“By 2024, the amount of manual effort for contract review will be reduced by 50% for those that adopt advanced contract analytics solutions.”
Gartner Report on Contract Analytics
The current state of Contract Reviews
The departments that are mostly involved in dealing with Contracts are Legal and Procurement and the adoption of the AI tools for contract review is still in a nascent state.
As the contracts are getting more complex and accelerated by Covid-19 to go fully digital, there are several key areas related to business processes and human involvement wherein the Contract Analytics tools can bring in efficiencies from different perspectives.
For example, manually keying in key contract data into an Excel sheet or even into a CLM system is error-prone and makes it difficult to keep track of obligations such as renewing the contracts on time, ability to keep track of contracts that are not in force (expired), and preventing unwanted services or licenses getting renewed automatically.
How Artificial Intelligence accelerates contract reviews.
With the new AI/ML/NLP powered platforms, the contractual documents can be analyzed by understanding the structure of the document, clauses that are important for the legal department to manage the risk and metadata that procurement wants to keep track of (Expiry dates, Termination Notice Periods, Volume Rebates, Discounts, Auto-Renewals, etc.).
One of the use cases that our customers frequently ask is to determine whether a document is fully signed, partially signed and whether all the signatories signed the documents.
This simple use case is critical when a company is doing due diligence during an M&A deal. For the acquiring party, the legal needs to submit all the fully executed contracts and the terms associated with each one of the contracts. The manual intervention required to do this simple task over a contract set of 10,000+ documents would itself take several months to segregate the documents.
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