Everywhere these days it seems people are talking about artificial intelligence (AI). But it’s more than just a popular tech term — AI can be harnessed to slash contract delays, enhance collaboration, and transform Legal into an efficient and strategic business partner for your business and the future.
When you consider the term AI, what immediately leaps to mind?
Is it the self-checkout kiosks at your local supermarket? Commanding Siri to “Play old-school hip hop” as you’re making dinner? Star Wars’ shiny gold protocol droid C-3PO declaring he is fluent in more than six billion forms of communication — or a far more nefarious Hollywood vision, where sentient machines rise and threaten our survival, like HAL 9000 from “2001: A Space Odyssey”?
While each of these do illustrate some facet of AI — or intelligent automation, of which AI is a foundational component — the reality is that AI is not now, nor will it likely ever be, that. AI will not destroy humanity as we know it. What AI can do, especially amidst a quickly evolving business landscape, is serve as an essential tool to elevate connection, diminish costs, and advance competitive differentiation for your enterprise.
The birth and growth of AI
A common 21st-century buzzword, AI was initially pioneered and named by mathematician and cryptanalyst Alan Turing in 1950 with the question, Can a machine imitate human intelligence?
Today, AI can refer to any machine, tool, or technology designed to act intelligently and mimic human actions and decision-making. While AI can make decisions, these decisions are mapped via machine learning (ML) — complex algorithms that amass data patterns to assess correlations, predict behavior, and reach a predefined conclusion. Most of us have been ML test subjects. It’s what’s utilized to supply insights for things like “Movies We Think You’ll Like” on Amazon Prime and other streaming services. Another extensively used business application is natural language processing (NLP), the capability of software to recognize human speech patterns and determine output. “Smart” assistants such as Siri and Alexa use NLP, disseminating language into word stems, parts of speech, and other linguistic features in order to respond. Chatbots who communicate on company websites do the same, but with typed text.
Over the past decade, AI has exploded and emerged as a cutting-edge phenomenon for retail, manufacturing, banking, and healthcare — and legal operations is no exception. More than 90% of new contract lifecycle management (CLM) solutions include AI as a critical functionality as it can catapult operational efficiency and drive revenue generation in game-changing ways. For instance, during the contract drafting stage, ML can suggest, simplify, and organize creation. NLP can be employed to “catch” missing phrases or correct inaccurate terms in new or existing contracts. Both skyrocket accuracy while reducing time spent on contracting — which is highly necessary when the 2022 Enterprise Legal Reputation (ELR) Report revealed Legal can spend half of their workdays reviewing contracts and Sales and Procurement often spend as much as 65% of their time on administrative tasks, like document preparation.
Elevating the power of CLM with AI
Contract management isn’t solely a legal issue — it’s an enterprise issue, inextricably intertwined with both revenue and relationships. Because every function within a company requires contracts, leveraging next-generation CLM proves a golden opportunity to impact and transform the business at large by:
Accelerating contract cycles.
AI is a shortcut to shortening your contract management time, acting (and even thinking and reasoning) like a junior lawyer by reviewing contracts and redlining contracts, often in under two minutes.
Slowing down the speed of the contract review process can increase the riskiness of the contract portfolio. AI-enabled CLM clause libraries can update and make actionable decisions backed by data — and when contract language is standardized and pre-approved and AI-powered playbooks are used, it can speed time to revenue by 24%. That time can then be used to focus on cultivating partner relationships so revenue isn’t left on the table.
Maximizing productivity while minimizing spend.
Intelligent automation that is CLM plus AI dramatically speeds processes, which organically reduces operational costs. By automating contract data extraction, AI can remove significant costs from sizable projects. Further, it can lower the odds of human error.
Eliminating repeat data entry is a simple and effective way to expedite CLM as well as magnify cross-functional collaboration by confirming correct data for every department. In fact, a study found that legal AI contract review software made new users 51.5% more productive and 34% more efficient. AI-aided validation has also been shown to escalate contract data entry and field validation by 400%.
Minimizing overall risk.
CLM solutions infused with AI can substantially increase control over contracting by determining, calculating, and assigning a risk score for each contract within your portfolio. This offers thorough visibility and transparency into an organization’s contracts, identifying non-compliant contracts proactively, verifying compliance, and lowering the odds of missed obligations that lead to penalties, fees, and fines — as much as 9% annually per contract and 15% in additional revenue each year.
Blazing CLM — and business — forward
There is no doubt that AI is metamorphosing digital transformation, driving organizational change, and revolutionizing the world as we know it. However, CLM + AI has proven to be so much more than a mere buzzword.
There is hope in technology, and AI is at the heart of innovation. Being on the forefront of its adoption and integration is certain to help you lead your enterprise into the future in groundbreaking ways.
Learn how Onit’s next-generation CLM solutions and AI-powered innovations meet you where you work with end-to-end automation of the contract management process to cultivate partnerships, elevate efficiency, and ignite revenue growth for enterprise-wide success.