AI Contracts: A Guide to the Technology Changing CLM

As a key component for creating successful, long-term commercial relationships, contract management is an essential yet oftentimes ill-managed practice. In fact, one study reported that firms may lose anywhere between 5 to 40% of the total contract value due to ineffective contracting.

The root of such inefficiency: conventional manual contract management, of course.

Given that existing contracting processes call for enterprises to author and maintain hundreds, if not thousands of contracts and embedded obligations, mismanagement is inevitable. As a result, no industry is immune to poor contract management or its expensive aftermath.

This is where AI contracts come into play and has the potential to change the game. 

What are AI Contracts?

AI contracts can be broadly defined as any  technology capable of autonomously learning and performing actions. In the case of contract lifecycle management, AI opens up promising application points to enhance companies’ understanding of contract data and analysis, enable risk discovery, and extensively automate drafting procedures.

Whereas first-generation CLM software relies on rules-based automation that still requires heavy manual intervention, AI-powered contract management platforms are designed to harness contract intelligence and enable enterprises to craft stronger contracts, which will subsequently streamline all downstream stages within the contracting lifecycle.

In this article, we’ll take a closer look at the specific ways in which artificial intelligence can make contract management better.

What is the Role of AI in Contracts?

Artificial Intelligence is taking contract management to the next level. Gone are the days of manual inputs and sifting through lengthy email threads. Through the use of AI, CLM technology has the potential to improve contract document management in any industry, no matter how extensive or complex a contract portfolio may be.

Combining machine learning (ML), natural language processing (NLP), and other AI technologies, AI-powered contracting software such as Sirion utilize a neural network-based system to identify, learn from, and offer prescriptive insights based on retrospective contracting data to help create smarter agreements, faster than ever before.

While AI-powered platforms like Sirion leverage ML and NLP to deliver intelligent recommendations, the real differentiator lies in how these systems are trained. Let’s explore how this training shapes smarter contract management.

How AI Learns from Contract Data

AI in contracts isn’t built on general language models alone. Leading platforms like Sirion train their AI engines using millions of enterprise contracts, enabling the system to learn the nuance and structure of commercial agreements across industries and geographies.

The AI:

• Learns from historical contract data, clause libraries, and negotiation outcomes.
• Picks up patterns in risk flags, clause deviations, and fallback language.
• Evolves continuously as it ingests new contracts, enhancing precision over time.

This training enables the AI to not only extract contract metadata but also predict intent, flag anomalies, and recommend language that aligns with enterprise standards—making it an intelligent co-pilot rather than a rule-bound assistant.

Applications and Benefits of AI Contracts

AI in Contract Intelligence

Legacy contracts are often spread across multiple data silos, limiting visibility and accessibility. As a result, contract managers—and by extension, other key stakeholders—are unable to access contract information on demand due to lack of centralization and data structuring.

This lack of visibility also prevents organizations from effectively enforcing contractual terms, leading to suboptimal business outcomes.

However, through the use of AI-powered auto-extraction and analytics, CLM software drastically reduces the time required for data extraction. Here are some ways in which AI helps you make the most of contractual data:

• Information discovery and visibility: AI-led CLM platforms such as Sirion can connect with industry-standard software such as ERP, P2P, and CRM to pull in and digitize documents, which are then stored in a centralized, cloud-based repository.

Once uploaded, users can utilize the “fuzzy search” or any other advanced search function to quickly and easily locate contracts according to the title, clauses, counterparty name, and so on. In effect, this functions like ‘Google search’ for contracts.

• Data extraction and accessibility: The AI engine also extracts contract metadata, clauses, obligations, SLAs, rate cards, and other relevant data points. This makes all granular contractual data immediately accessible.
• Performance management: The extracted data can then be visualized through role-based dashboards to enable supplier performance and obligation fulfillment tracking.

This information can also be used to support negotiation strategies, identify cross-sell and upsell opportunities, and facilitate smarter, data-backed decision-making.

AI Contract Authoring & Negotiation

Standardized contract management processes are key to ensuring due diligence during the contract authoring and negotiation phase. However, given the sheer volume of contracts organizations must manage, reliance on traditional, inefficient contracting processes becomes increasingly problematic.

When done manually, the contract drafting and legal review process can be arduous, error-prone, and simply impractical. Miscommunications and unfavorable agreements are more likely to occur. This, in turn, may prolong the contract negotiation phase, adding to the workload of contract professionals.

Fortunately, with one-click drafts enabled by AI-guided contract assembly tools, templates, and automated workflows, companies can streamline the drafting phase and expedite the negotiation cycle by up to 50%.

To ensure compliance with company-preferred positions at every touchpoint, contract management systems provide AI-assisted redlining and clause selection. These tools accelerate the legal review process by automatically scanning drafts and third-party papers to discover risk elements.

Everything from missing clauses, clause deviations, insertions, deletions, and modifications are highlighted by the AI. The AI can then offer prescriptive suggestions for preferred clause language. Not only does this significantly shorten the legal review phase but also enables companies to draft contracts up to 90% faster using standardized contracting language.

