Creating and reviewing a contract is a lengthy process, and when bulk contracts are added to the pile, the task becomes humongous, time, and labor-intensive. And the review process continues all through the contract life-cycle. Also, the legal team usually carries out contract analysis, which weighs heavily on the operational budget. On the other hand, poor contract management can prove costly for businesses, eating away over 9% of their total annual revenue.
An efficient and comprehensive technology solution is needed to address the aforementioned challenges. With AI, ML, and Language Analysis, contract analysis software simplifies the cumbersome process of updating, editing, and revising contracts. Hence, businesses can save more on their labor, cost, and time while realizing the full value of the business contracts.
A Brief Overview of Contract Analysis – Definition, Features and Benefits
Contract Analysis examines and tracks information within contracts throughout the contract life-cycle. These details are needed to reflect the status of the contract and adjust any changes in the clauses or company policies. Trackable information adds value to the business’s bottom line as these legal documents form the basic foundation of all business cooperation.
AI Contract Analysis Software Features
Best contract analysis software usually contains the following features –
A contract analysis software creates a centralized repository and seamlessly migrates the company’s entire contract portfolio.
Captures Granular Data
By leveraging the power of AI and Automation, contract analysis systems aptly extract data at a granular level from clauses, obligations, service levels, rate tables, and more. Such deep business and financial insights help businesses make smarter deals in the future.
Risk Analysis and Scoring
A contract analysis software automates the identification of missed clauses and deviations in terms and conditions or company policies to compute a risk score while considering both preferred and walkaway positions.
The intelligent software automatically sends recommendations such as correcting clause language, missing terms, deviations in the clause, and so on. The automated solution brings down the overall time taken to review contracts by legal teams when using the legacy processes.
AI Contract Analysis Software
Benefits of Contract Analysis
To err is human irrespective of how efficient they are. Manually extracting and reviewing granular information from contracts can forego crucial data hidden within lengthy contract clauses. Adding to that are the volumes of contracts a legal team have to deal with in a given period of time. Technology can never match the expertise of legal reviewers; likewise, manual contract reviewing can never match the speed and precision of AI-enabled contract analysis software.
Hence, an automated contract analysis solution adds the following benefits for businesses –
- Increase the visibility of the Enterprise Contract Portfolio by storing agreements in a centralized repository accessible to concerned partners.
- Modern technology solutions like AI and ML make the contract reviewing process faster and more accurate by identifying granular deviations or missing clauses, arresting incorrect language usage, and other drafting errors.
- Mining information from existing and old contracts helps businesses unlock hidden values and craft smarter contracts in the future with embedded risk control.
- Contract analysis software can easily fetch desired insights from contract portfolios for clauses or terms and conditions, ensuring business continuity during uncontrollable challenges like the pandemic.
- Availability of the right information at the right time can help businesses make better decisions regarding future contracts with existing clientele or partners.
How Does Contract Analysis Software Work?
Contract analysis benefit businesses in different ways. But, most importantly, the software addresses the complexities of legacy contract reviewing processes. The software is fuelled by the latest technologies like AI and ML; the software automatically locates, extracts, and reviews key points in bulk contracts in minutes and provides valuable insights when needed.
Let’s understand how a contract analysis software works –
- Reviewing contracts requires processing words aptly. Contract analysis systems are embedded with Natural Language Processing to process contractual terms and conditions penned in words.
- The software leverages the power of deep learning technology to properly segregate and categorize contractual data for extracting business deep insights.
- Rules-based systems create manual “rules” detailing each provision to enable the software to identify any language that aligns with the parameters of those rules.
- Machine learning systems study data and automatically categorize contract provisions into similar groups or sub-groups unsupervised.
- With the help of machine learning, contract analysis systems study the data fed to it, identify relevant language and build models. These models are tested against standard agreements to determine their readiness.
- Natural language processing helps the software to understand and work with human language. And deep learning is used to represent data accurately.
Best contract analysis software enables businesses to –
- Import contracts are formatted differently from anywhere.
- Get an eagle-eye view of projects to offset hidden risks better.
- Enjoy flexible search capabilities, such as finding documents based on the presence or absence of any clause, text within a provision, and custom tags.
- Easily extract any provision in any contract, in any language.
- Compare contracts and extract insights into a form to get a comprehensive view of where changes have been made across all agreements.
- Export contracts or pages of contracts to other systems.
Contract Analysis – The Smart Way of Reviewing Contracts in Bulk
Contract analysis manages contract reviewing in bulk and extracts deep business insights automatically, thereby reducing time spent on contracts to a mere couple of minutes. Also, it makes such information available as and when needed without any delay. Hence, companies are better positioned to negotiate improved deals and make data-driven decisions in the future. Also, AI contract analysis addresses the labor, time, and cost-intensive factors, which were major reasons for concern for many businesses.