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– Artificial intelligence Contract –
Efficiency is the goal of corporate law departments today. To achieve this goal, in-house leaders must think about the technologies available to them that support corporate objectives and enhance productivity. Those who deploy leading-edge technologies will gain a competitive advantage over slower-moving competitors.
Applied artificial intelligence (AI) for contract management can provide this advantage. Recent research finds that companies investing in applied AI will achieve substantial increases in profitability. At the same time, legal sector jobs are shrinking fast. Legal leaders and in-house professionals who will thrive in the new paradigm will increase their use of technology.
Contracting is a common activity, but it is one that few companies do efficiently or effectively. In fact, it has been estimated that inefficient contracting causes firms to lose between 5% to 40% of value on a given deal, depending on circumstances. But recent technological developments like artificial intelligence (AI) are now helping companies overcome many of the challenges to contracting.
The main challenge firms face in contracting arises from the sheer number of contracts they must keep track of; these often lack uniformity and are difficult to organize, manage, and update. Most firms don’t have a database of all the information in their contracts – let alone an efficient way to extract all that data – so there’s no orderly and fast way to, for example, view complex outsourcing agreements or see how a certain clause is worded across different divisions. It requires a lot of manpower to draft, execute, and improve not only the contracts themselves, but also the contracting processes and the transactions these contracts govern.
If, for example, a large tech company finds itself with a huge volume of procurement contracts that all have varying renewal dates and renegotiation terms, it would require hundreds of hours and a team of contract managers to review and track of all this information to ensure that no renewal or opportunity is missed.