The Role of Machine Learning in Contract Analysis

If you think contracts are long and unwieldy, here’s proof: according to an article in the New York Times, the average length of computer software contracts is 74,000-plus words, or, as the professor who combed through all the agreements to calculate that average pointed out, “basically the length of the first Harry Potter book.”

While Harry Potter might make for some fun reading, anyone who manages contracts for a living will likely tell you the pages and pages of fine print involved in most corporate agreements are decidedly not. And analyzing these lengthy volumes has historically been a cumbersome, manual task that – due to the potential implications of details as small as a comma – can take hour after painstaking hour. But contract analysis is hugely important work: this close scrutiny helps businesses to strengthen standard contracts, reducing their risks and improving potential upsides, and helps businesses to evaluate the terms of a specific contract, understanding exactly what they are obliging themselves to do and what they will get in return.

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What Does the Future of Contracting Look Like?

Contract management continues to evolve as the technology and tools involved improve and new features are introduced. One recent change that has already had a tremendous impact on legal teams is the introduction of artificial intelligence, which offers the ability to immediately extract actionable data from corporate agreements, among other benefits.

AI contract management is most likely to benefit industries with highly routine, template-based contracts such as healthcare, government, and manufacturing -- but as the technology continues to evolve, many other sectors will also benefit.

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3 Critical Steps That Need to Be in Your Contract Administration Process

Though the terms ‘contract management’ and ‘contract administration’ are often used interchangeably, they are not exactly the same thing. Contract management refers to the full spectrum of contract-related activities that occur within your organization, encompassing everything from the earliest stages of planning your approach to contracts in general, to drafting and negotiating agreements, to finally winding down and evaluating the performance of individual contracts after they have concluded. Contract administration, meanwhile, refers to a very specific phase within a contract’s lifecycle, kicking in during the post-award phase of your contract. More specifically, contract administration refers to the processes and procedures that must occur in order for business units to implement and manage a specific agreement after it has been finalized.

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New Ebook: How AI Contract Management Improves the Value of the Legal Department

It’s no secret that Artificial Intelligence (AI) is making a huge impact on a variety of industries and disciplines, and contract management is no exception. Contract management has historically been a very manual process, but software has been able to automate much of that manual work in recent years. The addition of AI is now making contract management simpler and more efficient than ever, which is paying significant dividends for legal teams of all sizes.

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What is Machine Learning and How Does it Apply to Contract Review?

A common problem in contracting is that despite best intentions, contracts often don’t deliver their full intended benefits: according to the Harvard Business Review, enterprises typically lose anywhere from five to 40 percent of the value of any given deal over the course of its lifespan.

Such value erosion can have many culprits: suboptimal and/or inappropriate terms and conditions, failures by one or more parties to abide by their contracted obligations, and the absence of or poor adherence to best practices for contract management are among the common themes that prevent businesses from realizing the full value of their agreements. But technology is providing enterprises with newer and more sophisticated tools than ever before that can help reduce such problems – and eliminate arduous, manual aspects of managing contracts and conducting contract reviews at the same time. One such innovation, machine learning, offers tremendous promise in this regard.

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A Guide to Accelerating Your Contract Management Process

Better contract management is closely linked with better overall business performance, research shows: according to a report from McKinsey, a combination of sub-optimal contract terms and a failure to employ best practices for contract management can result in erosion of value equal to nearly 10 percent of total revenues annually. As such, it follows that correcting vulnerabilities that commonly occur within contract lifecycles by improving end-to-end contract management processes offers a promising tactic for improving profitability.

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3 Applications for AI in Contract Management

We’re currently in the middle of the greatest disruption to how we work since the invention of the steam engine. From robotic process automation to voice recognition and natural language processing, artificial intelligence (AI) is enabling businesses to meet their objectives more efficiently and effectively than in the past, with forecasts that AI-based technologies will contribute up to $15.7-trillion to the global economy over the next decade.

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How Will AI Realistically Change the Way You Manage Your Contracts?

Whether it’s the personalized list of movies recommended to you by Netflix or customer service chatbots that get you the answers you need day or night, AI has already had a transformative effect on everyday life and will continue to expand as technology evolves. Within the business world – including within contract management-related functions – we’re seeing growing benefits.

But how has AI – or artificial intelligence – already changed some of the key tasks associated with managing corporate agreements? And what realistic expectations should we have for AI’s ongoing impact on how contracts are managed? Keep reading to find out.

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Artificial Intelligence in Contract Management: 5 Things You Need to Know

Across functions and industries, executives are excited about the potential of artificial intelligence – or AI – to transform key business functions. According to a report from Deloitte about the state of AI in the enterprise, businesses believe that the improvements AI can deliver are an important way to help them compete in today’s fast-moving marketplace, with software representing one of the easiest paths to AI adoption.

Among the top benefits, executives say AI is helping them to optimize internal processes and make better decisions. And while these findings are not focused strictly within the contract management function, the opportunities artificial intelligence technologies provide to help businesses manage their portfolios of vendor and supplier agreements, employment contracts, and other key documents are equally great.

But in order to develop an artificial intelligence strategy for contract management that delivers on expectations, it’s important to understand both the capabilities and potential of AI as they pertain to the discipline of contract management. Before you get started, here are five key things you need to know.

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Artificial Intelligence: The Basics

It’s hard to escape the footprint of artificial intelligence. Though once thought of in futuresque, sci-fi terms, artificial intelligence (AI) in its various forms has proliferated everyday life both at home and in the enterprise. According to a report from Gartner, the number of enterprises using AI has tripled in the last four years, meaning that from Amazon product recommendations to voice-controlled light switches to automated functions that improve key pain points and boost productivity at work, AI is now everywhere.

But what does AI actually mean and what do you need to know about it now? Keep reading to learn the basics.

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