Transform Your Contract Repository into a Smart Contract Database Using AI
If your documents are safely stored in the cloud, then congratulations on having taken the first step — but are you using a smart solution that makes you better at your job, or are you just using simple cloud storage? A contract lifecycle management (“CLM”) platform without artificial intelligence (“AI”) is basically just a contract repository. You need a CLM system that actively helps you manage contracts, not just a digital storage room.
The benefits of AI-powered contract management, including faster contract review and drafting times, are not just about making it easier to get work done — although that is a great benefit. Reducing the manual effort required to negotiate new deals and analyze the data stored in your contracts allows you to be more curious and ask more, and better, questions. The more informed you are about your business deals, the more effective you can be as a lawyer and business leader.
Let’s examine some of the differences between a simple contract storage solution and an AI-powered contract database.
What is a contract repository?
A contract repository can be any solution that your organization uses to store its contracts — even a filing cabinet.
The more interesting question is: what can a good repository do beyond just storing your contracts? Does the solution you’re using make it easier to search the contents of your documents? Can it help you quickly gather and organize information about everything that’s in your contracts?
A physical repository such as a filing cabinet or deal room might be better than nothing, but that’s a low standard. Legal teams today need efficient, scalable solutions that integrate with their preferred workflows, and that starts with using cloud-based software to store your legal agreements.
What is contract repository software?
Putting all of your legal documents in a cloud-based storage solution creates a central contract repository. With all of your files easy accessible in the cloud, you can quickly find any document you need by searching for it in your storage solution instead of combing through various email inboxes and hard drives to try to find specific documents — or worse yet, to try to revisit prior versions of particular documents or clauses in order to create redlines.
However, it’s not enough to simply have cloud-based documents. Businesses today often have hundreds or even thousands of active contracts in place at any given time. Even if they’re all in one online storage location, you’ll still have to conduct manual searches and read through your documents line by line if storage is all that your repository offers.
Contract repository management best practices
This is where AI comes in. It’s not enough to simply have a place to store your contracts. If you upload all of your documents to cloud storage that has no features beyond the ability to keep files in folders, then you still have to manually do all of the same contract management work that you would do with a shelf full of binders.
If you want to transform the way you work, then you need a smarter solution.
Today’s best contract management solutions leverage state-of-the-art natural language processing algorithms to exponentially reduce the time it takes to read through a large portfolio of documents, or to draft a new contract tailored to the deal at hand.
Here are some of the benefits of AI-powered contract automation, from creation through review and renewal.
AI can help you create smart templates based on your legacy contracts. Machine learning algorithms can review your existing agreements and suggest new language based on what’s already working for your business. When you eliminate the rote work of copying and pasting existing clauses to put together a template, you can spend your time focusing on substantive legal implications instead.
Better yet, machine learning can help you create a precedent-based contract to match the circumstances of the deal at hand. For example, if there’s a special clause regarding governing law that you include only for deals based in a handful of states, then when you create a first draft for a new deal tied to one of those states, the AI can helpfully suggest that you include that clause. Quickly creating customized contracts is that simple with the right platform.
AI can streamline review by quickly pulling and organizing contract data from your existing contracts. A good CLM solution will allow you to sort and search your database by criteria ranging from contract type to jurisdiction to renewal date. You should also be able to save searches with the click of a button in order to return to them later.
When it comes to reviewing individual terms, AI supercharges your contract review capabilities. A simple cloud storage solution can’t tell you what’s in your documents. You’ll still have to look for documents by name or file location, and then you’ll have to navigate page by page to find the specific clauses you need.
An AI-powered CLM system, on the other hand, can quickly identify specific clauses across all of your documents without forcing you to manually open and read through each one. When the AI has been pre-trained on dozens of different types of standard clauses, you can start using this search functionality right out of the box, so to speak — and it only gets smarter as you upload more of your own contracts into the system.
The best AI isn’t limited to just identifying clauses and making you do the work. You should expect an AI-powered CLM system to be able to dig into the contract metadata. The best CLM platforms can find and track over 60 data points from the name and type of contract, to party names and expiration dates. It may not take long for a paralegal or junior attorney to find and type out that information when it’s contained in just a handful of documents, but when your organization has thousands of contracts in place, manually managing all of that data quickly becomes untenable.
Consider a scenario in which you’ve been tracking four specific data points across all of your contracts for the past ten years, and now you start tracking a fifth. If you want to track that additional data point across your entire contract portfolio without AI, you’ll need to manually dig through ten years of paperwork in order to get your records up to date. Do you have that kind of time?
Incomplete data ruins the integrity of all your data. You simply can’t get trustworthy insights if your data is incomplete — and heaven forbid a paralegal or intern types in the wrong information somewhere among those thousands of data points in a spreadsheet. You need a solution that’s as smart and reliable as you are. Leveraging AI to quickly review and pull relevant, accurate information from every contract is the easiest and best way to get good, actionable data for your business.
Maybe you’re negotiating a new deal and you need to check what your organization has done in the past. Maybe you’re conducting an audit of your business documents. Either way, having an AI system that can efficiently gather all of the data you need from all of your contracts, no matter how far back you need to go, effectively creates an audit trail for your team — even if you weren’t actually tracking that data along the way.
In the long term, those enhanced contract review and creation workflows can also help you overhaul your entire contract renewal strategy. Instead of playing catch-up with renewal deadlines for vendor contracts, you can shift to a more proactive approach.
A good contract management platform will provide helpful dashboards to give you a quick visual update regarding important upcoming dates. In addition, timely alerts will notify you when deadlines are approaching, so you don’t even need to log in to the system in order to stay informed about renewal dates.
When you have more time to review your contracts before renewing them, you can stop fretting about missing deadlines and instead focus on optimizing your business relationships. Maybe the vendor you’re using now is no longer the best choice for your business — but if you don’t have time to take a step back and review that vendor’s performance relative to what they promised, or to take a look at the competition, then you might not know that.
The speed of AI-assisted review can help your legal team to work with professionals across finance, procurement, and other departments to assess whether your current vendor is one you want to keep. If it is, then you can use the time you’re saving on manual tasks to take a more critical look at the terms of your existing contract and negotiate better terms before renewing.
An AI-powered contract management system does more than just store your documents — it helps you build out a smart contract database that supercharges your business intelligence and strategic decision making.
Ready to learn more about how Evisort can help you build an automated contract database for your business? Schedule a demo today!
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