Contracts are essential to ensure legal obligations are met by both parties (primarily businesses) with their mutual consent, which in turn maintains a healthy commercial relationship. It is therefore vital to keep contract-relevant papers secure and organized because failing to meet obligations can lead to costly fines in the long run. This reflects the difficulty level of a lawyer’s fundamental job responsibilities.
Most businesses rely on lawyers and law firms for contract management services to prevent contract-related issues, such as a contract breach. However, companies lose 9.2% of their annual revenue due to poor management of contracts, according to the International Association for Contract & Commercial Management. Here, lawyers and other legal professionals can embrace LegalTech to enhance contract management efficiency, helping their clients prevent this hefty damage.
How is the Legal Industry Benefiting?
There are plenty of artificial intelligence (AI) tools on the LegalTech market that legal professionals can use to simplify various tasks. For example:
- Clause identification & extraction – legal software can identify and extract specific clauses more precisely.
- Contract review – this job has become easier with contract review tools and can be done in less time.
- Contract management – software can be used to analyze a contract against a standard.
However, there are many firms that have not adopted new technology simply because of the lack of time and resources required to make the shift successful. Lawyers must realize the potentials of AI that can genuinely improve contract management. Instead of relying on traditional methods of drafting, consolidating, storing, and tracking contracts that consume a lot of time, legal practitioners can get better control with the help of AI tools by automating routine tasks and centralizing contract management.
Let’s now get into details of how legal technology benefits the industry.
For contract drafting, AI-powered software allows lawyers to use several standardized contract templates, ensuring the usage of the latest and most accurate language. Also, there are tools that are integrated with both AI and Machine Learning (ML) technologies that lawyers can use for language assessment, especially while adding new contracts to the system and screening existing contracts for confidential data.
Lawyers know how demanding the task of contract review can become. Considering the need for highly secured systems for contracts, many legal professionals are adopting new technologies to minimize their workload. Otherwise, since a contract is comprised of various important documents, many law firms depend upon an outside counsel or external, specialized document review services.
The latest LegalTech tools can automate the entire contract review process:
- Reading contacts
- Identifying key information
- Presenting the information in a certain way so that it can be easily read and understood
Moreover, many law firms are experiencing the benefits of such software, which makes the review process a lot easier – it can even be automatically carried out within a few minutes.
Many lawyers and law firms consider contract management an intricate and labor-intensive task that requires them to track terms, conditions, obligations, and deadlines for each contract they manage. However, with new technologies, lawyers can upload contracts to a central location where AI software adds tags to each document automatically according to a predetermined set of criteria (for example, contract’s starting and end date, parties involved, type of contract, etc.). This enables users to view a snapshot of ongoing workflows and upcoming events, which means monitoring important dates and deadlines becomes easier that used to be one of the most challenging jobs related to contract management.
Catching up with a Changing Legal World
While the most suitable technology may vary as per the needs of individual law firms, one thing is certain: LegalTech adoption is a necessary step. Law firms should now know that AI is helping legal teams to streamline processes, making contract management a lot easier, efficient, and cost-effective. Such software also helps lawyers free up their time to focus on other, more critical practice areas.
With more and more lawyers, law firms, and in-house counsel turning to new technologies, affordable contract management may become common, and no one wants to be left behind. Moreover, the need for more efficiency and productivity will remain forever; hence, it is vital for legal practitioners to stay updated with the latest technologies and systems to catch up with industry-leading competitors.
Moving from paper-based contact management to digital contract management systems can be a smart step. Storing all contract-relevant documents in one centralized, secure location helps ensure optimal compliance and reporting. With this, law firm owners can ensure their staff is using the latest contract templates and clauses.
Additionally, in the current times when most employees are working from home, law firms can empower their mobile workforce by allowing them access to the platform using a password-protected panel. This way, all the latest contact templates and clauses can be made available for authorized team members from anywhere at any time.
Efficiency Enhancement & Time-Saving
Automation-powered contact management systems offer several great features, including:
- online redlining,
- approval cycle,
- alerts, etc.
The systems are very easy to utilize. Such tools are best for busy law firms handling a lot of contracts at a time as they help boost efficiency and improve the core of the entire process. All of this leads to fewer errors, helping lawyers and law firms save time.
Contract management software gives legal practitioners a competitive advantage, helping them create more value for clients. It moves the client’s organization way beyond a transactional approach using a complete, interlinked system that also offers valuable insights that grow with their business deals and help comprehend the value of their contracts.
The legal industry has entered an era where innovative & tech-focused legal service providers have a myriad of new opportunities. At the same time, clients stand to reap multiple benefits from better service and affordable legal fees. With this, we can say that LegalTech is helping the legal industry not only with contract management but also with a variety of functions and processes, taking center stage within this highly professional and vast industry.