As AI services become more widespread, business operations and practices are evolving, and legal firms and service providers are no exception. One key area in the legal field affected by AI is contract management. The use of AI in managing contracts is rapidly expanding as more organizations adopt AI-driven software to streamline their contract processes and reduce errors. Contract management is a complex process that involves drafting, negotiating, executing, and overseeing contracts.
It is vital for most businesses, as mistakes in contract management can lead to costly legal battles, revenue loss, and damage to reputation. Utilizing AI in contract management can help organizations lower these risks by automating many parts of the contract drafting process.
Karimi & Associates Law Firm, with a team of consultants, experts, and experienced lawyers in various legal fields such as financial, banking, and cyber law, provides specialized legal advice, drafts contract terms, and safeguards your interests during contract negotiations.
A Practical and Well-Known Example
Some legal startups, like LawGeex, an online legal services provider, now offer AI-powered contract drafting. To use it, the user uploads their proposed contract into an AI system. The system analyzes the text and produces a report highlighting legal terms and concepts. The AI can identify key legal points and recommend additions or deletions based on its analysis. It also pulls from a large database of successful and unsuccessful agreements in the relevant field to inform its recommendations.
Using AI technology enables new ways to review and edit contracts using extensive legal data, making it a valuable tool for drafting legal documents.
Advantages of Using AI
One of the main advantages of AI in contract management is its ability to analyze large volumes of data quickly and accurately. AI-powered software can review and assess contracts to identify potential risks and recommend clauses to mitigate them. For instance, AI can help prevent legal disputes by detecting and highlighting issues in contract language, such as vague wording or conflicting clauses, before the contract is signed.
AI can also assist in contract negotiations by suggesting suitable language for specific clauses based on past examples or legal practices. For instance, when negotiating a sales agreement, AI can analyze previous contracts to find common terms and recommend appropriate wording. This can speed up negotiations and help ensure a fair outcome for everyone involved.
Another advantage of AI in contract management is its ability to automate many human tasks. For instance, AI-powered software can automatically generate contracts using predefined templates, reducing the time needed to draft them from scratch and helping companies and organizations save time while also reducing the risk of errors.
Moreover, AI can help organizations maintain compliance with legal and regulatory standards. AI-driven software can review contracts to verify adherence to laws and regulations, such as GDPR and HIPAA. This advantage helps organizations avoid costly fines and legal disputes by ensuring their contracts meet all applicable rules and regulations.
AI Challenges
One major challenge in using AI for contract management is effective training. Artificial Intelligence-powered software depends on machine learning algorithms to analyze and interpret data, and its effectiveness is only as good as the data it is trained on. Therefore, making sure that the AI is trained on accurate, relevant data is crucial for producing accurate, reliable results.
Another challenge is making sure the AI is transparent and explainable. AI-based software can be complicated, and itโs not easy to see how it produces its results. So, making the AI transparent and explainable is crucial so users know how it makes its recommendations.
Artificial intelligence or legal advisor?
One of the biggest challenges in expanding AI use is legal experts’ concern that AI tools will replace real professionals. Could it be confidently assured that a contract drafted by artificial intelligence is completely coherent? Does the use of artificial intelligence eliminate the special and unique skills that legal experts bring to contract drafting?
Some may think that AI can replace a real legal advisor in the contract management process, while others believe that using AI for contract drafting is inefficient. However, AI startups are not trying to replace advisors and lawyers; they argue that AI systems are more likely to be used as legal assistants for drafting contracts, analyzing them, and offering suggestions for improvements; Legal advisors can choose whether to follow the recommendations.
Therefore, in the current context, AI technology cannot replace or diminish the role of lawyers, legal advisors, and contract specialists in contract regulation. Of course, the legal services industry is still in its early stages with AI.
The use of AI in contract management is rapidly expanding, and for good reason. AI-powered software can assist organizations in streamlining contract processes, reducing errors, and ensuring compliance with legal regulations. By utilizing AI, organizations can save time and lower costs. However, proper AI training and transparency are crucial to achieving accurate and reliable results.
If you are planning to draft or finalize a contract or need legal advice across various areas, you can contact Karimi & Associates Law Firm via the Contact Us section. Our team of consultants, experts, and professional lawyers will provide specialized legal assistance.