In-house legal teams worldwide rely on playbooks for their contract negotiations. Playbooks seek to standardize how legal teams review and negotiate contracts by specifying a company’s standard terms and fallback clauses. However, it is difficult to ensure that playbooks are followed as intended as interpretations may differ across a company, especially those with offices spread across the world. Not following a playbook can pose serious risks to companies, including increased liability and revenue leakage. According to the International Association for Contract & Commercial Management (IACCM), poor contract management costs companies 9% of their bottom line.
How can companies avoid risk and encourage adherence to their playbooks? The answer is automated contract markup. Automated contract markup is contract review software powered by artificial intelligence (AI) that can review contracts, identify inconsistencies, and automatically suggest edits consistent with a company’s playbook — as a result, standardizing how the company’s review and markup their contracts, no matter who and where it is being negotiated.
By helping companies rigorously standardize their contract review, contract review software such as BlackBoiler‘s Automated Contract Markup can mitigate risk, reduce frustration, and Challenges with the Contracting Process
Thousands of contracts are negotiated by large companies every year. A good playbook allows all those involved in the contract process, such as legal, sales, and compliance teams, to ensure that everyone is on the same page and speaking the same language when it comes to contract negotiation. A good playbook is essential when the key players in the contract process are spread across the world in multiple offices. For global companies, the difficulties of following the playbook and maintaining accuracy are compounded by differences in languages, jurisdictions, business and cultural norms, and time zones.
Playbooks help with reducing risk and standardizing how contracts are reviewed, but even those with years of experience can fail to follow a playbook. Contracts are reviewed by teams on both parties, with multiple revisions going back and forth prior to a contract being signed. The work is very monotonous, and frequently legal teams review contracts with similar language to those they had reviewed previously. Due to the tedious nature of contract review, the potential for error is very high.
Automation in contract review
The good news is that advanced contract review software can make a significant impact on the contract negotiation process. By automating the contract review process, companies can standardize and streamline the review and negotiation of contracts. Automated contract markup tools like BlackBoiler use advanced technologies like machine learning and natural language processing to review contracts and to make suggestions and edits that are consistent with the company’s playbook. It learns from a company’s playbook and suggest revisions to future contracts under review according to the company’s standards and clauses, no matter who is reviewing. The tools continuously learn over time from user behaviors and become more efficient. The technology learns from how an attorney reviews contracts and replicates this behavior in future reviews, allowing attorneys to no longer review every word of every clause of a contract. Not only does AI-assisted contract review provide significant time and cost savings while also reducing risk by standardizing the contract review across business units, it also allows for valuable data and historical knowledge that companies can leverage in each new negotiation.
Lawyers should view AI and contract review software as a tool that will help support their work and allow them to focus on higher-value tasks, and not as something that will replace them. Companies that adopt the technology will benefit from internal “champions” who can explain the benefits of AI to everyone involved in the contract negotiation process and encourage consistent use.
Contracts are the lifeblood of your business, regardless of your industry or where your offices are located. An inefficient contracting process can lead to inconsistencies, inaccuracies, lost revenue, and frustration. A well-executed contracting process can help you achieve significant savings in time, money, and labor and allow your in-house counsel to focus on higher-level, strategic work. With powerful automated contract markup tools to support the company’s playbook and supplement your attorneys’ work, your organization will quickly see benefits.