Isn’t it wonderful to take a chance? However, that is not acceptable in your company’s legal department. However, every contract, no matter how tiny or insignificant it appears, introduces a new risk to your organisation.
By utilising legal technology, you and your department will be able to approve contracts more quickly and with less risk. Tools that improve information availability, aid legal and business teams, and manage the whole contract lifecycle help to speed up the vital, yet time-consuming, contract risk management process. Here are five ideas to get you started.
Begin with a Template You Can Access Easily
You can avoid the time-consuming and hazardous process of generating contracts from scratch if you have simple access to authorised contract templates.
The Problem: Ineffective Contract Creation
The establishment of contracts is a significant source of contract-related risk. Creating a new contract takes time and is dangerous since it exposes the organisation to human mistake by the drafter. “Templates allow less room for mistake,” says Contracts Counsel. If a lawyer draughts every contract from scratch, there is a greater chance that they may overlook an important detail. Templates offer everything that might be required, allowing the attorney to customise or delete them as needed.”
Access to the usage of templates is critical for contract risk management since templates minimise risk while also speeding up the contract writing process. However, without a proper document management system, you may be unable to access the most recent authorised templates – or you may waste time searching for them.
A Contract Lifecycle Management (CLM) System is the solution.
An successful CLM platform centralises all of your company’s contracts and contract templates in a cloud-based location, allowing counsel to quickly and simply search for and retrieve authorised templates. You may save time, decrease risk, and promote department-wide uniformity by making it easier for attorneys to obtain contract templates. You may relax knowing that all key aspects are covered in each contract when your staff works from an authorised template.
Locate and analyse key terms and concepts in third-party contracts with ease.
Legal technology that assists you in locating and analysing essential phrases and concepts in a contract prepared by a third party expedites the review process while lowering the risks associated with human review.
The Difficulty: Examining All Instances of Key Terms
Another significant source of contract risk is the contract’s terms. “Contract terms are the lifeblood of the deal,” according to a Business2Community article. When contracts with obsolete or outdated terms are formed and, in certain situations, signed, there is a risk.” Because each contract’s contents are so crucial, the legal team’s ability to discover, examine, and change relevant provisions in a contract generated by a third party is critical.
In an ideal world, every firm would use the same contract form for every type of contract. Key phrases might then be easily found by reviewing attorneys in the same spot every time. In actuality, each firm has its own contract template, and each contract is somewhat different. This makes examining third-party papers difficult for legal examiners, as phrases and conditions that lurk in unexpected portions of a given document might be missed.
Manually searching through a contract for crucial clauses is not only time-consuming; it also creates risk due to the likelihood of human mistake and oversight.
The Solution: Contract Review Automation Using Legal Technology
You and your legal team may use a technology like Evaluate AI to more quickly locate and review relevant phrases and concepts. You may tell Review AI which terms and ideas are essential to you. The AI will then highlight certain terms in the paper. This guarantees that you can discover and handle every incidence of the key phrase in the contract, even if it’s in an unexpected place.
Furthermore, Review AI can evaluate whether any crucial ideas are missing. The tool connects to an authorised clause library automatically, allowing you to simply amend the document using pre-approved text. The technology provides legal reviewers with assurance that they will not miss anything and eliminates the need to spend hours combing over every line of the contract. It speeds up the review process by minimising several sources of risk, hence expediting contract risk management.
Examine AI Contract
Look up key terms in precedent documents.
Your legal staff may readily search for crucial phrases in prior contracts using an excellent knowledge management system. This ensures consistency and allows you to keep track of contract risk management.
The Problem: Inadequate Access to Precedent Documents
The collection of precedent papers is one of the most significant instruments in a legal team’s armoury. Access to historical records provides your staff with a thorough understanding of the legal environment in which your organisation operates. However, precedent papers are useless if they are not accessible or searchable. Contract reviewers may have to go through hundreds of previous contracts to get information about a single phrase or term. Imagine doing that by hand – it would take an eternity to conduct just one contract evaluation.
The Answer: An Efficient Knowledge Management System
An excellent knowledge management system enables you to do advanced searches throughout your entire contract database, allowing you to quickly locate relevant precedent contracts.
For example, if you’re analysing a new contract under California law, you may utilise the knowledge management system to search for all previous contracts signed in California and discover the wording used in those cases. This saves you time spent manually digging through precedent papers and promotes a more uniform approach to contract assessment and writing. This stability, in turn, lowers the company’s risk.
Consult with the Business Team Perform the First Pass of Contract Review
Automated legal technologies, such as Review AI, enable other team members, even those with no legal training, to obtain legal clearance on low-risk contracts more rapidly.
The Obstacle: A Protracted Approval Process
Many firms prevent sales team members from evaluating contracts because they may not know what to look for or how to spot issues and escalate them to legal. While this helps to reduce the risk of contract review, it also creates a bottleneck. Waiting for legal clearance on every contract, even those with little risk, creates a needlessly protracted procedure for business teams.
Self-Service Legal Review Review is the solution. AI facilitates contract risk management by allowing business users to submit low-risk contracts, such as NDAs, to an AI-based platform. The AI produces redlined answers that are aligned with legal’s standards, considerably speeding up the contract review process.
The programme operates by raising a red flag for issues of high, medium, and low risk and automatically recommending appropriate insertions, deletions, and other modifications. This enables business users to conduct an initial evaluation and negotiation of contracts while ensuring that significant areas of risk do not fall through the cracks.
Properly Execute Contracts Once Approved Legal tech that automates contract execution and maintenance saves time for the legal team and protects the organisation from financial danger.
The Problem: Inadequate Contract Management
Contract risk does not vanish after the contract is signed. If a contract is not properly performed or maintained, the organisation faces substantial legal and financial risk. To mitigate this risk, legal departments must verify that the corporation follows all contract conditions correctly and on schedule.
Furthermore, legal teams must monitor the contract’s lifetime to prevent exposing the organisation to needless financial risk. For example, does the contract automatically renew? Are there any conditions that must be satisfied in order for the contract to be terminated? Extracting and acting on the most important information from each of a company’s numerous contracts may be time-consuming and inconvenient.
The Solution: Contract Administration Streamlining Legal Tech Cloud-based legal tech, which keeps critical information in a centralised location, assists legal teams in streamlining the contract management process. You can quickly keep track of relevant information and create appropriate alarms using good CLM software, for example. This ensures you never miss a key deadline or fail to meet the parameters agreed upon with the organisation.
When launching a new legal tech platform, it is critical to ensure that the system will seamlessly interface with other components of your company’s tech stack. These linkages decrease manual work, remove redundancy, and simplify the contract management process even more.
Legal technology is critical to successful contract risk management.
Legal teams are always balancing the need to limit risk with the need to speed up traditionally sluggish processes and satisfy fast-moving business counterparts. Contracts are a prominent source of risk for businesses, and legal departments have traditionally spent a large amount of effort managing contract risk.
However, using legal technology solutions like as artificial intelligence (AI) that automatically flags areas of risk, legal and business teams may collaborate to speed contract evaluation and eliminate related risk. In summary? Effective legal technology benefits everyone.