; contract value thresholds no longer need to be governed by estimated financial impact.
M&A lawyers also make great use of AI, with it being able to make clause recommendations by learning from previous established best practises; search for problematic clauses using market standards; predict deals and spot patterns, and to run comparisons through clauses and documents.
What's the Catch?
Many law firms are hesitant to embrace AI in their well-established processes. This is natural, as adjusting to something completely new can be difficult. The most time-consuming part of getting started with AI contract review is familiarising yourself with your chosen tool. Many of these tools are designed from the ground-up with usability in mind to alleviate this concern.
Lawyers can focus more attention to council and new clients."
Some have expressed concern about paying for something that they've not needed in the past, however the financial benefits of using an AI far outweigh the cost of usage.
Is AI the Future of Law Firm Contract Review?
Many law firms around the world are adopting AI contract review tools. Implementing the correct AI into your processes will allow you to stay on top of any legal issues, while speeding up your legal due diligence.
As time goes on, AI is penetrating a wide variety of sectors. It stands to reason that AI is the perfect complement to law firm business practises. Any modern law firm should be considering using AI to streamline their workflow.