October 9 by Jesal Mehta
Law departments try to get more efficient every year. At the same time, the Chief Legal Officer or General Counsel leading a law department is looking for ways to align department objectives to corporate objectives.
How do executives balance these two needs? They use technology.
Contract Management Adds Value to Corporate Objectives
There are several tools that legal leaders have adopted widely to support efficiency goals. E-billing software, for example, allows for more efficient use of both inside and outside counsel hours. Matter management technology lets legal leaders control spending and allocate resources according to the importance of matters. Collaboration and document management tools make it easier to share the expertise of senior attorneys with the broader department and outside counsel.
Yet all these tools only assist the law department with its internal objectives, in particular with their cost management needs. There is still the question of aligning with corporate objectives such as increased sales and market share. To create this alignment, contract lifecycle management technology offers a solution.
Contract management technology increases the speed of contract cycles, increasing sales and win rates. Fully searchable and reportable contract data supports strategic decision making by offering a way to calculate risks and costs of a course of action. Integration to Quote-to-Cash processes, CRM and ERP systems further fuels these benefits.
Apttus customers have proven these benefits. In a 2017 survey of more than 200 Apttus customers, reported benefits include 42% faster contract cycles, 45% greater contract accuracy, 23% fewer amendments after signature, and 17% more contract auto-renewals.
In short, contract management software helps law departments meet corporate objectives unlike any other technology that law departments use. And applied artificial intelligence makes contract management software more powerful.
What is Applied Artificial Intelligence for Contract Management Software?
Artificial intelligence technology uses the number-crunching power of modern computers to find patterns in data, and then recommend or execute an action based on the data. The continual improvement of algorithms and ever-faster computers have enabled this technology to become extremely good at certain tasks, such as playing chess. These programs seem “intelligent” because they can exceed human capabilities in areas where the best decision requires a degree of data analysis that human can’t perform on their own.
Such technologies are now coming out of the lab and into everyday products, such as virtual digital assistants and the recommendations offered by your favorite music or television streaming service. When artificial intelligence is a core part of an application, it is called applied AI.
Business applications are now using applied AI to fuel productivity and achieve corporate goals. Contracts are an excellent place to apply AI, for several reasons. Contracts are important to businesses, they contain large amounts of data that cannot be analyzed by hand, and they can offer insights to recommend valuable actions.
Applied Artificial Intelligence Benefits Corporate Objectives
When applied AI is added to contract management technology, law departments are even more tightly connected with corporate goals. Consider these specific ways that companies can use applied AI in contract management:
• Agreement Risk Management. AI calculates the financial risks associated with key terms and clauses in negotiated agreements. Now the law department is able to understand the risk of certain terms and terms in combination, and can avoid risks that the business cannot accept.
• Contract Cycle Time Reduction. AI calculates cycle time associated with every aspect of a contract, including clauses. Contract professionals can reduce the time required to reach contract signature through cycle time prediction based on similar agreements. This capability reduces contract cycle times, further increasing sales and win rates compared to the use of contract management alone.
• Clause Recommendation. With its granular mapping of cycles and risks for every contract, the AI offers alternate word and clause suggestions that are proven to streamline negotiations and reduce risk exposure. This tool fuels more risk control and greater sales.
• Third-Party Paper Automation. The AI can “read” a document and understand what language is associated with a specific type of clause or term, with great accuracy. Contract managers can then automatically map business terms and clauses in a third-party document to the legal playbook. While reducing costs, this unprecedented capability also reduces risks.
It’s no accident that leading organizations have embraced contract management. Many have also experimented with artificial intelligence in recent years, perhaps not knowing how they will use it.
AI is no longer experimental—it’s here, and it’s applied in tools law departments use today.