How Can AI Improve Contract Management

How Can AI Improve Contract Management

Artificial intelligence (AI) is finding a home in many businesses and industries around the world. A plethora of new applications are appearing in commercial, marketing, and government entities. The explosive growth is linked to the growth and accessibility of vast computing power.

AI contract management is one of the many applications that changed the way businesses and firms manage contracts. Contract management was labor-intensive and still left room for significant human error, until contract management software powered by artificial intelligence changed the field.

Contract management involves:

  • Vast quantities of data—some businesses manage thousands of contracts at any given time. Even in smaller businesses, the size and volume of contracts, along with their associated data, can equate to large datasets.
  • Multiple personnel who need access—different groups of employees will need access to a contract based on what the contract entails. The need for access by various people created bottlenecks before cloud-based repositories allowed anyone with approved access to work on the contract at any time.
  • Workflow management—with the large quantity of data and numerous parties involved, it makes sense that contract management demands a way to manage workflow.

How AI can positively impact contract management

AI and machine learning can extricate data in a much more efficient manner than humans can. Data management may be the area where AI can have the most significant impact on contract management. Machine learning can allow AI to provide pattern recognition and to identify previously unseen patterns. Machine learning can also identify relationships in contract data.

Artificial intelligence is an excellent risk mitigator. There are numerous ways that artificial intelligence mitigates contractual risks:

  • The ability to generate automated alerts based on approaching deadlines, time to renegotiate the contract, autorenewal of contracts, and other customized alerts.
  • AI can identify the non-standard language in any contact, including one from a third party.
  • AI can identify language that leads to incomplete or problematic contracts.
  • Artificial intelligence can make suggestions based on analytics that decide which contract clauses have the highest success rate.


Artificial intelligence in contract management is a powerful optimization tool. Clauses within a company’s contracts that are most commonly renegotiated will be suggested to optimize future contracts. In-depth analytics give companies more information about what is successful and unsuccessful in their contracts. Powerful analytics in AI software can find and analyze connections that would be difficult or impossible for humans to do. The analytics give companies powerful insights into their contracts and serves to provide a deeper understanding of how each part of the entire contract, or sets of contracts, are performing.


Contract management can be tedious, as it involves many repetitive tasks. Artificial intelligence can handle many of the repetitive tasks, freeing humans to work on the more creative aspects of a business. Scanning, tagging, and uploading contracts are done automatically. In automating these steps, companies remove the risk of human error in this tedious and time-consuming task. 

Creating consistency across contracts helps make contract management more straightforward, and artificial intelligence makes uniformity easier to accomplish. From customized templates to the recognition of irregular language, AI reduces inconsistencies. Before instituting artificial intelligence into contract creation and management, contracts lacked uniformity, making them difficult to organize, update, and manage. Consistency makes contracts easier to review and replicate. Companies can increase the volume of contracts they can negotiate and execute when homogeneity is achieved with artificial intelligence.

Automatically populating data and metadata fields makes contract creation faster and more efficient. Extraction tools driven by AI and machine learning allow incoming contracts to be tagged, filed, and searchable, just like contracts created in house. The data extraction tools can learn from the data, optimizing the process.

Improving the use of resources

Highly trained contract specialists on legal teams are an expensive resource. Using this type of resource to review basic contracts, or do simple data entry in populating new contracts is a poor use of resources. AI-driven contract management reduces the amount of time legal professionals need to spend on contract management, therefore, reducing the cost of contract management and freeing up the legal specialists to do the type of work for which they have trained.

Artificial intelligence has received mixed reviews in many realms, and there have been sensationalist claims made about the potential dangers of AI. In reality, artificial intelligence is not replacing humans. Instead, it is taking care of much of the tedious tasks humans once had to do, freeing people to focus on skills that cannot be replaced by machine learning. In the arena of contract management, legal teams and others involved in the day to day process of contract management are satisfied with letting AI do the grunt work while they focus their efforts on projects that exceed the scope of what AI can do.

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