- 15 min read
- nia balbo
Introduction
You get curated playlists on your favorite music apps.
You can purchase cars that drive themselves.
You tell a speaker sitting on your kitchen counter to set a timer for your food.
Whether you realize it or not, that’s all possible because of artificial intelligence. AI is nothing new.
What is new are the ways legal and legal ops teams use the technology to improve their jobs. AI offers the ability to truly speed and optimize everyday contracting tasks. But that’s not to say it doesn’t come with a few valid concerns.
Let’s take a look at the impact of AI in legal operations, how you can use it, the risks it comes with, and what it all boils down to.
The Types of AI for Legal Ops
Not counting moments of random curiosity, how often do you question how technology works? Probably not too frequently. We just trust that AI works and gives us the outputs that we want.
But when it comes to using artificial intelligence in the legal space, you need to do a bit more digging to understand how the technology operates and delivers the benefits you hope to get.
To that end, there are a few different types of AI that Legal Operations can use to empower their jobs and improve efficiencies across their businesses.
Machine Learning
Machine learning (ML) uses specific data and algorithms to imitate how human beings learn. Over time, this AI becomes more accurate in predicting the way your legal ops team would perform certain tasks and mimics them.
Natural Language Processing
This form of AI uses machine learning to enable computers to learn and communicate using human language. NLP makes it much easier to ask AI questions, in the same way you would ask a person.
Large Language Models
Large language models (LLMs) train on large amounts of data and detect patterns to allow the AI to understand natural language and perform a wide variety of tasks.
Generative AI
The most recent craze in the AI world, generative AI creates content in response to your request. Depending on the platform you’re using, getting the result you want can be as easy as typing out a single sentence.
Now that you have a better idea of how this technology works on the backend, let’s take a look at how you can specifically use AI for legal operations.
The Benefits of Contract AI
The ways you can use contract AI are limitless.
From contract authoring to performance monitoring, these different forms of artificial intelligence offer an easy, fast, and accurate way to improve your contracting processes.
1. Contract Drafting and Review
One task at the top of every Legal Ops team’s to-do list? Find a way to cut down on how long it takes to draft and review contracts.
Contract AI uses historical data and your approved playbook to draft new contracts in seconds. You won’t have to spend an entire afternoon writing up contracts from scratch.
Need to review your existing portfolio or a new agreement coming in from a counterparty? That same technology can analyze documents in any format, so you learn exactly what data and terms they contain.
2. Legal Research
You have questions about existing contracts. Contract AI delivers the answers.
Rather than waste time manually searching through storage drives or (we shutter) paper documents, you can prompt your AI-powered CLM to pull up exactly what you’re looking for.
Just type out “Show me contracts expiring in six months” or “Give me a risk profile for our current contracts.” You’ll have your answers in seconds. Talk about efficiency.
3. Data Management
By using AI to ingest your business’ contracts into a unified, intelligent repository, you turn them into interactive sources of data. With that level of accessible information, you can make better-informed decisions that improve your overall business.
4. Contract Visibility
Manually managing contract data severely restricts how easily you can determine what’s in your agreements. Never mind using that information to reduce risk and maintain contract compliance.
Once you store your contracts in a cloud-based repository, AI delivers complete visibility into every agreement, including how one document relates to another.
5. Compliance Tracking
From adhering to regulatory requirements to being ready for internal audits, compliance tracking is a key part of reducing contract risk. But leaving Legal Ops to track every compliance-related term manually almost guarantees you’ll land in hot water.
Contract AI detects and corrects non-compliant language, monitors regulatory terms, and ensures on-time obligations so you’re never caught by surprise. And that’s all with reduced governance costs.
6. Obligation Monitoring
Manually tracking obligations from thousands of contracts is nearly impossible.
On top of giving you full visibility into every contracted obligation, contract AI lets you:
- Visually monitor contract performance
- Track any obligation back to its specific contract and clause
- Identify the financial impact of your contract obligations
7. Spend Management
Every financial aspect of your contracts—pricing, billing dates, and obligation delivery schedules—affects how well your finance team can budget and forecast revenue.
