Why You Should Use AI To Streamline And Improve Your Contract Review Process
Unlock Efficiency, Reduce Errors, and Accelerate Decision-Making with AI-Powered Contract Review Solutions
A solid contract is the backbone to all successful professional partnerships. Without a formal contract in place, you open yourself up to necessary risk, conflict, and financial loss. Yet, up to 80% of business partnerships end in divorce, often because they neglect this crucial foundational step. But it's not hard to see why. Contracts are notoriously time-consuming and confusing to decipher. Fortunately, an AI contract review tool can streamline and simplify this complex process via sophisticated algorithms and machine learning capabilities that automatically screen contracts for risks and errors. By integrating this tool into your operations, you can better protect yourself legally and get a fair deal in whatever partnership you enter.
Identify and mitigate risk
AI contract review tools can flag potentially unfair terms that may not be in your best interests, so you can make edits and negotiate something more favorable. Similarly, it can also highlight unclear terms that leave room for potential dispute. You may have a very different interpretation of vague phrases like "as soon as possible" or "best efforts" compared to your potential business partner, for example. AI flags this sort of unclear language, so you can improve clarity and enter into a fairer arrangement. The same goes for payment terms. The tool will check due dates, payment amounts, and penalties are clear, fair, and consistent throughout the contract. So, with AI, you won't ever end up inadvertently agreeing to a bad contract that's not in your best interests.
Summarize lengthy contracts
Business contracts aren't exactly fun or easy to read, but an AI contract review tool can summarize them for you. It can extract key points and clauses, and copy them to separate documents or store them as rich metadata text fields for you to review. You can therefore get a handle on the main points without having to read the whole thing right away. This improves accuracy and saves time. In fact, AI can review a contract in just 26 seconds, whereas lawyers take 92 minutes on average.
Yet, it's important to stress that no matter how capable AI may be, you also don't want to defer to it completely. After all, it's just a machine and not infallible. Human oversight remains essential, and particularly so in sectors like law that rely on data integrity. Shockingly, one in six legal AI tools have been found to make up false information. So, contracts and documents should always ultimately be read over by a human in full before you decide whether or not to sign the dotted line. Balancing AI with human judgment will ultimately help you get the most out of the tool.
Best practices for AI contract review tools
You can also reap the maximum benefits from AI contract review technology by following best practices. For example, before investing in a tool, set goals for what you want to use it to achieve. Do you want to lower risk above all? Speed up review times? Improve accuracy? By being clear on your goals and needs, you'll have an easier time choosing the most suitable tool.
You should also always choose AI tools that adhere to strong security standards, so as to protect sensitive information (over 40% of businesses have had an AI privacy breach). Before purchasing a tool, check it has security certifications. It should also do continuous security audits that identify and fix vulnerabilities in real-time. These precautions can mean the difference between keeping your data secure or accessible to hackers.
Also, be prepared to set aside time to train your AI tool to make it as accurate and effective as possible. As these tools use machine learning, they need to be trained over time to understand the specific language, terminology, and clause variants commonly used in your industry. So, this just means you should feed it a number of your previous business contracts so it can familiarize itself with them before officially using it for contract review.
AI can help you streamline the contract review process, so you can improve accuracy, save time, and enter into fair business partnerships. By understanding how to get the most out of your chosen tool, you can successfully protect yourself from legal risks.