Future of Contracts: Key Takeaways
Contracts are the commercial backbone for all enterprises globally and have the potential to drive fundamental changes in business behavior.
At Apttus, we recently published thoughts and perspectives from 11 leaders in the field of law and technology. Below is a quick summary of their different perspectives and predictions on the next decade of contracting:
Implementation of a contract lifecycle management tool cannot be limited just to legal processes. Even intelligent business processes defined by sharp legal minds are not inherently better for an organization if they stand alone. A CLM implementation is a program governing and impacting all the sell and buy-side processes. The future of contracting begins today by implementing CLM as a program of many individual projects across the organization.
Combining intellectual rigor with technology that already exists is poised to give a huge boost to innovation in the contracting process. The real future of contracting involves deliberate movement up the value chain by leveraging a tool stack that already exists.
A change movement from document-centric to the data-centric contracting process has already begun. The change is driven by increased time spent on liability negotiations than establishing a clear baseline of responsibilities for the success of the business transactions.
The future will belong to those legal organizations and professionals who use data and AI tools for contract analytics. Successful legal professionals will leverage best-in-class tools to enable their business clients to take informed risks.
Advances in collaboration technology predict the demise of email for collaboration during the contracting process. CLM platforms such as Apttus CLM provide far greater efficiency when users enforce platform-based collaboration tools.
Contracts will be transformed fundamentally via AI, blockchain, and their applications. As blockchain-enabled smart contracts will ensure that all parties have met contractual obligations, AI-enabled applications will render clearing houses or financial intermediaries irrelevant.
Legal organizations will focus on delivering a far greater user experience to end-users of the contracting process. Powered by AI and Blockchain, contracting will become a no-touch process, and end-users will experience it as a seamless flow.
Artificial Intelligence and Legal Operations
Lawyers using AI tools will replace lawyers or legal organizations who don’t or won’t use AI. Artificial intelligence tools will ensure the equilibrium of promises and legal risks inherent in business transactions leading to streamlining of contract management.
Legal professionals focusing on repeatable tasks will be out of the contracting business as self-service contracting systems become commonplace. Lawyers will instead focus on higher-value prediction services and will manage the risk of a company getting sued or embroiled in a controversy.
Standardization of the contracting process through technology will be a massive enabler for procurement and sourcing professionals. Companies will allocate more legal resources to the commercial side as procurement becomes self-sufficient to generate, drive and analyze contract documents.
The future of contracting begins with informed negotiations, equal access to market data, and tool-based ability to weight risks. While today’s technology makes all this possible, it requires unlearning many current practices and habits.
CLM technology will power the future of contracting with audit trail capability that will identify what went wrong, when, and why. Blockchain technology will only act as a supplement in the coming decade. Multiple advances in AI and quantum computing are still required to make it mainstream for reliability and security expected by business clients.
Standards and Protocols
Computable agreements that can self-execute are the end goal for contracting. For this future to arrive, organizations will have to agree on common standards and protocols to enable the internet of contracts. The CodeX Computable Contracts Initiative and the Legal Specification Protocol project reflect an attempt to draft agreements in a format that machines can understand.
Contracting ultimately will become a source of revenue generation for companies. As contracts are the mirror to gauge the performance, contracts will become a series of data points.
Do you want to learn more? Get your copy of the Future of Contracts White Paper here.