AI’s impact on the software landscape has been impressive, and this is no less true of legal-specific software.
The development of contract management tools into contract intelligence platforms comes at a fortuitous time:
Post-COVID revenue pressures have brought on a great deal of accountability in the buy-in process for legal tools.
For in-house leaders, purchasing tools isn’t just a question of how quickly you can get a deal across the line, but if the platform directly contributes to the bottom line.
That is the distinction between standard contracting tools and intelligent contract management platforms.
In this article, we’ll explore the details of contract intelligence and explain how such platforms are different from other contracting tools we know of.
What is contract intelligence?
Contract intelligence is the integration of machine learning, natural language processing (NLP), and artificial intelligence capabilities into traditional contract management software.
The outcome is a contract lifecycle management platform that adapts, learns, and grows depending on how you use the platform.
It counters challenges far more proactively, performs microscopic audits, can integrate intelligently and seamlessly with other tools in your arsenal, and, most importantly, helps you execute agreements in a real-world context.
By analyzing structured agreement data, your contract intelligence tool can surface insights about the intended outcome of document clauses and integrate with other business tools to help ensure that these outcomes are realized.
This software enables organizations to manage contract compliance at scale while recognizing and minimizing risk in real time by triggering actions based on predefined parameters.
It is also instrumental in improving the overall visibility of contracts, allowing teams to access pertinent information easily as well as generate actionable insights from the contract repository.
Also read: Contract Repository: Everything You Need to Know
Why should you use contract intelligence? 6 benefits
1. Speed and accuracy
For legal teams and businesses, contracts are not just complex assets. They are also the guardians of business interests, overseeing every dollar transaction for the business. Even the slightest error could lead to a sizeable loss.
In such cases, the speed proposition is not enough.
While traditional contracting tools standardize templates and generate new contracts off those precedents, they still require manual reviews and edits if conditions within the contract change through the lifecycle of the contract.
This can lead to instances of oversight and trigger contractual risks.
“Your job is often explaining legal risk in a digestible way to ensure that the business is aware of what could happen and what the consequences of certain decisions may be. Think big picture. For example, even though a decision may not carry legal risk, it might carry PR risk. Being able to identify risks that impact the business (while not always ‘legal’ in nature) will help you become a trusted advisor.”
~ Katayoon Tayebi, Associate General Counsel, FIGS
Accelerating Your Career as In-house Counsel
On the other hand, contract intelligence software tools leverage AI to analyze any change in context through the process and can automatically readjust themselves to the compliance standards of the organization.
For example, if your company requires you to add a specific clause for every deal with companies beyond your local jurisdiction, an AI-led contract management tool would automatically ascertain the jurisdiction discord and insert the relevant clause.
This bypasses the need for manual micro-updates for every contract and can lead to review-free contracting cycles while producing error-free contracts faster.
2. Greater contract visibility with insight surfacing
With a more intelligent system, contracts stop being static records of information. Contract information is processed and becomes actionable insights that power business performance.
Leveraging contract intelligence can uncover your relationships with your customers by highlighting your most engaged or longest customers to help you move towards building a referral chain, thereby generating further revenue.
Another potential application is flagging off clauses or parts of contracts that are most contested and corrected to help you assess your company’s legal templates. This would, in turn, save hours in negotiation and can even stop revenue bleeding.
Perhaps the biggest contribution in terms of actionable contract intelligence would be to identify and flag off contracts that would harm lifetime value (LTV) from paying customers.
3. Scalable intelligence
One of the biggest benefits of using an AI-powered contract intelligence platform is that it's trained on millions of agreements and continues to learn based on your organization’s contracts.
This helps protect your brand by proactively monitoring obligations and ensuring contract complications. Some can even respond in real time to global regulatory changes and build in up-to-date language to keep agreements compliant, then flag exceptions for further review in instances where they are not.
Also read: AI Contract Analysis: Saving Time and Increasing Efficiency
4. Real-time improvement opportunities
Opting into an intelligent contract management system gives you the power to identify common gaps in your compliance standards and lets you address them proactively.
As and when a contract is generated, AI-led contract management platforms track for legal inconsistencies at the back end and provide corrective suggestions that you can accept or decline.
With time and your input on suggestions, the AI acquires a better understanding of your compliance guidelines and can automatically readjust to accommodate your needs.
