Why AI Will Take Over Contract Review & Contract Management Processes

Why AI Will Take Over Contract Review & Contract Management Processes

Contract management software with AI capabilities can identity patterns in contracts and use specific data points to interpret the contract’s intent. As the AI’s algorithms gain familiarity with contract data, the AI and contracts becomes more and more capable of drafting initial contracts from different sources.

Artificial intelligence (AI) is an incredibly powerful tool, capable of rapidly increasing and maximizing results in both contract review and contract management. AI can be implemented to offload specific tasks within the contract lifecycle. Such tasks, while they are required and inherently critical to the process itself, can be tedious and time-consuming. Contract generation, risk management, workflow, and negotiation are a few examples of important tasks that can be automated by AI.

Contract management software with AI capabilities can identity patterns in contracts and use specific data points to interpret the contract’s intent. As the AI’s algorithms gain familiarity with contract data, the AI and contracts becomes more and more capable of drafting initial contracts from different sources.

An Overview of Artificial Intelligence In Contract Management

In general, AI is a standout for creating efficiency in managing contracts throughout the entire contract lifecycle. The versatility of AI is a key feature that aids today’s leading contract management firms in conducting more accurate and efficient contracting.

In terms of negotiations, AI functions as a dynamic and “take-charge” type of advisor. AI can ensure that data recommendations are made instantly to increase the speed and efficiency of negotiations. In addition, AI can keep discrepancies at bay by highlighting any encountered issues and by helping contract managers follow policies in general (Mainspring, 2020).

While managing contract lifecycles, mitigating risk is crucial. AI can flag important information and manage obligations and conduct contract routing to help create a seamless process with minimal risk.

Artificial intelligence streamlines contract documents by taking their contents and formulating “structured enterprise data” (CloudMoyo). With such data, areas of both opportunity and risk can be identified. Additionally, AI can develop a contract repository that functions as a strategic tool, further separating companies from their competitors. Due to the complexities of contract language and clauses, manually overseeing contracts can become challenging and time-consuming when renewals, terminations, and amendments of the contracts come into play. With AI based contract review tools, all parts of the contract lifecycle can become systematized and labor-saving.

What AI-Based Contract Management Software Offers

By including AI in your contract ai software, you can review, organize, and negotiate contracts at higher volumes with significantly increased productivity and accuracy.

Some applications of AI in contract management software include the following:

  1. Classify contracts – organizes contracts by clause and by contractor agreement
  2. Classify clauses – searches documents for meaning paragraph-by-paragraph, categorizing clauses according to content
  3. Highlight clauses – notes data that the clause protects
  4. Locate new clauses – protects new clauses in a clause repository
  5. Supervise various processes – reviewers can reorganize misclassified clauses for later identification
  6. Classify associated documents – acknowledge any associated document categories

AI greatly enhances and supports contract review tools strategies by both detecting and extracting data, and by managing risk and transparency (Sehgal, 2020).

Where Does Artificial Intelligence Extract Contract Data From?

The value of AI contract review software is heavily based on its ability to save time and process incredibly high volumes of data with extreme accuracy. Consider the following to see if artificial intelligence applies to some of the documents that your company consistently encounters during your contract management processes:

  • Healthcare contract documents
  • Real estate deeds and/or contracts
  • Merger and acquisition contracts
  • Supplier contracts
  • Customer contracts
  • Sensor data (industrial machinery)
  • Raw materials orders (construction industry)
  • Vehicular data (industry fleets)
  • Corporate employee and hiring data (Sussman, 2021)

Automation of Various Processes

With AI contract review software, thousands of contracts can be instantly auto tagged with corresponding data, companies, deadlines, and renewal alerts that can create a well ordered and coherent contracting system. AI and contracts automates contract migration and contract abstraction, which easily organizes and appropriately places information from your contracts. Today’s AI is comprised of algorithmic equations that are ran by “natural language processing”-based machine learning (NLP) (CloudMoyo). From these algorithms, the AI can conduct both contract migration and contract abstraction with incredible precision and momentum while developing indexes based on obligations, key terms, and provisions. The result? The ability to automatically take crucial information from contracts instantly (i.e., signature date, vendor contact information, names, renewal dates) (CloudMoyo).

AI Pinpoints Where to Improve

The natural language processing-based machine learning algorithms used by AI help recognize clauses, names, and additional contract data based on contract contents. In this way, tags are auto generated and applied to contracts and related documents by the software when a document is entered into a contract management software system. In addition, when the AI’s algorithm finds that a clause has been named incorrectly, it offers the user to then make amendments and correct the label for the text or document. The AI will then make proper adjustments in its system once the text or clause has passed through a few times to follow, ensuring the mistake is not repeated (CloudMoyo).

AI Maintains Contract Consistency

A key benefit that AI contributes is the ability to maintain consistent terms across all contracts. Beverly Rich of the Harvard Business Review expresses the example of how this concept applies to the manner the phrase “confidential information” is used in non-disclosure agreements (NDA’s) (2018). In this instance, the company must ensure all sectors of the company agree on the manner that the phrase is defined and how changes to the definition must be discussed with accuracy. This is because a change to the definition operationally could potentially create challenges for the company. By utilizing AI, the operational definition of “confidential information” to such company can be held consistent throughout the contract templates, and the AI can identify other various key terms that are associated with and signal “confidential information” in further non-disclosure agreements (Rich, 2018).


Artificial intelligence continues to improve and streamline the contract management process. To stay ahead of your competitors, consider implementing the latest AI-based systems to increase productivity and to better serve your customers and vendors. In many of today’s industrial and business giants, AI has led the way to change the speed and power of their operations. Having a well-versed understanding of how artificial intelligence can help up-level your current contract management process is necessary to the implementation of such technology. If your company has a high volume of contracts or you simply desire to routinize your contracting and increase time-efficiency, consider adopting AI into your system.


CloudMoyo. (n.d.). Applying artificial intelligence to contract management. CloudMoyo. https://www.cloudmoyo.com/blog/artificial-intelligence-in-contract-management/#:~:text=Applications%20of%20AI%20in%20contract%20management&text=It%20can%20let%20companies%20review,able%20to%20negotiate%20and%20execute.

Mainspring. (2020, November 23). What is the Future of AI in Contract Management? Mainspring. https://www.mainspringcg.com/what-is-the-future-of-ai-in-contract-management/.

Rich, B. (2018, February 12). How AI Is Changing Contracts. Harvard Business Review. https://hbr.org/2018/02/how-ai-is-changing-contracts.

Sehgal, D. R. (2020, October 1). How is AI changing contracts. iPleaders. https://blog.ipleaders.in/how-is-ai-changing-contracts/.

Sussman, J. (2021, February 23). AI Contract Review: Why AI Is Taking Over Contract Review. Evisort. https://www.evisort.com/why-ai-will-take-over-for-contract-review-and-contract-management/.


Written by Lindsey Paulk

Lindsey Paulk is a Content Writer in Jacksonville, Florida that specializes in digitally communicating all-things contract management.

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