Lack of Explainability and Source Citation

One of the foremost challenges with generative AI is its opaque decision-making process. Often, AI-driven insights are delivered without a clear trail of reasoning, making it difficult for users to trust or validate the outputs. In contract management, where decisions must be defensible, this absence of transparency creates significant risks—particularly in high-stakes scenarios like compliance or dispute resolution. Trust falters when AI cannot explain itself, which fuels skepticism.

Accuracy of AI Responses

AI-generated insights can sometimes be misleading, especially when models aren’t specifically trained for the intricacies of legal contracts, procurement negotiations, or sales agreements. While AI processes large amounts of data quickly, its outputs still require human review to ensure accuracy and relevance. Generic models may lack the specialized training needed to fully understand complex contract language, which can lead to errors.

Cost and Complexity of Training AI Models

Building and maintaining large AI models is both costly and complex. Training a model with billions of parameters can cost millions, and organizations must also invest in dedicated data science teams to fine-tune these models for specific contract-related tasks. This makes AI implementation a significant investment, both in terms of upfront costs and ongoing maintenance.

Data Security and Privacy Concerns

When it comes to contract management, data security is non-negotiable. Many off-the-shelf AI models exchange data between private clouds and third-party servers, raising concerns about how that information is stored and used. Companies must be cautious about whether their proprietary contract data could be used to train external models, potentially compromising sensitive information. Choosing a solution that keeps data secure within the organization’s own environment is crucial to avoid unintended risks.

AI-Based Contract Management You Can Trust: Ensuring Transparency and Reliability

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Contracts are the foundation of every business relationship, defining the terms of partnerships, sales, procurement, and more. However, managing these critical documents through manual processes has long posed a challenge for organizations. Enter AI-based contract management—a transformative solution that’s revolutionizing the way businesses handle their contracts. From streamlining contract creation to enhancing analysis, AI is transforming contract workflows and making them more efficient, reliable, and secure.

Redefining Contract Processes with Generative AI

Traditional contract management is often slow and prone to human error, but AI-based contract management has brought a new level of efficiency. Generative AI, in particular, has emerged as a game-changing technology in this space. It automates key aspects of contract management, from drafting tailored contract templates to suggesting optimal clauses and flagging potential risks based on historical data.

Generative AI doesn’t replace the human element—it enhances it. By taking over repetitive tasks, it frees up legal and procurement teams to focus on high-level decision-making. This not only accelerates contract turnaround but ensures that every document is crafted with precision and foresight, minimizing the risks of errors and oversight.

Rethink How You Manage Contracts

Learn how GenAI is reshaping contract creation, execution, and analysis in GenAI in Contract Management: Myths vs. Reality.

Navigating Concerns Around Generative AI

While generative AI offers tremendous potential, it’s not without its challenges. When it comes to integrating generative AI into Contract Lifecycle Management (CLM), legal teams are often the most cautious stakeholders. Their hesitancy stems from the high-stakes nature of contract management—where even minor errors can lead to compliance issues, disputes, or financial losses. Legal departments are particularly concerned about AI’s ability to understand and process the nuanced language of contracts, as well as its lack of transparency in how decisions are made.

As businesses explore AI-based contract management, there are several key concerns that must be addressed:

Lack of Explainability and Source Citation
One of the foremost challenges with generative AI is its opaque decision-making process. Often, AI-driven insights are delivered without a clear trail of reasoning, making it difficult for users to trust or validate the outputs. In contract management, where decisions must be defensible, this absence of transparency creates significant risks—particularly in high-stakes scenarios like compliance or dispute resolution. Trust falters when AI cannot explain itself, which fuels skepticism.

Accuracy of AI Responses
AI-generated insights can sometimes be misleading, especially when models aren’t specifically trained for the intricacies of legal contracts, procurement negotiations, or sales agreements. While AI processes large amounts of data quickly, its outputs still require human review to ensure accuracy and relevance. Generic models may lack the specialized training needed to fully understand complex contract language, which can lead to errors.

Cost and Complexity of Training AI Models
Building and maintaining large AI models is both costly and complex. Training a model with billions of parameters can cost millions, and organizations must also invest in dedicated data science teams to fine-tune these models for specific contract-related tasks. This makes AI implementation a significant investment, both in terms of upfront costs and ongoing maintenance.

Data Security and Privacy Concerns
When it comes to contract management, data security is non-negotiable. Many off-the-shelf AI models exchange data between private clouds and third-party servers, raising concerns about how that information is stored and used. Companies must be cautious about whether their proprietary contract data could be used to train external models, potentially compromising sensitive information. Choosing a solution that keeps data secure within the organization’s own environment is crucial to avoid unintended risks.

A Secure AI-Native Platform with a Multi-Model Approach

Sirion’s approach to AI-based contract management addresses many of these concerns head-on. Customization and security are paramount at Sirion. Unlike platforms that depend on third-party models, Sirion’s AI is developed in-house and trained on billions of contract-specific data points, ensuring highly relevant insights while maintaining complete security within your organization’s ecosystem. We never share or use your contract data to train external models, safeguarding sensitive information throughout the entire contract lifecycle.

Sirion leverages the strengths of large language models (LLMs) and small data models (SDMs) together, to deliver reliable, tailored results. LLMs excel with shorter prompts and better understand natural language queries, while SDMs are more effective for point-level tasks and processing longer documents like contracts. This multi-model approach ensures highly effective and accurate issue detection, complex extraction, and conversational search in contracting, using the right AI model for each task.

Explainable AI: Transparency You Can Trust

Sirion is not just an AI-based contract management solution; it is an AI-native contract management platform. This means AI is deeply integrated into the platform’s core, and it doesn’t just generate insights—it explains them. Sirion’s explainable AI provides full transparency by showing the reasoning behind every decision, offering users a clear understanding of both the “what” and the “why.” With this level of transparency, businesses can trust that the insights generated are backed by solid logic, helping them make more informed and confident contract decisions.

Industry Recognition and Customer Trust

Sirion’s leadership in AI-driven contract management has earned it significant industry recognition. For the third consecutive year, it has been named a Leader in the Gartner CLM Magic Quadrant 2024. This recognition underscores the platform’s commitment to explainable AI and its dedication to customer satisfaction.

Additionally, Sirion secured the top spot in the Spend Matters® Fall 2024 SolutionMap Analysis, earning the highest scores for overall CLM functionality. With an impressive 4.8 rating on Gartner Peer Insights™ as of October 2024, Sirion’s customers consistently praise the platform for its powerful features, security, and ease of use.

Embrace the Future of Contracts with Confidence

AI-based contract management is not just a technological trend—it’s a powerful tool that can streamline contract processes, reduce risks, and improve decision-making. By addressing common concerns such as data security, explainability, and accuracy, businesses can confidently adopt AI to manage their contracts while staying protected. With Sirion’s trusted and explainable AI, your organization can unlock new levels of efficiency and precision in contract management, allowing you to focus on strategic growth and innovation.

Experience AI-Native CLM in Action

See how Sirion transforms contracting with automation, compliance, and faster time-to-contract.

About the author

AI-Based Contract Management You Can Trust

Arpita Chakravorty

SEO Content Strategist and Growth Marketing for Sirion

Arpita has spent close to a decade creating content in the B2B tech space, with the past few years focused on contract lifecycle management. She’s interested in simplifying complex tech and business topics through clear, thoughtful writing.

Additional Resources

Procurement CLM: From Fragmentation to Integration with CLM

Contract Management