Increasing Contractual Insight: AI’s role in contract lifecycle management

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Artificial Intelligence & Robotics Increasing Contractual Insight: AI's role in contract lifecycle management

By Nicole Black

September 25, 2023, 12:29 pm CDT

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Nicole Black.

It seems that not a day goes by without a new generative artificial intelligence, or GAI, software announcement in the legal technology space. The rate of advancement has been rapid, and new GAI large language model products are being developed incredibly quickly. No matter your practice areas or firm size, there is undoubtedly a generative AI tool in development that has the potential to significantly streamline your daily workflow.

For the last six months, I’ve been writing about GAI and the different categories of LLM software that are, or will soon be, available for legal professionals. In May, I provided an overview of LLM contract analytics tools designed to assist with the drafting and review of contracts. In this column, we’ll explore another type of LLM software that also applies to contracts but in a different context: enterprise contract lifecycle management, or CLM, which includes intake, drafting, negotiation and management of contracts.

The evolution of CLM

Contracts are the lifeblood of business operations, and yet until recently, were one of the most underutilized assets in the corporate world due to their static nature. AI and LLMs provide a new layer of data analysis and insight that dramatically increases the value proposition of contractual data to an organization. These documents define the parameters of a company’s interactions with its key stakeholders—customers, suppliers, partners and employees. Historically, negotiating, managing and tracking contracts and their key provisions has been challenging due to the static nature of the documents.

In recent years, however, the landscape of contract management has shifted dramatically, redefining the value proposition of contracts for both companies and law firms. Rather than merely establishing parameters for legal obligations, they are more aptly viewed as unique enterprise datasets that can be leveraged for insights and analytics to inform decision-making and support key business objectives.

Choosing CLM software

AI functionality is the key that unlocks the untapped potential of contracts and CLM software, providing near-instantaneous access to actionable insights that support strategic decisions related to negotiation, risk assessment, compliance and the allocation of resources. As LLM tools proliferate, corporate legal departments will increasingly have more robust and powerful CLM insights than ever before. Using these LLM-powered chatbots, legal professionals can identify input search requests that search across an organization’s entire repository of contracts or a single contract. Customers can also engage in a question-and-answer format across a database of contracts or a single contract.

Note that when choosing cloud-based CLM software, cloud-based options will necessarily involve sharing your business’ data with a third-party provider. To maintain ethical compliance relating to client confidentiality, it is essential that you fully understand how the technology vendor will handle your firm’s data, including determining where their cloud servers are located, who can access the stored information and what backup measures they have, among other factors.

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CLM software options

Now let’s take a look at some CLM software tools that have recently integrated generative AI features into their platforms. While not exhaustive, the list below provides a starting point for your research into this software category. Some of these products also include contract drafting functions but are included here because that’s not their primary use case. Because these products are enterprise-level, pricing is unavailable on the companies’ websites and is not included.

• Luminance Corporate - Ask Lumi: The “Ask Lumi” feature adds value to Luminance Corporate by facilitating contract due diligence through targeted data extraction and risk assessment insights. Users can interact with the AI for immediate answers to specific contract questions. This tool automates the contract management process by answering questions from users in real time relating to both contracts under negotiation and finalized agreements. With multilingual and multijurisdictional capabilities, this CLM solution is particularly well-suited for firms operating globally.
• Icertus Explore AI: This platform analyzes customer data to provide in-depth contract intelligence. Its AI chat interface allows users to extract valuable insights from comprehensive contract data, summarize and translate contracts across multiple languages and monitor specific contractual obligations, among other features. The AI can glean contextual insights from historical contract data that can be used to forecast outcomes and make strategic, informed decisions.
• ContractPod AI Leah Insights: “Leah Insights” aggregates data from contracts to help users make informed decisions about issues ranging from contract negotiation decisions to risk management assessment. By providing a comprehensive dashboard view of both vendor and customer contract data and leveraging real-time, predictive analytics, it streamlines and informs the negotiation process. In addition to providing a historical overview of a firm’s previously signed contracts, Leah Insights can also answer questions and locate contractual data. The platform’s robust search and translation capabilities make it a versatile tool for legal teams managing complex, multijurisdictional agreements.

GAI functionality is changing the way that we use and interact with contracts by making contractual data more accessible and valuable. Contracts are no longer static, stale documents and instead provide a treasure trove of data that can be mined to provide strategic and informed insights, enabling legal professionals to better mitigate risk, negotiate, manage and assess contracts.

We’re entering an unprecedented phase of legal software development. The changes are occurring rapidly and on a broad scale across the legal software ecosystem. As GAI tools are released and embedded into existing, trusted legal software platforms, the potential benefits are significant. But remember, while these tools offer incredible advantages, they also trigger ethical considerations related to data security and client confidentiality. Choose wisely and carefully, and you’ll be well-equipped to navigate the increasingly diverse and robust legal GAI landscape.

Nicole Black is a Rochester, New York-based attorney, author and journalist, and she is senior director of subject matter expertise and external education at MyCase, a company that offers legal practice management software for small firms. She is the nationally recognized author of Cloud Computing for Lawyers and is co-author of Social Media for Lawyers: The Next Frontier, both published by the American Bar Association. She writes regular columns for ABAJournal.com and Above the Law; has authored hundreds of articles for other publications; and regularly speaks at conferences regarding the intersection of law and emerging technologies. Follow her on X (formery Twitter) @nikiblack, or she can be reached at [email protected].

This column reflects the opinions of the author and not necessarily the views of the ABA Journal—or the American Bar Association.

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