Are You Ready to Modernize Your Contract Review Process?

Imagine a scenario: Your legal team is handling dozens of contracts every week, carefully reviewing each one to identify critical terms and flag potential risks. Despite the team’s best efforts, they’re overwhelmed, and important details occasionally slip through. Sound familiar? This is where contract summarizers can make a big difference.

While manual review has been the traditional approach, today’s contract summarizers offer a compelling alternative, leveraging advanced AI to accelerate and streamline the review process. But is it the right choice for your team? In this post, we’ll explore the pros and cons of each approach to help you make an informed decision.

The Traditional Route – Manual Contract Review

Manual contract review involves legal professionals closely reading and analyzing each part of a document. This method has served legal teams well for decades, relying on human intuition, expertise, and critical thinking to interpret complex language and identify potential red flags.

Advantages of Manual Review

1. Depth of Human Insight: Legal professionals bring a deep understanding of legal principles, industry nuances, and cultural context. This allows them to interpret complex language and nuanced terms that an AI might overlook.
2. Flexibility: Human reviewers can adapt their analysis to fit the unique aspects of each contract. They can assess not only what is written but also the intent behind certain terms, which is important in sensitive legal matters.
3. Contextual Understanding: In situations where contract clauses are ambiguous or have multiple interpretations, manual reviewers can apply context to make well-reasoned decisions.

Drawbacks of Manual Review

1. Time-Consuming: Manually reviewing contracts is a labor-intensive process. For large teams managing high volumes, this can result in substantial time commitments, leading to potential burnout and slower turnaround times.
2. Costly Resources: Manual review requires skilled legal professionals, which can be expensive. For companies with limited resources, this method may not be sustainable in the long run.
3. Risk of Human Error: Even the most diligent reviewers can make mistakes, especially under tight deadlines. A small oversight in a clause could lead to costly legal complications.

Example: Imagine a startup dealing with vendor contracts each month. With a small team, each contract might take hours to review, tying up resources that could otherwise be spent on growth initiatives. Even one overlooked clause could result in a significant penalty or liability down the line, impacting the company’s bottom line.

Contract Summarizers: A High-Tech Alternative to Refine Legal Workflows

Contract summarizers are AI-driven tools designed to analyze and extract key information from contracts quickly. They scan documents, identify critical clauses, and provide summaries that legal teams can review at a glance, making the process faster and more efficient.

Advantages of Contract Summarizers

1. Speed and Efficiency: Contract summarizers can review documents in seconds or minutes, reducing turnaround time. For teams with high volumes, this tool is invaluable, allowing them to keep pace with demanding workloads.
2. Cost Savings: By automating the bulk of the work, contract summarizers reduce the need for extensive manual oversight, translating into lower operational costs.
3. Consistency and Accuracy: Unlike human reviewers, AI-driven summarizers don’t get tired or distracted. They apply the same standards across all documents, which can help minimize errors and ensure uniformity.

Drawbacks of Contract Summarizers

1. Limited Interpretation: AI tools may struggle to interpret certain clauses that require a deep understanding of legal language and context. They excel at recognizing patterns, but they can’t fully understand intent or nuance.
2. Learning Curve: Implementing and integrating a new contract summarizer into your team’s workflow can take time. Teams may need to undergo training and customization to ensure the tool meets specific needs.
3. Lack of Complete Autonomy: For high-stakes contracts, AI tools alone may not be enough. Many companies still require a human touch for the final review, especially in complex scenarios where critical details could make or break an agreement.

Example: Consider a multinational company with regional offices around the world. Each region may have its own legal standards, and a contract summarizer can quickly flag the clauses that are most relevant to compliance in each area, allowing human reviewers to focus on more nuanced, location-specific points.

Key Factors to Consider When Deciding Between Manual Review and Contract Summarizers

Choosing the right approach involves assessing your team’s needs, goals, and resources. Here are a few key factors that may help guide your decision:

1. Contract Complexity: Highly complex contracts, such as those for mergers, acquisitions, or cross-border transactions, may still require human review to fully understand intricate details. Routine or standardized contracts, like NDAs or vendor agreements, are ideal candidates for a contract summarizer.
2. Team Size and Resources: Smaller teams with limited resources may find automation particularly beneficial, allowing them to keep up with contract volume without needing additional staff. Larger firms with specialized departments might prefer a mix, where manual review is used selectively.
3. Volume of Contracts: Teams handling frequent or high-volume contract reviews such as in finance, procurement, or real estate can save significant time with a summarizer. By automating routine analysis, team members can focus on strategic work.
4. Compliance and Regulatory Requirements: Industries with strict compliance needs, such as healthcare or finance, often require precise contract language to meet regulatory standards. In these cases, a contract summarizer can quickly flag any deviations from compliance terms, allowing the team to take appropriate actions.
5. Budget Constraints: Contract summarizers can represent an upfront investment, but they often lead to long-term savings in time and labor costs. Teams with limited budgets may find it more cost-effective to automate part of their workload.

Example: A law firm that manages recurring client contracts, like leases, can benefit from a contract summarizer by reducing manual review time for similar, repetitive terms. However, for one-time or high-stakes contracts, a human review might be more suitable.

Hybrid Approach: Combining the Best of Both Worlds

For many legal teams, the best solution may not be choosing one approach over the other, but rather combining them. By using contract summarizers for routine tasks and manual review for complex cases, teams can maximize efficiency without sacrificing accuracy.

Example: A tech company might use a contract summarizer to review all incoming vendor agreements for standard terms and flag any unusual clauses. The legal team then conducts a final, human review on flagged documents, ensuring both efficiency and precision.

The hybrid approach allows legal teams to enjoy the benefits of automation while retaining control over high-stakes documents. By focusing manual review efforts where they’re needed most, teams can reduce costs and improve overall workflow.

The Future of Contract Review: How Legal Teams Can Benefit from the Right Balance

The world of legal work is evolving, with AI tools like contract summarizers playing an increasingly prominent role. As legal teams face growing demands, having the right tools is essential to staying competitive. Contract summarizers not only improve efficiency but also allow legal professionals to allocate their time more effectively, focusing on strategic aspects rather than routine tasks.

While manual review remains a valuable tool for complex and high-stakes agreements, combining it with automation may be the optimal solution for many teams. This approach enables legal departments to handle larger workloads without sacrificing quality.

Make Your Contract Review Process Smarter with SpeedLegal

Ready to streamline your contract review process? SpeedLegal’s contract analyzer can help you save time, reduce costs, and improve accuracy, allowing your team to focus on what truly matters. Request a demo today to see how SpeedLegal can transform your workflow and boost your team’s productivity.