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The Role of Artificial Intelligence in Contract Management

Contract Management Software

From Netflix recommendations to self-driving cars, the applications of artificial intelligence in everyday life continue to expand with each passing year. Businesses, too, leverage artificial intelligence techniques in order to know which customers to target, which products need improvement and which processes they should automate.

Surprisingly, AI has made limited progress in the legal profession so far--but as more and more companies realize the major benefits in doing so, this number is only expected to grow. Below, you'll find just a few of the ways that AI can support and enhance traditional activities in contract lifecycle management (CLM).


One hot subfield in artificial intelligence is "machine learning," by which computers can learn to classify unknown items and make better decisions just by having access to more data. Machine learning is used for everything from speech recognition to medical diagnosis, and now, legal firms are taking it up in order to write better contracts.

Many contracts include boilerplate language such as commonly used clauses and sentences that are repeated between documents. Current CLM software can store these frequent phrases so you can recall them for later use.

However, machine learning can go one step further: it can identify the type of contract you're working with and then suggest the appropriate stock parts to use inside it. For example, AI-enhanced CLM software may suggest that a contract between two companies who are frequent partners include similar language to past contracts, or that contracts between two companies in different countries should include a clause to deal with currency fluctuation issues.


Even modern CLM software feels a bit like digging through an enormous file cabinet, especially when you're only partly sure that the document you need is inside. Traditionally, most CLM applications have had only limited search capabilities that require strict parameters for the query to successfully find the requested document.

Now, any search functionality worth its salt needs to deal with what AI researchers call the "Paris Hilton problem," in which the search engine needs to determine whether the user is looking for hotel rooms in France or news about the socialite heiress. AI can drastically improve searches in CLM software's contract repository using techniques from natural language processing, and information about users themselves, in order to better understand the meaning and context of each search.


Not only is keeping previous contracts a legal requirement, it also makes business sense to hang on to them so that you can analyze them and learn from your past experience. The same fact holds true, of course, when discussing computers instead of humans.

Companies may handle thousands of contracts each year, and each contract is a source of valuable information: for example, how the contract partner handles issues such as rights and remedies, or how long it takes one partner to execute a given deal. AI-enhanced software can mine these contracts for information, find patterns in the data, and use them to provide reports on specific partners or contract clauses.

Final Thoughts

These days, the applications of AI across multiple fields (including contract management software) are truly mind-boggling--there's hardly an industry or process that can't be improved with the right artificial intelligence or machine learning technology. AI-enhanced CLM software can help your business become more efficient, gain more insights, and come to the right decisions more quickly.

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