How AI is Revolutionizing Contracts

The world of contract drafting is undergoing a transformation with the advent of Artificial Intelligence (AI). AI has found its way into the nuanced world of contract development, creating a more efficient and streamlined process. According to the International Association for Contract and Commercial Management (IACCM), the use of AI in contract development has increased from 12% in 2018 to 36% in 2020. McKinsey & Company analysis has shown that AI can reduce the time required by lawyers to evaluate and write contracts by 20 to 25 percent.

The Power of AI in Contract Drafting

AI-powered software programs are revolutionizing contract drafting by automating and enhancing the process. These software programs replace certain terms, add pre-approved words automatically, and offer recommendations for appropriate words to be used in contracts. They can also generate AI-based contract templates for individual clients, corporate houses, and businesses. With the help of this software, lawyers and legal professionals can now draft contracts more cohesively, ensuring that outdated information is updated with the latest data. This not only minimizes future conflicts arising from contracts but also saves valuable time.

Streamlining Contract Management with AI

AI is not only transforming contract drafting but also contract management. The automation capabilities of AI make it possible to manage repetitive tasks such as contract classification, clause classification, and defining important terms. This technology allows legal professionals to streamline their workflows and achieve better organization. However, it is important to note that human intervention is still required to adjust and fine-tune the work generated by AI tools on a case-by-case basis.

Automated Contract Review and Analysis

AI-powered software, using Natural Language Processing (NLP), can quickly and efficiently extract and review contracts. This technology eliminates the need for lengthy human reviews and helps identify potential risks and concerns within contracts. Additionally, this software can be used to prepare summary charts, arrange clauses, provisions, and provide answers. By using AI for contract review and analysis, legal professionals can save time, gain insights, and ultimately eliminate problems and risks within contracts.

Enhancing Contract Negotiation with AI

Contract negotiations can be time-consuming and complex. AI-based software tools are now making these negotiations easier and more efficient. With the help of AI, data-based proposals can be made, conversations can be initiated well in advance of contract renewal, compliance issues can be detected, and insights into contract performance can be gained. While AI-based negotiators cannot replace human negotiators, they provide valuable assistance. For example, Walmart deployed AI-based negotiation software with a chatbot for suppliers. As a result, 68% of suppliers liked the offer and approached back, and the AI-based negotiators were able to deal with 100,000 or more suppliers.

Ethical Considerations and the Future of AI in Contracts

It is crucial for legal professionals to exercise due caution and reasonable care when using AI-based software. AI should be used as a tool to enhance their work, rather than replacing human judgment and expertise. Even with AI, lawyers and legal professionals should proofread the final draft of contracts and communicate with clients effectively. AI is a powerful tool, but it is not liable for any legal mistakes or omissions in contracts. The responsibility ultimately lies with the lawyers who use the AI system.

The future of AI in contracts holds great potential. AI-based software, with ongoing training and updates, can improve contract management workflows and provide solutions to potential disputes. It can detect familiar elements and clauses of contracts, process data accurately, and help lawyers detect discrepancies and loopholes. While AI cannot replace humans, it complements their abilities and makes them work faster and more efficiently.

To stay ahead in the legal profession, it is crucial to prepare for the rise of AI. Additional training on language, data, and laws will be necessary to fully leverage the capabilities of AI. By incorporating contract management lifecycle and automated contract tools, legal professionals will save time and resources, allowing them to focus on more skill-required tasks. AI is not meant to replace humans but to enhance their ability to meet the demands of modern times.

For more information on AI’s impact on contracts and other news, visit Zenith City News.

Preparing for Artificial Intelligence in the Legal Profession

How is Artificial Intelligence shaping the Legal Sector of Today?

Is ChatGPT the Future of Law, A Billable Hours Showdown, and AI Versus IP