For years, the legal function has relied on deep expertise, institutional knowledge, and manual effort. However, as contract volumes grow and deal cycles tighten, that traditional approach is no longer sustainable. Contract Lifecycle Management (CLM) platforms and the AI technologies embedded within them are reshaping how legal and business teams operate.
A common misconception – AI will eventually replace lawyers
Really? AI is augmenting legal work, not automating it out of existence. Contract negotiations often involve nuances, dynamic business terms, and regulatory specifics that require legal insight and/or context. A standard clause flagged by AI may need to be entirely restructured, considering a unique deal scenario. In the current landscape of speed, consistency, and data-driven decision making, the hybrid model of AI is being integrated into legal capability and is quickly becoming a competitive advantage.
Technological advancements – why are they required?
The rise of digital tools and contract management software since the early 2000s has provided companies with the means to manage contracts more efficiently and transparently. This leads to various business benefits of having a structured contract management process.
- AI reviews first drafts: Contract reviews have been simplified with AI-based platforms doing the first review and highlighting the risk areas or extracting the key contract information.
- Lean Processes: With cutting-edge advancements, CLM platforms can ensure that users adhere to the processes/workflows laid down in the contracting cycle. It also has built-in checks and mechanisms that eliminate human error for repetitive tasks.
- Contracts and Data Points: Earlier, contracts were treated as individual documents, and lawyers never imagined that these contracts would become a reliable source of data points/trends. Most CLMs today facilitate and provide data insights and analytics (enhancing decision-making), making jobs easier for legal and business teams.
- Timelines:Historically, legal teams operated independently, and mostly, the business teams would accept their approach. This flexibility contributed to longer cycle times. The transition to modern age CLM systems ensures users follow a defined process/ workflow that is customized/well thought out, ensuring that the contracts move through their assigned cycle, right from the initiation stage through execution within the defined timelines. Outliers are easily identified, highlighted, and dealt with separately. This allows a higher percentage of execution and closures, saving the company a huge amount of cost.
Amplifying potential and creating value
With the onset of many e-signature platforms, contract execution became easier, allowing a speedier signing process and greater security and compliance. Also, CLM platforms specializing in centralizing features provide a full suite of functionalities for storing contracts securely and ensuring compliance, including automated alerts for important dates and milestones.
Top CLM platforms today provide AI capabilities that help lawyers review contracts, provide contract insights, suggest alternate fallback language or approach, negotiate strategies, etc. In the future, AI is going to get embedded in this legal world like never before, ensuring that businesses prosper and allowing the contractual parties to focus on more strategic items than getting bogged down with the minute and repetitive specifics of this process. AI will advance in all legal industry sectors, making progress in automation in contract review, litigation, legal research, etc.
AI will continue to improve, but it won't replace human expertise in contract management. What it will do is elevate the role of legal professionals by freeing them from repetitive tasks and enabling faster, smarter decision-making.
The most valuable legal teams will integrate technology into the core of their operations, not as a bolt-on. This requires a shift in mindset: from reactive legal support to proactive business partnership, enabled by platforms, powered by data, and led by people who understand both.
Experienced lawyers with extensive knowledge of platforms are invincible due to their unique combination of legal expertise and technical acumen. This dual competence makes them not only highly valuable but also difficult to replace, giving them a competitive edge in the legal industry. Hence, we will need technologically savvy lawyers to navigate the constantly evolving realm of digital contract management.
Firms that invest in upskilling legal teams and embedding CLM technologies today won't just streamline contracting tomorrow, they'll unlock new value from a function long seen as a cost center and turn it into a driver of business outcomes.
Originally published by Commerce & Contracting.
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