Industries are being upended by artificial intelligence, and the legal field is no exception. One of the most significant changes is happening in contract review, a labor-intensive and detail-oriented process that has seemed immune to any real innovation, much less revolution.
Yet, with the introduction of this new technology, we are seeing a sea change in the way reviewing contracts are done – and who does it. In this informative piece, we will go over how artificial intelligence is currently being employed to perform legal work, focusing on contract review AI, and what to expect from it moving forward.
Understanding AI Contract Review
Simply put, this technological advancement helps people understand contracts. It does this by employing machine learning, natural language processing (NLP), and other artificial intelligence techniques to dissect and make sense of contracts and legal documents.
These software tools are trained to recognize risks, figure out which provisions don’t quite match up with other provisions, and ensure that everything flows together and makes sense.
How It Works
Contract review AI uses multiple AI technologies, including:
Natural Language Processing (NLP):
NLP is what allows AI to understand and interpret human language – in this case, the language in contracts. With NLP, the AI can extract all the necessary (and key) information (dates, clauses, names, and obligations) and even identify terms that may be problematic.
Machine Learning (ML):
Contract review AI also uses machine learning, which works with enormous amounts of contract data. Over time, it not only gets better at recognizing all the contract commonalities, but it also gets better at spotting and flagging unusual clauses that may require a second look.
Optical Character Recognition (OCR):
OCR is utilized for converting images of documents into actual text. This is notably advantageous when one has contracts that have written provisions needing to be examined. The contracts can first be scanned and then converted to digital form through the OCR process.
Benefits of Using AI for Contract Review
For organizations that deal with a high volume of contracts – such as law firms, corporations, and government agencies – the efficiency and speed of AI review can offer significant benefits.
Saving Money:
Companies can reduce legal costs by automating the routine review of contracts. They can move resources to other areas that need higher-level expertise from the legal department, and this should save them from having to hire a lot of human labor.
Precision and Dependability:
The elimination of human error makes for precise and dependable document review. Contract review AI offers near-perfect consistency in its analysis of documents, making it a reliable tool for spotting the kinds of important details (terms, deadlines, clauses) that a good document reviewer should and must see to avoid serious concerns for their client.
Identifying Risk:
AI technology can also help locate risky clauses. This can help companies reduce future legal and financial exposure. For instance, you can adjust the AI to flag clauses related to data privacy, indemnification, and liability limitations – three areas that might pose future risks for the organization.
Boosted Compliance:
In sectors with stringent regulatory demands, like finance and healthcare, contract review ensures that organizations comply with all relevant laws and regulations. This not only helps steer them clear of potential fines and penalties but also gives them a much better chance of adapting to constantly shifting compliance standards.
Trends for Tomorrow’s AI Features
As the technology behind AI matures, it is expected to become more potent and gain wider acceptance. Some of the trends emerging from this adoption include:
More Automation:
Future instantiations of contract review AI may tackle complex, multi-document jobs, moving from individual contract review to seeing the big picture of contract, lease, or policy relationships.
Blockchain Technology:
This can bring about greater security and transparency in contract management. This is especially true when speaking of “smart” contracts – self-executing contracts with terms directly written into code. The next step for AI and blockchain may very well be the management and oversight of smart contracts by AI systems.
Increased Clarity:
In the future, AI tools may concentrate on illuminating the nature of their decision-making processes so that legal professionals can fathom the AI’s line of reasoning and have an enhanced level of trust in the outcomes it produces.
Improved User Interfaces:
An ever-increasing focus on user-friendly design means that AI platforms will likely become more open and accessible to all manner of users – even those without formal legal training allowing it to provide a much broader array of professionals with legal insights.
Utilizing Contract Review AI for Your Organizations Needs
The way in which contracts are examined and interpreted is being thoroughly revolutionized by AI. The artificial intelligence that is performing this work is getting smarter all the time.
Ultimately, the age of lawyers having to pour over tedious documents for hours and hours is coming to an end. As the technology continues to advance, legal experts will be able to focus their time and attention on other aspects of their business.