Reduced admin, faster processes, free money, magic beans - what aren’t vendors promising AI can do, when it comes to contracts? Let’s take a look at what’s real, what’s not, and what’s making the biggest impact when it comes to contract AI in 2024.
To find out more about contract AI, join the next Juro runthrough here.
What is contract AI?
Contract AI describes the use of text-based machine learning applied to contracts to make the process of drafting, reviewing, and tracking contracts faster and more efficient.Â
Like a human lawyer, contract AI begins by understanding and familiarising itself with the language used in legal contracts.
To do this, the algorithms that power contract AI tools are trained to identify and flag patterns and behaviours in contracts. This enables the AI to recognize key terms, phrases, and concepts by repeatedly seeing words and phrases in context.
Contract AI then applies what it’s learned to reduce repetitive contract admin tasks throughout the contract lifecycle.Â
For example, contract AI software can automatically extract important contract data and highlight specific terms of interest, like the governing law, effective date, or personal information. Without AI involvement, this information would need to be tagged and captured manually by people.Â
Generative AI also uses large language models (LLMs)Â to generate contract drafts in seconds, with guardrails that you can control. These LLMs can also be used to identify key risks within a contract, as they can review large volumes of text quickly.
What are the benefits of using AI for your contracts?
AI isn’t a panacea, but it can bring significant benefits if used in the right places. Contract AI unlocks:
Increased productivity: lean legal teams to operate more efficiently by using AI for routine tasks that slow them down.
Faster contract turnaround times: contract AI can be used to draft, summarize and review contracts in seconds, meaning contracts can progress faster too.
Lower costs: AI contract tools can automate some of the work you'd typically outsource to contractors and law firms, cutting costs as a result.
However, the biggest benefit for in-house lawyers is that it substantially reduces the amount of low-value work that lands on their desk.Â
Our 2024 research indicates that a majority of in-house lawyers have experienced burnout at one time or another; and a majority feel that a lack of resources and budget are amongst their biggest problems at work.Â
Drafting and related tasks are a great fit for the capabilities of large language models, enabling lean legal teams to handle more routine work, but without adding legal headcount to the team.
What types of AI contract software are available?
Contract AI is a broad category, so it’s important to understand exactly where the different tools can add value. The three main groups are:
1. AI contract drafting software
AI-powered contract drafting tools can generate contracts in seconds based on the information you provide in your prompt.
AI contract drafting software tends to be a point solution - it delivers value at the contract drafting stage of the lifecycle but doesn’t offer functionality to help with the other stages of the lifecycle, like getting a contract negotiated, signed, stored, and tracked.
2. AI contract review software
AI contract review software is used to find, extract and flag important data points and deviations within executed contracts, making it quicker and easier for teams to review their agreements.Â
Certain AI contract review tools, like contract intelligence software and AI contract analysis software, will also evaluate risk within a contract and flag areas of concern.
Again, the main limitation of AI contract review software is that it doesn’t deliver end-to-end functionality for the whole lifecycle.
3. AI-enabled contract automation software
Unlike the two types of contract AI we just described, AI-enabled contract automation software offers features that benefit teams throughout the contract lifecycle.Â
An all-in-one contract automation platform like Juro enables teams to leverage AI to draft and review contracts, as pictured here:
… but it also lets users:
Collaborate on contracts in real time, without leaving their browser
Set automated approval workflows for high-risk contractsÂ
Instantly query contracts to find key data pointsÂ
Sign contracts securely with legally binding eSignatures
Set automated reminders for important dates within a contract
Initiate contracts from integrated platforms, like CRM or ATS
This enables businesses to leverage the various benefits of contract AI while also making the rest of the contract lifecycle faster, more efficient, and less painful.
Want to find out more about contract AI with Juro?
Juro is an AI-enabled contract automation platform that empowers your team to create, agree and manage contracts in one unified workspace. Juro is a global Leader for CLM, according to independent G2 reviews, and leads the category for user adoption and quality of support.
Visit juro.com/legal-assistant to find out more, or book a demo with my team here.
Author Bio
Richard Mabey is the co-founder and CEO of Juro, one of the UK and Ireland’s 100 fastest-growing technology scale-ups. A former M&A lawyer at Freshfields, Richard founded Juro in 2016, and was recently shortlisted for the scale-up entrepreneur of the year by the Great British Entrepreneur Awards.
