Contract Analytics: A New Artificial Intelligence Endeavour

Artificial intelligence (“AI”) is transforming the way that organizations operate on a daily basis. Business professionals regularly turn to computers for assistance with tasks that humans have traditionally performed. The legal industry has used AI software for legal research, case evaluation, and discovery review for years. This software can quickly complete projects while saving money and yielding results that are more efficient. Now organizations have a new AI tool at their disposal to aid with contract review and negotiation.

What is Contract Analytics Technology?

Lawyers generally associate AI with predictive coding software that is used for analyzing data during the discovery phase. What many do not know is that there is also AI software specifically designed for contract analytics. AI contract software is ideal for organizations regularly involved in contract analysis and negotiations. For example, both corporate and estate lawyers would likely benefit from this technology because they are frequently exposed to a large number of contracts.

These programs have algorithms trained to review and extract certain data from contracts. Say an organization has a large database of purchase agreements that include multiple languages. The task at hand is to determine if a certain clause is present in each contract, and if so, whether the wording is uniform or varied. AI software can review, identify, and extract this information in a matter of minutes (or sometimes even seconds). The reviewer can then determine which contracts contain the optimal clause and which need to be amended or renegotiated.

Contract analytics software continually improves and learns what is relevant to the users as they input more data into the system. After an inquiry is finished, most programs will generate a summary report or redlined/highlighted version of the document. The report may suggest adding or removing certain clauses based on what appears in the majority of the other contracts, as well as what contracts are up for renewal. This differs from contract management software that only offers storage, organization, and simple document assembly features. AI software is far more involved and advanced than this because it can actually analyze the contents of the contracts and offer advice about what might need to be changed.

Why Legal Professionals Should Try AI Contract Software

Contracts govern many business relationships with current employees, former employees, clients, vendors, and other business associates. Because of this, contract interpretation is at the center of many legal disputes. Failing to address important information and include clear language in a contract puts an organization at risk for decreased client retention, increases the risk of future legal exposure, and can overall affect the value of important business transactions. This is especially overwhelming for organizations who deal with contracts on a regular basis. Manual contract review is time consuming and can be difficult to manage efficiently when dealing with large contract databases.

AI contract analytics software can remedy this problem by providing fast and efficient summaries. This gives lawyers more time to identify and remedy any possible risks or variances that may exist in a specific contract. Four major benefits of using this technology are:

  1. It speeds up review and negotiations while providing superior results. AI software can review contracts exceptionally fast. A recent study had both a team of seasoned lawyers and AI software perform issue spot analysis with five nondisclosure agreements (“NDAs”). It took the machine 26 seconds to complete the project, as compared to an average of 92 minutes for the lawyers. Additionally, the machine had a 94% accuracy rate, which was significantly higher then the lawyers’ 85% average accuracy rate.1 Accelerated review that yields enhanced results give lawyers the opportunity to use the software’s information and advice to develop better strategy and risk analysis. This also leads to expedited negotiations that run smoother, which all parties involved generally favor because they can close deals quicker with less conflict.

  2. It strengthens contract capabilities. Organizations that use AI can overall organize and manage their contracts better. This decreases the risk of overlooking important information or deadlines, such as when a contract is up for renewal. The ability to receive input is also crucial because it allows the reviewer to identify various clauses that are out of place, redundant, absent, or potentially harmful. Oftentimes manual reviewers will miss these details, whether it be because of simple human error or a rushed deadline. Another major advantage is that a lot of these programs have the ability to recognize and understand different languages. Multi-language agreements can present roadblocks for manual reviewers that AI software does not encounter. Because of these features, lawyers can look at contracting trends and determine what is ideal for a particular contract deal to be effective.

  3. It promotes consistency. Organizations regularly aim for consistency in their work product. Uniformity is ideal in many contracting situations, such as with NDAs and noncompete agreements. After AI software identifies inconsistencies among contracts, lawyers can review the data and determine why the inconsistencies exist. They can then determine if a provision needs to be renegotiated, removed, or amended. Some provisions will need to remain varied because of the situation surrounding the agreement. AI software helps lawyers keep track of these differences and ensure that they meet the needs of each individual client, vendor, and employee. The ability to effectively maintain consistency and manage variations helps organizations avoid future legal disputes.

  4. It gives lawyers a competitive edge. Contract lawyers who use AI software have an advantage over other lawyers. Using AI cuts down on time and money, which is always appealing to clients. Lawyers can streamline simple contracts that are ready for signature. Lawyers can also take the hours they would have spent on manual review and use it to identify risks, strengthen strategy, negotiate more favorable terms, and obtain more business. All of these benefits make organizations who use AI more favorable to current and potential clients.


Contracts make or break business deals and legal disputes. Courts and mediators will generally view a written contract as the controlling factor in settling disputes. As with other AI technology, many lawyers will be skeptical to use contract analytics software. The proven success rate of AI programs in general, along with the benefits that the contract-focused software offers should ease their minds. For now, these programs will provide a greater financial advantage to organizations who deal with a high volume of contract work. As this technology continues to evolve, there will likely be more cost-effective options for organizations who have a smaller contract focus.

#AI #FutureOfLaw #SmartContracts

Register here for your monthly Asia legal updates