artificial intelligence in contract review
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This article is written by Sasthibrata Panda, pursuing a Diploma in Advanced Contract Drafting, Negotiation and Dispute Resolution from


The invention and innovation of Artificial Intelligence (AI) in the law of contract will bring a paradigm shift in our legal world. Everyone will be benefited by it. The law firms will get more clients, the lawyers will enhance their skills and the people will get a faster legal remedy. The law firms can take the help of AI to overcome from a large number of the difficulties to contracting and reviewing hundred-page contracts. The law firms will save time and understand well. However, the fear of being replaced by AI has been an issue. But the role of AI will not replace but will assist the law firms in the review process of the contract. Further, it will improve the personal skill of the lawyers. Thereby, in this blog, we will focus on the use of AI in the process of contract review. 

Table of Contents

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Contract Review and the Complexity Involved in the Process

Contract review is one of the most important aspects in the world of business. But the process of contract review is still tiresome because of the complex facts and numerous clauses. The law firm has to sit and review each line manually. This traditional review process takes days to complete and mistakes are not uncommon. So, few startups are trying to solve this problem by developing AI. Presently, these AI are not capable of executing the whole review process of the contract. But in the mere future, the AI will serve as an assistant to the law firm for a full contract review.

The major problems faced by the Law firms are to manage, update and organize a plethora of contracts. And each of the contracts is distinctive. Unfortunately, many of the law firms do not have any technology to maintain or manage the database of all the contracts. Either these law firms manage their contracts by manually or by using a very limited application (i.e., Enterprise Resource Planning (EPR) system). Lack of AI pushes the law firms to maintain a “file and forget” status. Because of these complexities, the law firms are losing 5% to 40% of the revenue. AI will mitigate corporate risk, improve strategic planning, better management of finance and ensure all the rights of the clients. Hence, the AI will be an evolution for the law firms dealing with the process of contract review.

AI Means Advancement in Contract Review 

The process of contract review is about an in-depth analysis of the contract. It varies from contract to contract. However, this plays a significant role in negotiation between parties and the management of the business. This process consists of measuring the feasibility of the contract, risk assessment of the contract and analyzing the outcome of litigation and legal spend.

Risk Assessment 

To achieve better results, the law firm can use AI to evaluate the contract and predict the risk associated with the contract. Identifying the risk will prevent future disputes and get an edge in the field of law. As AI helps in organizing the contract and streamline review, which will be very advantageous for the assessment of risk. Organizing the contract and streamline review will help in providing a specific contract to the client, hence, avoid contract related disputes. 

Legal Spend

AI will estimate the proper account of the revenues and the legal spend of a law firm. As many law firms are using e-billing systems but in-house lawyers are not experts in extracting the information from the e-billing. So, AI provides an e-billing system, which gives information regarding external legal spend and assists lawyers to enforce billing. The lawyers can compare with their competitors as the AI provides a comparative analysis of other law firms who are engaged in the similar work, the experience of the lawyer or law firm, risk profile of the work and average period for the work.

Other Aspects of Contract Review

At last, AI can assist law firms in a due diligence review by managing contracts and keeping the terms and usage (e.g., ownership clause in Intellectual Property Law related contracts) consistent of a corporate contract. It can also distinguish various types of contract in different foreign languages. AI makes the contract review faster, more effective and reduces the expenses by 50%. Further, AI will provide an analysis of the outcome of the litigation. The reasoning of the bench, judgments of the courts, and all other important information get expeditiously analyzed with the help of AI. More importantly, it does not replace the human from the process. Hence, if a law firm starts taking the help of AI then it will gain an advantage over other competitors.

AI in Smart Contracts

Advancement in AI shows the potential to widen the ambit of smart contracts (smart contracts are not legal agreements). Since Smart contracts function according to IFTTT (If This Then That) logic. Presently, the smart contracts can transfer crypto-currency, but gradually the complexity will increase and so will the AI. Then, the smart contracts will be able to handle the complex business transaction. Though India’s stand for the cryptocurrency is uncertain, many countries have adopted cryptocurrency. Then the companies who are dealing through crypto-currency will hire law firms to explain the complex terms and conditions of the traditional text-based contract. If the law firms can learn how to use AI then they can negotiate, adjudicate and review the contract of the company. 

Advantages to the Law Firms

AI for contract review is right now at a midpoint. But in the future, AI will transform the contract review process that the law firms are presently using. As AI has the potential to help the law firms regarding the review process of enormous volumes of contracts (both basic and complex). All the commercial negotiation or transactions that required committing hours of the law firm to review the contract will be done painlessly. This doesn’t mean organizations will require fewer lawyers, but instead, their jobs may change. For instance, lawyers will invest more energy and precious time in building relationships with clients, analyzing risks and giving insight. Hence, AI could save money and re-allocating labour to procedure quality work. Subsequently, this will increase the clientele of law firms.

Rather than having an enormous group of partners lead due tirelessness before an arrangement, law firms will have a small team review documents that give advice, suggestion, recommendation and guidance to the client. Similarly, the role of contract management professionals will shift. Right now, contract review gets done by an entire team, but AI tools enable a well-designed software platform – coupled with a few employees – to do the job. In any case, as this technology creates, one thing is sure that one day AL will be valuable to all law firms.

Advantages to the Lawyers

AI has been perceived as a threat to the lawyers’ employment. But the usage of AI is only limited as an assistant to the lawyers, which give better-negotiating abilities and improve the skills in a shorter time. They can invest extra time in reviewing more contracts. Lawyers applying this innovation should decide how it fits in with their work and rebuilds appropriately. Generally, lawyers with high-volume contract business will gain a large financial advantage from using AI. Ultimately, due to AI, the role of lawyers in reviewing a contract will change. But this change will benefit the lawyers professionally and financially. As this innovation keeps on coordinating with the business transaction, more lawyers will use it to get similar advantages and monetary benefits. 

The lawyers need to upgrade their skills according to new technology and development. AI is picking up prominence among legitimate experts who have high-volume contract business since AI can fundamentally smooth out the agreements cycle and give prevalent outcomes. While AI doesn’t remove the human component (i.e., judgment forming and creativity) from contract investigation, it can make those human analysts quicker, more efficient, and minimizes the expenses up to 50%. So, this is not about Human Lawyers versus AI, but the Lawyers who use AI versus who do not.

Implementation of AI by Other Countries 

AI will be the next revolution in the field of law. Companies of western countries have already started taking the help of AI for contract review, resolving the dispute and tax assessment. For example, Braskem, which is a Brazilian petrochemical company. It executes different types of contracts with 100s of countries. It has to review every contract before executing a contract with a new party. Since reviewing contracts is very important to avoid risk and future litigation. It identified the problems and took the support of AI to resolve it. Filipe Tavares, the legal manager of Braskem said, “the board members recognized the requirement for a uniform single contract management system that can be deployed at a global level.” Therefore, to avoid losses, Braskern took the help of AI (ContractPodAi) to manage the process of contract review. 


Similarly, in India, SpotDraft provides an AI contract management platform for reviewing, drafting, managing, analyzing and negotiating contracts. Indian law firms can also use AI to help to improve their client’s business relationship. 

Finally, AI in the justice system will gain pace in solving disputes and ease the weight of pending cases from the shoulder of the judiciary.

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