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Categories

04.12.2023

Artificial intelligence in contract drafting

Automation and optimization of contract processes

2023, the digital era in which artificial intelligence (AI) is significantly changing the way contracts are drafted. In this blog article, you will learn how AI-based automation optimizes contract processes and makes companies more efficient.

The role of contract drafting in business

In order to understand how contract drafting is being significantly changed by AI, it is necessary to take a closer look at the special role of contract drafting in business life. It is one of the most important parts of business and legal transactions. Clear and precise agreements between parties must be recorded in order to avoid misunderstandings. A well-drafted contract defines the rights, obligations and responsibilities of each party and sets the framework for dispute resolution. Contract drafting has an indirect influence on the strategy, planning, management, finances and other elements of a company.

In addition, it creates trust between the contracting parties and promotes business security. Contract drafting is so important because it influences tax, financial and operational effects. It is also a risk mitigation tool as it addresses potential pitfalls and liability issues.


Automation in contract drafting

Most people are familiar with automation, such as the monitoring and documentation of contracts. The contract itself, on the other hand, is usually drawn up laboriously by hand. On average, it takes 20–30 days to draw up, negotiate and conclude a contract.

With contract management software and automated templates, these steps can be automated and therefore significantly accelerated. Predefined templates can be included and the legal operator has to select the appropriate one. On the other hand, templates can be created based on parameters, which allows the operator more individuality. This streamlines processes, minimizes errors and increases efficiency, allowing contracts to be designed and managed faster, more accurately and more cost-effectively.

Specially developed AI algorithms and software are used for this purpose, which access extensive databases of contract templates. These templates can be adapted to the individual requirements and conditions of a company or transaction. This enables the rapid creation of customized contracts without the need for lawyers or legal professionals to manually create each contract.


Advantages of contract management software  

The benefits of the software are manifold: not only does it save time and resources, it also significantly reduces the risk of human error. In addition, the software ensures that contracts are always up-to-date and compliant, as it automatically takes into account changes in laws and regulations. Looking to the future, automation will play an even greater role, with AI systems taking on more and more tasks; from contract tracking to meeting deadlines and notifications. This will free up human resources and speed up contract processes.

Companies using this technology can optimize their contracting and gain a competitive advantage by enabling faster and more accurate contracting.

 

This article was written by Chiara Giuliani and Samir Salam

Legal Service Delivery

With Legal Service Delivery, the Now platform from ServiceNow® offers a connection between employees from specialist departments with legal touchpoints and the legal teams that can be integrated into your organization's system landscape. The comprehensive integration into governance or compliance processes, as well as the link to document management and eSignature software, make it possible to harness the power of digitalization for your organization's legal affairs.

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