Artificial intelligence (AI) has been gradually disrupting traditional sectors and processes, with law and procurement being no exceptions. The integration of AI and machine learning (ML) technologies in these fields can help manage contractual risks more effectively and efficiently. Here are some of the concrete ways AI can be employed, accompanied by real-world use cases:
- Contract Analysis
AI-powered contract analysis tools can rapidly process large volumes of contracts, identify potentially risky clauses, flag missing terms, or spot other legal issues.
Use Case: LawGeex, an AI-based contract review platform, uses natural language processing (NLP) to review contracts and compare them to a predefined legal policy. The platform can automatically flag risky clauses and suggest alterations to align the contract with the company’s policy, helping businesses mitigate risks before they occur.
- Contract Process Automation
AI can automate various stages in the contract lifecycle, from drafting and reviewing to negotiation. By doing so, it minimizes the risk of human errors that could lead to contractual risks.
Use Case: Legal Robot uses AI to automate the contract creation process, utilizing a vast legal language database. It helps businesses generate legally sound contracts with reduced human intervention, minimizing the risk of manual errors.
- Risk Prediction
ML algorithms can be trained on historical data to predict contractual risks, allowing companies to make informed and proactive decisions about their procurement contracts.
Use Case: Kira Systems, an AI-powered contract analytics software, provides detailed risk reports by learning from previously negotiated agreements. It helps procurement teams foresee potential risks, providing an early advantage in the negotiation process.
- Deadline Management
AI can automatically track key dates and deadlines within contracts, alerting procurement and legal teams well in advance, thereby avoiding potential penalties or other legal repercussions.
Use Case: LinkSquares, an AI-driven contract management platform, provides alerts for important dates in contracts, such as renewal dates and deadlines for deliverables, ensuring that companies meet all their contractual obligations timely.
- Regulatory Compliance
AI can help ensure that all contracts comply with applicable laws and regulations, reducing the risk of legal violations.
Use Case: Compliance.ai uses machine learning to keep track of regulatory changes and automatically assess whether contracts remain compliant, reducing the risk of overlooked regulatory changes.
- Training and Decision Support
AI tools can provide contextual training and decision support to procurement staff and legal teams, based on a comprehensive analysis of data and contractual risk patterns.
Use Case: LawPath uses AI to provide personalized recommendations based on the legal needs of businesses. It helps legal and procurement teams make better-informed decisions by offering contract templates, legal advice, and more.
AI is revolutionizing the way large corporations manage contractual risks in their procurement departments. However, while AI can provide potent tools for managing these risks, it should be seen as a supportive tool rather than a complete replacement for human legal expertise and understanding.