This negates the need to onboard and train junior lawyers to check your contracts, even as the contract volume increases across the company. This means spending less time on repetitive tasks and more time training future leaders.
5. Direct impact on business performance
Contract intelligence tools have a wide impact on business performance objectives:
- Increased cash flow through improved realization of entitlements
- Cost and time savings through the reduction of contract management and legal fees
- Shorter sales cycle times
- Preventing unwanted renewals and leakage from expired agreements
Also read: Rethinking In-House Legal OKRs, KPIs, and Goals
6. Powerful analytics and data visualization
A retrograde analysis of contracts can not only uncover a wealth of information surrounding your agreements, but it can also help identify and work around operational inefficiencies and minimize productivity leakage.
Intelligent contract analytics also provides greater visibility into a wide array of metrics. This includes key measurements such as the following:
- Cycle times
- Risks
- General deviations
- Internal turnaround times
For example, continuous monitoring of sales contracts can help you keep track of your typical sales cycle durations and identify delays.
Also read: Faster Contracts Make Shorter Sales Cycles: 1st-Hand Experiences At SpotDraft
For larger companies with teams across the globe, a combination of sales data can also help them identify best performers or team-specific challenges.
This helps you prioritize tasks, identify caveats, and optimize your processes to drive greater business value.
AI-backed contract intelligence software also directly impacts the performance of the legal team.
It helps in-house lawyers actively create custom reports during their periodic performance assessments and demystify the legal function to resonate with other business teams.
AI-powered contract analytics makes data visualization simpler and helps display the legal team’s impact on the overall business.
What are some features that an intelligent contract management platform offers?
1. Contract setup and templates
Artificial intelligence is a huge boon when it comes to creating new contracts.
With an intelligent contract management platform, legal teams can import documents and turn them into templates or leverage AI and a pre-built clause library to create agreements quickly.
This is a major benefit, especially to sales teams, who can now work faster to close deals and get a contract out as soon as the customer gives the signal.
2. AI-powered contract search
Trawling through lengthy contracts to find the clause you’re looking for can be a painfully time-consuming task.
But AI-powered contract analysis platforms can quickly scan through a whole database of agreements and surface key insights or clauses when you need them.
3. Reporting and analytics
A solid contract intelligence tool should be able to pull together various data points and present them in a dedicated, customized dashboard.
This way, you won't need to wade through tons of contract data to find out how your CLM processes are performing. In many cases, you can even have a report emailed to your inbox each week!
Also read: How to Choose and Use the Best Legal Analytics Software
4. Deep integrations
When choosing a contract intelligence platform, you’ll want to prioritize one that integrates with as many relevant platforms as possible, especially those you’re already using:
- Procurement tools
- Spend management platforms
- CRMs and sales engagement tools
- Cap table management solutions
Also read: 6 Must-Have CLM Integrations for Streamlined Workflow and Higher ROI
5. Automated workflows
Automated workflows help legal stakeholders streamline operations and reduce compliance risk.
The most common example in the context of an intelligent contract management solution is contract review process automation.
Also read: What is Contract Automation? Expert Tips & Insights
If you can automate new contract approvals—routing agreements to the right people and scheduling reminders when delays occur—you can cut down review time without increased spending on more manpower.
“It's good for a SaaS lawyer to be tech-savvy because it helps to know what tools are at your disposal and how to use them best. Go to the people who know how to use these tools well and ask them if it's possible to set up the workflows/automations you want within them.”
~ Sue So, Head of Legal, Hopin
Commercial Contract Management in Hypergrowth Startups
Leverage contract intelligence with SpotDraft
AI-based contract intelligence is a powerful advancement in the world of CLM.
The question really isn’t whether to adopt it, but which platform to partner with to best leverage modern intelligence capabilities.
Let us introduce you to SpotDraft.
SpotDraft's contract management platform includes an easy-to-use, hassle-free contract database that captures and reports contract lifecycle data and intelligence to users to enhance efficiency, save time, and minimize errors.
Also read: Building a Scalable Contract Database (Why, How + Templates)
Our AI-powered end-to-end contract automation system helps put the entire contract workflow on autopilot, identify and address gaps, and uncover a wealth of insights across previous contracts to support your team.
Work smarter, not harder. Discover contract intelligence for yourself with a free demo.
