In a recent post, we explored the many benefits of deploying a contract lifecycle management (CLM) system to help in-house legal teams coordinate, track and automate the creation, negotiation, execution, and monitoring of business contracts. We saw how properly designed CLM systems go far beyond merely being a system of record in which contracts are well-organised, up-to-date, and searchable. We discussed how they create consistency, efficiency, and oversight across the contract portfolio. And we touched on how they can go further to add value to the business by delivering control, clarity, and insights.
Here, we dive deeper into this last point, examining why and how to leverage contract lifecycle management using the power of artificial intelligence (AI).
Maximising CLM – the power of automation and AI
There are many areas of CLM in which it’s possible, and desirable, to automate repetitive tasks, reducing manual involvement to make processes more streamlined and standardised, and then to take this to the next level by turbocharging the capabilities of CLM tools with AI.
For example, smart CLM solutions can automatically generate standard agreements incorporating the necessary terms and conditions and then populate them with relevant information gathered from internal systems, or create templates where the clauses contain built-in guidance to help users fill them out. Document review and analysis tools use AI technology to identify the required provisions so that legal teams and their colleagues in other business departments can be confident they are fit for purpose. These documents can then be tailored in each case to suit the specific circumstances.
Automated reminders can be set up to prompt stakeholders when they need to take action, such as to give feedback on a draft or sign a final document. In addition, contract expiry and renewal dates, relevant law changes which might affect agreements, and contract breaches and obligations can be auto-tracked and alerts sent out, saving time and effort and protecting the business from risk and liability.
On top of all this, AI within CLM tools can be harnessed for even higher-level functionality. For instance, it can perform advanced contract analytics, bringing to light where key clauses exist across the whole suite of contracts and pinpointing potential where clauses could be impacted by new business developments or where there is scope to renegotiate terms.
It can then present this information in reports for key executive stakeholders, helping to inform C-Suite decision-making around everyday operations or business strategy. Given that businesses may have hundreds or thousands of different documents in their portfolios, this would be virtually impossible to deliver manually in many cases.
The list goes on, such as using AI to leverage internal and customer data and spot inconsistencies within the contract portfolio, perform predictive analysis, tag legacy and third-party contracts and even provide helpful chatbots to assist users with any tasks they are undertaking. In this way, a whole raft of CLM needs can be addressed.
A valuable ‘system of intelligence’
As business needs grow and change rapidly, legal departments should be looking to move their CLM systems beyond the record-keeping stage, embedding them within their organisations so users can engage with them seamlessly, and so that they ultimately provide an invaluable ‘system of intelligence’.
On the one hand, this will enable legal teams and business leaders to identify where areas of risk are emerging so that they can take preventative action. On the other, they will be empowered to see where proactive changes could be made to contracts to deliver greater value to the business.
Read our white paper ‘See the bigger picture: Shift from “handling contracts” to contract lifecycle management’ for more information about how to leverage CLM systems using AI to maximise efficiency, effectiveness and return on investment.