Generative AI in CLM: What Business Functions and Legal Teams Can Expect?

Generative AI, as discussed in the previous blog, is a subset of artificial intelligence that focuses on generating human-like text, making it an invaluable tool in contract management. Generative AI can understand, analyze, and create contracts by leveraging natural language processing (NLP) and deep learning techniques, making contract management more efficient and less error-prone.  

Contracts are the lifeblood of any business, governing relationships and transactions. However, crafting, analyzing, and managing contracts can be time-consuming and complex. This is where Generative AI offers innovative solutions to streamline contract management.   

Use Cases of Generative AI in CLM 

a. Contract Drafting 

Generative AI can assist legal professionals in drafting contracts from scratch or modifying existing templates. It can provide suggestions, correct language errors, and ensure that contracts align with legal standards and compliance requirements. 

Imagine you need to create a non-disclosure agreement (NDA) for a new business partnership. Generative AI can help by offering templates, suggesting clauses based on the nature of the deal, and ensuring that the language is legally sound and compliant. 

b. Contract Summarization 

Reviewing lengthy contracts to extract critical information can be a painstaking process. Generative AI can summarize contracts within seconds, highlighting essential terms, conditions, and obligations, helping legal teams save valuable time. 

For instance, if you receive a 50-page vendor contract, Generative AI can generate a concise summary that includes crucial payment terms, delivery schedules, and termination clauses, allowing you to grasp the contract's essence quickly. This can add immense value to non-legal teams in better understanding the contract.  

c. Pre-defined Questions to Extract Insights 

Generative AI can be programmed to ask pre-defined questions about a contract, extracting crucial insights and data. This facilitates quicker decision-making and enhances risk assessment. 

Let's say you're managing a portfolio of supplier contracts. With Generative AI, you can set up predefined questions to extract data about pricing changes, contract renewal dates, and performance metrics. This automated process saves time and ensures you stay informed about your supplier relationships. 

d. Risk Scoring 

Generative AI can assist in building risk models that consider various contract attributes and their potential impact on the organization. These models assign numerical values or scores to different risk factors, helping organizations quantitatively assess and compare contract risks. For example, a contract with a high-risk score might involve substantial financial penalties in case of a breach. In contrast, a low-risk score indicates a straightforward agreement with minimal potential liabilities.   

Benefits of Generative AI in CLM 

Faster Contract Execution 

Generative AI accelerates the contract lifecycle by automating tasks such as drafting, reviewing, and summarizing, reducing the time it takes to execute contracts. This speed is crucial in today's fast-paced business environment, allowing organizations to seize opportunities more swiftly. 

Contract Insights Within Seconds 

With Generative AI, legal professionals can gain immediate access to critical contract insights, enabling them to make informed decisions swiftly. Instead of spending days analyzing contracts, you can now have valuable insights within minutes. 

Ensure 100% Compliant Contracts 

Generative AI helps maintain contract compliance by proactively identifying deviations from agreed-upon terms, reducing the risk of legal disputes and penalties. This not only saves money but also safeguards your organization's reputation. 

Extracting Key Insights with SimpliContract’s GAI  

SimpliContract CLM is a leading AI-powered end-to-end contract lifecycle management platform for enterprises. It offers features such as contract summarization and pre-defined question extraction to streamline contract management processes further. With SimpliContract, you can achieve greater efficiency and accuracy in your contract management efforts. 

Contract Summarization  

SimpliContract's AI-driven summarization feature condenses lengthy contracts into concise, easy-to-understand summaries. Whether you're dealing with supplier agreements, employment contracts, or licensing agreements, SimpliContract ensures you have quick access to the most critical contract details. 

Pre-defined Questions to Extract Insights 

SimpliContract's pre-defined question feature allows you to create a library of standard questions that can automatically apply to contracts. This feature enhances contract analysis and ensures you don't miss crucial details. For example, you can set up questions related to compliance, pricing, or termination clauses, making it easier to assess contract risks and opportunities. 

Tips for Effective Contract Management with Generative AI 

Collaborate: Foster collaboration between legal and business teams to ensure contracts meet all requirements and expectations. Generative AI is a tool to enhance, not replace, human expertise. 

Quality Assurance: While Generative AI can expedite processes, always perform a final human review to ensure accuracy and compliance. Humans provide the judgment and context that AI may lack. 

Continuous Learning: Stay updated with the latest Generative AI advancements and adapt your CLM processes accordingly. The legal tech landscape is evolving rapidly, and staying informed is essential to remain competitive. 

Road Ahead for Generative AI in CLM 

The future of contract management lies in the continued integration of Generative AI. Here are some trends to watch for: 

Improved NLP Models: Expect more sophisticated NLP models capable of understanding context and intent better, enabling AI to provide more nuanced contract insights. 

Blockchain Integration: Enhanced security and traceability through blockchain integration for contract management. Blockchain can provide an immutable record of contract changes and executions. 

AI-Powered Analytics: Advanced analytics using Generative AI to provide deeper contract insights. AI will help organizations uncover patterns and trends in their contract data, driving better decision-making. 

As the legal industry embraces technological advancements, integrating Generative AI into CLM processes will become necessary to stay competitive and ensure optimal contract management.  

Discover how SimpliContract leverages Generative AI to streamline contract management for you.