Contract management is a crucial responsibility for legal teams, but also affects all parties involved in the contract process. Digitalization helps improve processes and free time for impactful, added-value projects. But having a good Contract Lifecycle Management tool is no longer enough – it must include AI-powered features to really ensure compliance, mitigate risks and accelerate operations.
In this article, we’ll explore inefficiency indicators in your contract lifecycle that can be optimized through AI-powered solutions.
Impact of Obsolete Processes on Contract Management Efficiency
Despite increasing acceptance of technology among in-house counsel, there’s still reluctance to leverage AI for legal and governance activities. As a result, some tasks and processes of the Contract Lifecycle Management are executed manually, causing inefficiency and frustration amongst team members. Some of the most common complaints are:
- “Does anyone know if this is the latest version of the contract?”
- “How much longer until we receive the approved signature?”
- “We missed the renewal deadline again.”
- “Our sales processes are delayed because the legal team takes too long with client contracts.”
Once gaps and issues are identified, organizations can implement AI-driven solutions to speed up processes and improve accuracy, all while keeping security a top priority.
3 Key Indicators of an Inefficient Contract Lifecycle
Before diving into how AI can revolutionize contract management, it’s essential first to recognize the indicators of an outdated process:
1. Difficulty Managing Large Volumes of Contracts and Data
As your company grows, so do contract volumes. Handling data manually becomes tedious and time-consuming. Looking for key clauses or specific dates in hundreds of documents for instance not only is time-consuming, but it also increases the risk of human error, which can lead to compliance issues or missed deadlines.
2. Information overload and complex document analysis
Legal professionals are relying on specific data and information and need efficient ways to retrieve them in a timely manner. With an ever-growing number of contracts and associated documents, finding the right piece of information becomes a real hassle, and it’s even more complicated to analyze the available data and transform it into insights and effective decision-making tools.
3. Challenges with multilingual documents
Multinational companies have an additional layer of complexity when it comes to contract management. Contracts are written in different languages, clauses differ from one legislation to another. Manually translating or validating clauses across languages is a slow process. This can lead not only to delays in contract approval and execution but also to inaccuracies or even compliance issues.
Does any of these symptoms ring a bell? If the answer is yes, you should consider AI-powered CLM solutions to bring your contract management up to speed and increase efficiency and accuracy of the way your legal department handles contracts.
That means that you and your teams are ready for AI. However, there are still common beliefs about AI that scare more than one in-house counsel. Let’s have a closer look at some of them.
Demystifying AI in Contract Lifecycle Management
There are fears and superstitions when it comes to AI and legal teams. The main one is the fear of compromising security and losing control over the highly sensitive data legal departments are handling. Another common misconception is that AI can lack specific legal knowledge which may lead to inaccuracies, errors and lack of precision.
However, today’s advanced technologies have allowed for robust AI solutions that offer the security and accuracy legal departments require. The key differentiator: private AI. While public AI systems use third-party technologies that can collect and use confidential data, exposing it to data breaches, private, proprietary AI doesn’t. It’s developed internally, independent from third-party vendors, and integrates best-in-class security features. Moreover, it’s trained on specific legal data to offer answers that meet legal departments’ high requirements in terms of expertise and accuracy.
With AI tools for contract lifecycle management teams can:
- Identify relevant information such as contract expiration or renewal dates and set reminders
- Extract key information from contracts, offering summaries that avoid lengthy manual reviews
- Harmonize clause management and identify potential discrepancies
Handing these time-consuming tasks over to AI tools saves precious time and enables legal professionals to focus on tasks requiring their expertise, such as strategic decision-making, negotiation and risk assessment.
AI in Action: Comparing Manual and AI-Powered Contract Management
If you still need convincing, the following information might help you root for AI solutions. Using data from our customers, we have created a table comparing time spent on certain tasks.
| Task | Without CLM (Manual) | With CLM and AI (Automated) |
| Search for specific clauses | 1-3 hours | 1 minute |
| Review of expiration dates | 1-3 hours | 5 minutes |
| Contract version validation | Up to 1 day | 6 minutes |
| Overview of complex contracts | 2-3 days | 10 minutes |
| From creation to signature of a contract | Weeks | A few days |
AI can significantly improve timelines for simple, repetitive contract tasks, reducing risk while providing significantly higher operational efficiency.
How AI-Powered Solutions Transform Your Contract Management
With secure AI tools, Contract Lifecycle Management (CLM) solutions offer advanced functionalities that address many issues and inefficiencies legal departments face. Let’s examine a few AI-driven features that revolutionize contract management:
1. Extractive AI for Simplified Contract Insights: using tags allows you to extract key data and information from hundreds of contracts, getting the crucial information you’re looking for in seconds and transforming it into precise summaries.
2. Instant Document Summaries: with one click, AI tools can generate precise accurate summaries even of very long contracts and documents saving the time of reading through hundreds of pages and minimizing the risk of missing essential elements.
3. Collaboration Across Languages: using a chatbot with AI capabilities facilitates collaboration and breaks down language barriers. AI not only translates documents within seconds, but it also answers questions about a document in the language used for the question.
AI is the Future of Contract Lifecycle Management
By identifying the inefficiencies in your contract lifecycle and adopting AI-driven solutions, you can transform your organization’s contract management process from a time-consuming burden into an efficient operation.
Book a demo with us and see how DiliTrust can support your path to AI adoption with our private AI powered solutions.
