AI Contract Review: Speed up reviews and mitigate risks

Imagine an environment where every contract your organization processes is reviewed in minutes, not days. Where potential risks are flagged before they become costly mistakes. Welcome to the future of contract management, powered by generative AI technology.

But what exactly is AI contract review, and why is it becoming an essential tool for legal teams and procurement professionals alike? 

In this article, we’ll take a look at how contract review powered by Zip AI can accelerate workflows and optimize contract management, unblocking processes and mitigating risks.

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What is AI Contract Review?

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AI contract review refers to the use of artificial intelligence, particularly large language models, to analyze and assess contracts. Unlike traditional methods, which rely on manual review by legal professionals, AI contract review automates much of the process. This technology is quickly changing how legal teams and procurement departments handle contracts, offering a more efficient, accurate, and risk-averse approach.

As organizations increasingly deal with complex and high-volume contracts in-house, AI-powered spend orchestration  solutions are becoming indispensable in ensuring compliance, consistency, and accuracy.

AI Contract Review vs. Manual Contract Review

Even with a skilled compliance team as part of the contract workflow, the manual contract review process is time-consuming and fraught with potential for human error. In contrast, AI-powered spend orchestration tools can introduce a level of precision and efficiency that manual processes simply can’t match. Here’s how they differ:

• Risk Detection Mechanisms: AI-powered tools are equipped with sophisticated algorithms that can detect risks within contracts in real time. These systems scan legal documents to identify potential risks, such as non-standard clauses, deviations from approved templates, and terms that could lead to future disputes.
• Identifying Commonly Overlooked Risks: Human reviewers, even experienced legal experts, can overlook risks due to the volume or complexity of some contract types. AI contract review software excels at spotting these issues, thanks to its ability to analyze entire contracts and cross-reference them with established playbooks and legal standards.

Use Case Example: Consider a law firm or multinational enterprise that handles hundreds of NDAs (Non-Disclosure Agreements) each month. With manual review, a legal team might spend hours scrutinizing and redlining each document for potential risks, causing bottlenecks for everyone down the line. 

AI-powered document extraction tools can reduce this process to mere minutes, flagging any non-standard clauses and allowing compliance professionals and other stakeholders to focus on more complex tasks.

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How Does AI Contract Review Work?

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AI contract review software operates through a series of well-defined steps, integrating seamlessly with existing workflows:

1. AI Algorithms and Machine Learning: At its core, AI contract review leverages machine learning algorithms to analyze contract data. These algorithms are trained on vast datasets of legal documents, enabling them to recognize patterns, extract relevant information, and identify potential risks.
2. Process Flow from Ingestion to Analysis: The process begins with the ingestion of contracts into the AI system. The software then analyzes the contract data, extracting key points such as pricing, terms, and obligations. This information is then compared against established benchmarks, legal standards, and the company’s internal playbook.
3. Integration with Existing Systems: AI contract review tools can be integrated with contract lifecycle management (CLM) software and other existing systems, including Microsoft Word and document management platforms. This ensures a smooth contract review process without disrupting established workflows.

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Top Benefits of AI Contract Review

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Implementing generative AI tools to assist in reviewing contracts can brings numerous benefits, making it a valuable investment for organizations and legal departments of all sizes:

• Process Automation: One of the most significant advantages is automation. By automating the contract review process, organizations can achieve substantial time savings, freeing up legal professionals to focus on higher-value tasks.
• Streamlined Vendor Management: AI-driven contract review tools streamline vendor management by identifying redundant requests, accelerating vendor approvals, and ensuring consistent contract terms. This leads to cost efficiency and improved vendor performance.
• Enhanced Decision Making: AI contract review tools provide legal teams with actionable insights derived from contract analysis. These insights enhance decision-making by highlighting key areas of concern and offering data-driven recommendations.
• Continuous Learning and Improvement: AI models are constantly learning and improving. With each contract review, the system becomes more adept at identifying risks and ensuring compliance, leading to ever-increasing accuracy and efficiency.
• Accuracy and Risk Mitigation: AI contract review software significantly reduces the risk of human error. By automating the review process, organizations can mitigate risks more effectively and ensure compliance with industry standards.
• Cost Reduction: By streamlining the contract review process and reducing the need for extensive manual labor, AI contract review tools can lead to significant cost savings for organizations.

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How to Choose the Best AI for Contract Management

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There have never been more options to pick from when it comes to AI-powered contract review solutions, but selecting the right vendor considering several key factors:

• Must-Have Features: Look for AI contract review tools that offer advanced risk detection, integration capabilities, and customizable workflows. The software should also provide real-time analytics and detailed reporting.
• Integration Capabilities: Ensure that the AI contract review software can integrate with your existing tech stack, CLM systems, and other relevant platforms. Orchestrated solutions will streamline the implementation process and minimize disruptions.
• Security Measures: Security comes first when it comes to dealing with legal contracts. Choose AI contract review software that offers robust security measures, including data encryption, compliance with industry standards, and regular security audits.

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Implement AI Contract Review with Zip

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Modern AI-powered spend orchestration tools offer incredible advances in terms of efficiency, risk mitigation, data integrity, and cost reduction. Zip AI takes these benefits to the next level, providing a comprehensive orchestrated solution that addresses the needs of procurement compliance teams at any scale. 

Here’s how Zip AI can accelerate contract management and purchasing workflows across your company.

1. AI Document Extraction: Zip’s AI document extraction automatically parses data from contracts, order forms, and other documents, creating an accessible single source of truth.
2. AI Risk Detection: That platform scans contracts for various risks, including weak confidentiality protections and uncapped liability, helping legal and procurement reduce the likelihood of contractual risks.
3. AI Intake Automation: Zip’s consumer-grade entry point to purchasing requests includes an AI assistant that can answer intake questions using natural language processing, reducing procurement’s involvement in routine intake queries.
4. AI Vendor Consolidation: Zip AI drives savings by flagging redundant requests, and nudges requesters toward pre-approved vendors.
5. AI Assistant: An always-on AI assistant—living in Zip and in Slack—provides dynamic guidance for requesters, freeing up procurement teams for strategic work.

Ready to see the difference Zip can make for your organization? Request a demo today and take the first step toward accelerating your contract management process.