2023 Predictions: AI Raises the Bar for Contract Management
Legal and business teams will require more from their technology
Legal technology that automates basic or repetitive tasks is now non-negotiable, and more automation and intelligence across the contract lifecycle is required. Contract lifecycle management (CLM) technology needs to be adaptable to company-specific functions and needs, and the best way to do that at scale is to choose a solution with embedded AI. When an organization invests in a CLM solution with AI, teams should not only be able to use that AI immediately for common use cases, but they should also be able to train the AI to identify clauses or phrases unique to their business or industry. For example, they might need to search and flag payment clauses according to the company’s billing preferences to accurately predict cash flows. Legal, finance, operations, and procurement teams typically all require contract data–each team with its own unique use cases–and companies should expect legal technology to support those varied needs. As companies work to control costs and free up capital in an uncertain economy, savvy leaders will turn to contracts to unlock previously hidden sources of savings. Organizations need complete visibility into vendor relationships and financial obligations to maximize value and strategically manage business spend–something you can only achieve at scale with AI.
Generative AI will begin to automate contract negotiation
Generative AI, the ability to train a machine to generate original content from a prompt, is just entering the market, with many intriguing applications for business. Forrester Research believes in 2023, at least 10% of Fortune 500 companies will generate content with AI tools. Some of the most common use cases so far are producing blogs and marketing content, powering customer support chatbots, generating software code, designing product prototypes, and more.
One emerging application that I am quite passionate about is the massive potential of generative AI for contract drafting and negotiation, which we have been exploring in our AI Labs. Evisort’s generative AI technology uses large language models to draft, redline, and negotiate contracts automatically. Unlike more general generative AI models, Evisort’s generative AI builds on top of our proprietary AI that has been trained on over one billion contract data points. This means Evisort’s generative AI can work even on complex, nuanced documents, in accordance with a company’s risk tolerance and preferred legal language. This application is only the beginning, and we could eventually see generative AI draft completely new contract templates, negotiate (with or without supervision) on behalf of companies, and more.
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Legal technology will be further integrated into the enterprise ecosystem
2023 will be the year of connecting data across the enterprise–especially contract data. Legal teams must be able to integrate their technology with other business-critical systems for customer relationship management (CRM), enterprise resource planning (ERP), procure-to-pay (P2P), collaboration, and more. Organizations that can create and support efficient, connected technology ecosystems will reduce their operational risk and maximize the investment in and impact of their technology.
AI will help navigate policy and regulation changes
Business leaders continue to examine policies around ESG, data privacy, and compliance. The European Union is modifying its privacy rules, U.S. states are instituting a patchwork of state-specific laws, and investors are increasingly scrutinizing ESG reporting. As these policies evolve in 2023, companies need to adapt quickly to navigate the complex regulatory landscape. AI-powered contract management enables the necessary pivots. With its capability to search for specific clauses or phrases, for example, Evisort's AI can flag outdated language. This eliminates the need for time-consuming manual search and replacement and the potential for overlooked or forgotten provisions. Companies can also quickly reference regulatory requirements like data breach notification policies. Additionally, contract intelligence provides the visibility necessary for ESG reporting and disclosures.
Legal technology has substantial expectations to fill in 2023 as business leaders seek to improve access to data, increase automation, and weather economic uncertainty. As additional capabilities and use cases emerge, I expect to see a wave of AI-powered CLM adoption in the coming year.
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