Legal Ops can leverage contract AI to get real-time financial data and streamline invoicing to help finance teams ensure cash flow and avoid value leakage via poor contract performance.
8. Policy Distribution
In a perfect world, once Legal Ops establishes a process or policy, everyone in the enterprise will follow it. In reality, it takes a bit more work to get everyone on board.
Using AI-powered CLM, your legal ops team can set up workflows and maintain legal-approved templates and clauses libraries in a single platform. This way, there’s no guessing if certain language or actions align with approved processes. The contract AI will flag anything that doesn’t.
9. Contract Storage
Raise your hand if your contracts are currently stored in six different (disconnected) platforms or locked Google Drives that only certain people can access.
CLM solutions powered by contract AI let you house your entire contract portfolio in a single, secure repository. Every contract version, from the initial draft to the final execution, is right where you need it.
10. Workflow Automation
It’s tedious enough having to manually push contracts to the next step of their lifecycle. Add the frustration you feel when you find out two weeks later that a time-sensitive agreement has been sitting, waiting to be pushed on, and your day’s all but ruined.
Skip the stress and use contract AI to set up customizable workflows and automate contracting tasks for streamlined processes.
Now, even with all the benefits AI offers Legal Ops, every technology has its risks.
The Risks of AI For Legal Operations
Especially as more and more legal functions consider adopting AI solutions to improve contracting, some common concerns have had teams treading lightly.
A Lack of Emotion
Certain issues, such as negotiations, mediation, and litigation, have a lot of emotional ties to them. While lawyers can consider more personal factors when drafting contracts or making legal decisions, AI often approaches matters more objectively.
This makes it all the more important for your in-house counsel to act as a human check for your contracting tasks after AI has handled the heavy lifting.
Training Concerns
AI is only as good as the data set used to train it. Some training preferences can influence datasets, potentially limiting their ability to produce certain results.
To avoid this, you’ll have to ensure the data used to train the contract AI solution you use has been trained on a wide enough set of data to avoid narrow result possibilities.
Ethical Concerns
Depending on how contract AI is trained, results could lead to unjust outcomes for certain parties.
You would want to ensure the contract AI you use has measures in place to avoid biases, hallucinations, and general errors that can lead to heavy consequences for the involved parties.
Security Concerns
Some teams are concerned that relying on AI can lead to data breaches or result in private data being used to train larger models without consent.
This is why you should only consider CLM solutions that do not use your data to train their LLMs. Additionally, those solutions should have strict data security measures in place to keep your data secure from third parties outside its own environment.
When you weigh the benefits and risks Legal Ops can experience when using contract AI, you can arrive at a few clear conclusions.
The Implications of AI for Legal Ops
With all the different AI technologies available to legal and legal operations teams, one question looms.
What does it all mean?
Well, there are two main takeaways from everything we’ve learned.
AI Makes a Huge Difference in Legal Ops Efficiency
There’s no denying the ease and accuracy of contract AI.
From contract drafting to administration, AI helps legal ops teams streamline and optimize their processes for faster contracting with fewer errors.
By implementing this technology into your everyday operations, Legal Ops can maximize realized contract value and minimize risk, turning contracting processes into a well-oiled machine.
It Matters Who You Partner With
Not all contract AI platforms are the same.
You need to carefully research a solution’s training and security measures to ensure your data will be safe and you can reduce the chance of bias or hallucination. Give shopping for an AI-powered CLM solution the same due diligence that you would an M&A deal.
You’ll be glad you did when you find the platform that best fits your needs and standards.
The Bottom Line: Find a Contract AI Platform That Fits
Like any other technology, contract AI does present some risk. But, as long as you choose the right CLM solution, those risks pale in comparison to all the benefits it offers.
Your legal operations team can use Sirion’s AI-native CLM to centralize your contracts, get the answers you need in seconds, and smash bottlenecks to minimize delays and drive the business forward.
Ask us how we can turn your contracts into living documents while protecting your data on our secure platform.
Additional Resources
Legal vs. Legal Operations: What’s the Difference?
14 Contract Negotiation Strategies and Tips to Empower Teams
What is Contract Data Extraction? How to Automate it with AI?
Subscribe to Our Newsletter