As seen in the drafting and negotiation phase, AI streamlines complex contract tasks that once took days. But how does it compare more broadly with traditional CLM platforms? Here’s a snapshot of the key differences.

AI Contract Risk Management

When businesses have thousands of procurement contracts, customer contracts, non-disclosure agreements, other contract types, and legal documents to manage, manual risk mitigation is ineffective. Simply put, organizations will continue to unknowingly increase their risk exposure.

Companies that adopt AI contracting software can go on to improve risk discovery in third-party papers and legacy portfolios.

As a self-learning system, a CLM’s AI engine can compute and generate risk scores against contract drafts by comparing its clauses against the enterprise contracting playbook. Contract managers can then course-correct based on the AI-suggested contract modifications.

With regards to legacy contracts, risk identification is made possible thanks to digitization.  Following digitization, information from both printed and handwritten agreements can be extracted and subsequently compared against company standards.

The CLM system alerts all stakeholders of potential issues and areas of risk—leading to fewer compliance issues and better alignment with desired business outcomes.

Beyond managing risk, contract AI is unlocking value across departments—from procurement and sales to finance and IT.

The benefits of AI in contract management aren’t limited to legal teams. Let’s explore how different departments gain from AI-powered CLM.

AI CLM in Action: Department-Wise Impact

Legal Teams:

Accelerate contract review and risk analysis, reduce workload, and standardize legal language with AI-assisted clause suggestions.

Procurement:

Manage vendor contracts more efficiently, monitor compliance, and automate renewal alerts to avoid value leakage.

Sales & Commercial Teams:

Speed up deal closures with pre-approved templates and reduce negotiation cycles through guided redlining.

Finance & Operations:

Gain visibility into contract-related liabilities, milestones, and cash flow triggers. Use dashboards for obligation tracking.

IT & Compliance:

Ensure contract data is secure, centralized, and integrated with systems like ERP, CRM, and procurement tools for smoother audits.

As AI continues to evolve, we’re only beginning to scratch the surface of what’s possible in contract management.

The Future of AI in Contract Lifecycle Management: What’s Next?

The next frontier in contract management is being shaped by large language models (LLMs), generative AI, and conversational interfaces. Here’s a glimpse into what’s emerging:

• GenAI for summarization: Automatically generate executive summaries of complex contracts.
• Conversational search: Ask questions like “Show me contracts with payment terms over 90 days” and get instant results.
• Proactive risk mitigation: AI identifies potential risk areas before the contract is even finalized.
• AI copilots for legal teams: Drafts, reviews, and suggests edits in real time, dramatically reducing review cycles.

As these advancements redefine what’s possible—from real-time summarization to conversational contract search—businesses need a platform that doesn’t just keep up, but leads the way. Choosing the right AI contract management software means finding a solution that’s built to handle not just today’s demands, but tomorrow’s innovation.

What’s the Best AI Contract Management Software for Enterprises?

The best AI contract management software doesn’t just automate tasks—it delivers strategic value across the entire contract lifecycle. While many tools focus on isolated functions like drafting or review, Sirion stands out by combining deep AI capabilities with enterprise-grade lifecycle management. From authoring and negotiation to performance tracking and renewal, Sirion empowers legal and business teams to work smarter, faster, and with complete confidence.

1. Built AI-First, Not AI-Added

Unlike retrofitted tools, Sirion was built from the ground up as an AI-native platform—trained on 10M+ enterprise contracts and tailored for both buy- and sell-side use cases.

2. Full Lifecycle Intelligence

Sirion brings AI to every phase of contracting—from authoring and redlining to post-signature obligation tracking and renewal management—without switching tools.

3. Smarter Learning, Deeper Insights

Powered by neural networks and machine vision, Sirion extracts complex contract elements across formats—tables, handwritten docs, multi-language files—going far beyond metadata.

4. Guardrails You Define

Legal sets the rules. Sirion enforces them. Contract playbooks, fallback clauses, risk thresholds—all embedded directly into AI workflows so teams can self-serve with confidence.

5. Enterprise-Ready Integration

Sirion connects seamlessly with SAP, Salesforce, Oracle, and Workato, syncing contract activity with your broader enterprise ecosystem for end-to-end automation.

6. Security You Can Trust

With SOC 2 compliance, GDPR-ready architecture, and no use of customer data for public model training, Sirion keeps sensitive contract data safe—by design.

Unleash the Power of AI Contract Management with Sirion

Artificial intelligence is paving the way for smarter, more cost-effective contract management solutions. As technology continues to radically transform how we conduct business, traditional contracting is not only unnecessary—it’s harmful to professional relationships.

Contracts shape how businesses operate—and Sirion empowers you to manage them intelligently. From data-rich drafting to risk-aware negotiation and performance-led execution, our AI-native CLM platform helps you transform contracts into strategic assets.

To learn more, request a demo today with Sirion and start adopting AI strategies for more effective contract management.

FAQs: AI Contracts