Contracts as data
Everybody knows that we’re in the era of Big Data. But what does that mean for business lawyers?
People in the business world often think of data as numbers in spreadsheets. However, all information regarding how a business runs is useful data. If you really want to know what’s going on with your business, you can’t just ignore one of the most vital sources of information about it: contracts.
Most people tend to think of contracts in terms of the obligations those contracts codify, and it’s true that those obligations are important. However, a commercial agreement does not just contain a list of things to do. Contracts contain some of the most crucial information about how the business is doing, including the status of deals with customers and ongoing relationships with business partners.
When you look at the terms and clauses contained throughout the thousands of contracts in a business’s portfolio, from payment terms to indemnity obligations, what you are seeing is a database of information on the business’s dealings with customers, partners, employees, and other parties.
Contracts are data. The rest of the business runs on data-driven decisions; now the legal team can, and must, too.
What is contract analytics?
So how does a legal team begin to analyze and act on all of the valuable business data stored in the company’s contracts? As with all data, it’s not enough to simply amass information and expect things to change. You need data analytics.
Data analytics is the process of turning data into business intelligence. Professionals from all disciplines need to be able to look beyond raw data and see the story that the data is telling them about the business. What’s working? What’s not? What’s trending up, or down? Data analytics requires looking critically at data in order to derive actionable insights from it.
Contract analytics, therefore, is the process of turning contract data into meaningful business insights.
Making the shift from simply managing contracts to analyzing contracts can yield an array of benefits for businesses, from identifying hidden opportunities for cost savings to tightening a company’s regulatory compliance initiatives.
The first step is moving from manual contract management processes to contract management software. Centralizing the business’s contract lifecycle management (“CLM”) processes and tools in one place can vastly reduce risk stemming from oversights and inconsistencies in workflows while also speeding up cycle times. Legal and procurement teams can get more done with a good CLM platform, and they can do it more securely and consistently.
With more efficient, reliable contract management systems in place, legal professionals and business leaders will be in a better position to gauge contract performance over time and make informed decisions going forward.
Artificial intelligence (“AI”) and contract analytics
If you need to quickly analyze the data in a large number of contracts, just having software that stores your documents isn’t enough. Businesses today often have thousands of contracts in place with customers, suppliers, employees, and more, and relying on manual review and organization simply isn’t an option.
If you upload your documents to a typical cloud-based storage platform, you still have to organize them and search for information manually. Worse yet, you have to repeat the same steps every time you want to search for the terms contained in your documents.
And if your files are just flat scans of pieces of paper, you can’t even use Ctrl + F! You’ll have to painstakingly locate, open, and read through each file the same way you would with contracts printed on stacks of paper.
Wasn’t the whole point of moving to the cloud to work smarter, not harder?
Don’t just digitize. Data-tize.
An AI-powered CLM platform enables lawyers and business leaders to quickly sort through and analyze the valuable data contained in those vast troves of business information. It’s like a search engine tailored to your contract portfolio.
Contract analytics powered by artificial intelligence. That’s contract intelligence.
Contract intelligence provides insights at blinding speed by leveraging state-of-the-art learning algorithms. Thanks to the power of machine learning, AI can synthesize massive collections of data in a fraction of the time it would take a human to do the same. When it comes to contracts, that means that AI can review thousands of documents during the time it would take a lawyer, procurement manager, or paralegal to review just one.
Natural language processing is the application of machine learning to written language. These algorithms enable AI to understand the context in which a given piece of text operates, thereby providing insight into the relevance of a clause to a particular search, and even allowing the program to produce new templates with the same level of quality as a human writer.
AI contract review software leverages these cutting-edge abilities to provide busy professionals with automated contract data extraction. Instead of poring over documents line by line, searching for bits of information across hundreds of clauses per document, a contract intelligence platform can quickly search for specific fields across a company’s entire portfolio of contracts.
Better yet, automated contract analysis provides lawyers and contract managers with a head-start on business intelligence. For example, let’s say you need to know how many of your contracts contain clauses that are compliant with new data privacy laws. If you’re using Evisort, you can supply the AI with a sample of your approved language. The platform will then search all of your existing agreements for the same or similar language and quickly show you which contracts are compliant and which need updating. You can make the necessary revisions and send contracts to every stakeholder for review and execution without ever leaving the Evisort interface.
If you’re doing business in 2021, can you really afford not to have contract intelligence in your toolbox?
Ready to find out how Evisort’s AI can supercharge your business’s contract analytics capabilities? Schedule a demo today!