Efficiency and accuracy are of vital importance when managing contracts. Many organizations fear they may fall behind as more and more of their peers embrace automation through artificial intelligence.
One notable area AI has positively transformed is contract summarization. With the advent of AI-powered contract summarizers, legal operations teams can now optimize contract lifecycle processes like never before. In this blog post, let's explore five ways contract summarization with AI-backed contract management software can change the game of legal operations.
#1 - Enhancing Speed & Efficiency
Traditionally, contract summarization has been a labor-intensive and time-consuming endeavor. Legal professionals would have to spend hours or more manually reviewing and extracting important information from lengthy contracts. Now - with AI-based contract summarizers - this process can be completed in a fraction of that time. With structured data recognition via natural language processing, CLM software can quickly analyze, extract, and categorize crucial metadata points from a contract including:
- clauses and sections.
- payment terms and conditions.
- names of counterparty companies and their business stakeholders.
- contact information (such as phone numbers, fax numbers, email addresses, and physical addresses).
- obligations.
- key dates and timelines.
- these data points and many others!
User-friendly contract summarization drastically improves speed and efficiency as teams review contracts. In automating the extraction of the abovementioned key information and more, legal ops professionals can save valuable time and allocate employee resources more effectively. This increased productivity allows legal teams to handle a larger volume of contracts and meet deadlines near and far without compromising accuracy.
#2 - Improved Accuracy & Consistency
Human error is always an inherent risk in any manual contract process; contract summarization is no different. However, some mistakes can lead to costly legal disputes and delays.
AI-based contract summarizers essentially eliminate the risk of human error by providing accurate and consistent contract summaries. Contract artificial intelligence is trained on vast amounts of real-life, diverse contract data - enabling it to identify and extract key information with next-level precision. Legal operations teams can rely upon these user-friendly and easy-to-manage summaries to make strategic, informed decisions while proactively mitigating potential risks.
The use of AI-based contract summarizing tools virtually ensures that extracted information is accurate and consistent across many contracts. This consistency allows contract management professionals to more easily compare and analyze agreements in their contract repository for due diligence, compliance, and negotiation. By reducing the changes of inconsistencies and errors, advanced contract summarizers boost the overall quality and reliability of contracts and contract analysis.
Speaking of which...
#3 - Comprehensive Contract Analysis
Contract summarization is not just about extracting key contract data; it also involves analyzing the overall contents of an agreement. Intelligent contract summarizers can support a holistic analysis of contracts - highlighting potential risks and exposures, obligations, and opportunities. Individual contracts can also be analyzed against broader trends with contract analytics tools. Users can go beyond simple keyword extraction in favor of valuable insights that can inform decision making processes.
Want to see how an imported clause stacks up to the organization's preferred version of that clause? The contract summarizer can quickly recognize the similarities and provide an exact percentage match. Additionally, when deadlines and obligations are detected, the functionality can automate the formation of a workflow so that team resources take the appropriate actions when they need to be performed.
In providing a far-reaching view of a contract, AI-boosted contract summarizering features enable contract lifecycle management teams to make well-informed decisions and effectively manage contractual relationships.
#4 - Increased Compliance & Risk Management
Observance of legal and regulatory compliance requirements should be a top priority for any organization. Future-minded contract summarizers can play a game-changing role in ensuring contract compliance and mitigating risks.
Contract intelligence can identify clauses, counterparties, credentials, and other elements of a contract that require action or information to reduce risk. By flagging potential areas of concern, contract managers can proactively address these issues and mitigate any potential risks.
Additionally, contract summarizing tools can also assist in risk management by analyzing the language and provisions of a contract and identifying if they pose a financial, legal, or reputational risk on a configured, rules-based sentiment. Then, teams can take appropriate action to mitigate these risks, such as renegotiating terms or seeking additional legal counsel.
#5 - Cost Savings & Resource Optimization
Manual contract summarization necessitates significant manpower and resources. By utilizing AI-powered contract summarizers, contract management teams can optimize their resources and decrease costs.
AI-based CLM software can generate summaries for multiple contracts in a short span of time - eliminating the need for extensive manual reviews. in turn, legal operations professionals can focus on higher-input tasks, such as field-specific or situational contract negotiation and strategizing for maximized efficiency and return on investment. All the while, they can retain what adds up to a summary of a contract repository as a whole.
To get started on an easier way to manage contracts with AI-based contract summarization functionality, book a free demo of CobbleStone Contract Insight today!
*Legal Disclaimer: This article is not legal advice. The content of this article is for general informational and educational purposes only. The information on this website may not present the most up-to-date legal information. Readers should contact their attorneys for legal advice regarding any particular legal matter.
