Artificial intelligence has taken the world by storm, and the legal world is no exception. For years, legal teams have been bogged down by tedious manual contract reviews, wasting hours identifying key terms and assessing risks. Now, with the help of AI, contract redlining is easier than ever before. 

By leveraging machine learning and natural language processing, AI swiftly analyses contracts, flags key clauses, highlights risks, and uncovers inconsistencies, tasks that would otherwise take lawyers hours, if not days. This frees you up to focus on more strategic tasks. 

Let’s dive into how AI is revolutionizing contract review and why it’s a game changer for the legal industry.

‍

How Contracts Were Reviewed Before AI 

Before AI, contracts were manually reviewed by lawyers. On a typical day, legal teams examine a large volume of contracts against set checklists. According to a survey, most contract professionals spend almost two hours trying to find the right section or language. Not to mention, it is more labor-intensive and puts huge pressure on lawyers to deliver high-quality work within time constraints. Yet, the company remains at risk due to human error-related overlooked data.

In a report by Thomas Reuters, there was a 65% increase in the volume of matters handled by in-house legal departments, which would mean that there would be more work for the legal teams. As a result, law firms are turning to AI to stay compliant and efficient.

‍

Transforming Needs

Current trends indicate that 70% of law firms are already using AI or researching the use of Gen AI. In order to remain viable, companies must protect their business model from regulatory compliances and increase their growth rate. To accomplish this, legal departments must transform their work model in response to:

• The constant demand for delivering high-quality services quickly,
• Building a competitive lead and staying ahead of market needs,
• Enhancing accuracy and automating repetitive actions to allocate more time for high-value tasks. 

Approximately, 43% of the firms of the 200 largest law firms have a dedicated budget for investing in Gen AI this year. For businesses, however, controlling costs and striking a balance between affordability and excellence remains crucial. Law firms are considering AI adoption as the path to this transformation. 

Of course, contracts being central to identifying conflicting clauses and mitigating risks, are the ideal place to start. Here, investment in the right technology is key to meeting consumer demands and achieving high efficiency.

‍

Innovations Driving Advanced Contract Analytics

1. Artificial Intelligence (AI) - 

What it does - With AI, tasks can be automated with NLP and ML technologies, saving time and reducing manual labor. Using historical data, AI-based algorithms can identify patterns, extract insights, and forecast outcomes, automating previously manual tasks. 

Key Application in Contracts - By using AI-based automation, contracts can be classified by their type and subject matter. Furthermore, contracts can be summarised to include key terms, entities involved, and timelines, eliminating the need to manually review large volumes of documents for information.

‍2. Natural Language Processing (NLP) - 

What it does - Natural language processing bridges the gap between machines and human language. The model interprets typical human-written text to provide efficient and accurate identification and extraction of information.

Key Application in Contracts - Contracts are traditionally written in an unstructured manner, making it difficult to extract information. Using NLP technology, key information can be extracted to identify anomalies and organize contracts in structured form. Additionally, the software can be used to analyze existing contracts and identify areas of dispute. 

‍3. Machine Learning - 

What it does - ML models are trained on large datasets to improve accuracy. The model analyses historical data, identifies patterns, learns from them, and flags those that are relevant. Over time, data-driven models can be improved by inputting data to predict outcomes.

Key Application in Contracts - The software is trained by ingesting contract data into the model to identify potential risks and provide recommendations for improving contracts. Furthermore, the model is trained by experienced legal practitioners so that the software can learn over time from feedback. 

‍

AI Formula

Data, technology, and expertise are helping transform the contract review process by improving accuracy, and efficiency overall. AI-driven contract review solutions can provide a comprehensive and automated analysis of contracts, flagging any potential areas of risk. 

This helps organizations save time, reduce costs, and ensure that their contracts are compliant with applicable laws and regulations. For AI-driven legal technology to provide optimal results, the software should combine the necessary elements for speed, accuracy, and efficiency.

Data 

Data is the master when it comes to having an effective tool. Data from contracts is fed into the algorithm so that learning can be applied to produce satisfactory results. As a result, it has proven to be crucial to the success of developing not only an effective but also a powerful tool. With data training, artificial intelligence can also be trained to recognize even inconsistent clauses within contracts that are differently structured.

Technology 

Technology is the driving force behind modern day growth, and it is the backbone for interpreting and analyzing contracts faster than humans can. By combining ML and NLP, AI can review contracts even better than humans can. It is therefore crucial for legal departments to adopt technology to gain a competitive advantage.

Expertise 

The expertise of legal practitioners still remains imperative for a reliable tool despite technological advances. Legal professionals are the key to producing training data, validating machine-learning algorithms, and analyzing errors. Furthermore, lawyers give valuable feedback in order to improve the model's performance and monitor software usage.

‍

How we do it at SpeedLegal

Here's how SpeedLegal's AI tool makes all this possible. 

• Lawyers Trained Model: As per a study by Harvard involving 1500 companies, it was concluded that AI works best when collaborated with human expertise. It is exactly what we have been doing at SpeedLegal in the past. Our skilled lawyers use their diverse experience to train the model and provide insights that help the tool identify clauses and flag risks that may have gone unnoticed by in-house teams.

• Playbook based Analysis: At SpeedLegal, our tool reviews contracts in accordance with the playbook meticulously drafted by our experienced lawyers. By doing this, we ensure that no red flags are overlooked when you upload your next contract on our platform. Additionally, the tool suggests missing clauses that ensure full compliance with our contract standards.

• Data Privacy and Security: SpeedLegal handles all client data according to General Data Protection Regulation (GDPR) guidelines, while the website is encrypted to prevent data leaks. Clients also have the option of reviewing the data SpeedLegal holds about them and raising concerns if they feel their data is being misused. 

As a result, our tool is not only more reliable, but clients are also able to share contract data with confidence, knowing that their privacy and security are protected.

If you're a founder overwhelmed by contracts filled with legal jargon, or a lawyer with a high volume of contracts to review, SpeedLegal is here to help! Discover how the tool can speed up your legal processes, reduce costs, and improve accuracy. Contact us today to learn more and schedule a demo!