How to Revolutionise the Contract Negotiation Process with AI
Contract negotiation can be streamlined by introducing AI-powered analytics to the negotiation process. Every contract that your organisation executes poses some degree of uncertainty or risk. For example, a master services agreement (MSA) you are asked to sign could contain untenable warranties or provisions that might compromise data security. Agreements must be reviewed carefully, but a lengthy review process can often drag out and cause bottlenecks between a legal team and sales or procurement departments. Read on to discover how AI can help the contract negotiation process.
Understand the need for AI by the numbers
It’s useful to understand how much time and money manual processes can be costing your enterprise. According to the DocuSign 2020/2021 State of Contract Management Report:
- More than 90% of respondents said that human error impacted their current contract process.
- 71% of respondents generate three or more versions of a contract before it is signed
- 49% of organisations said contracts take upwards of 20 hours to negotiate
In addition to this, Forrester Consulting’s 2020 State of Systems of Agreement report, conducted on behalf of DocuSign, found that:
- 47% of respondents said their enterprise experienced unnecessary risk due to the inability to manage, search and proactively detect problematic language in contracts
- 46% said that inefficiencies in the contract negotiation process resulted in a poor customer experience
Smarter Contract Search
DocuSign Insight, part of the DocuSign Agreement Cloud™, delivers contract analytics to help legal and business teams gain visibility across an entire organisation’s portfolio of contracts. Insight analyses agreements from a range of sources and formats with a combination of AI technologies. The AI-powered contract analytics bring intelligence to the entire contract lifecycle.
Insight’s AI enables agreements to be searched and filtered by the legal concept and has full Boolean search functionality across contract text. For example, if you’re looking to understand how your supplier relationships may be impacted during a catastrophic event, you can automatically find and compare all force majeure clauses across all supplier contracts. Artificial Intelligence will help you find the agreements even if the specific term “force majeure” doesn’t appear in the clause.
Better Contract Negotiation
DocuSign Analyzer takes Insight’s advanced contract analytics and applies them to the pre-execution phase of agreements. The technology can help you revolutionise the negotiation process, allowing legal and business teams to negotiate agreements faster.
Analyzer streamlines and expedites negotiations by:
- Automatically recommending replacement language for risky terms in your organisations pre-approved clause library.
- Automatically extracting clauses and terms of incoming agreements
- Ranking the risk level of extracted terms by applying logic to build in-depth scorecards based on your organisations own legal and business playbook
Analyzer’s risk analysis looks at both the absence and existence of terms of interest in the agreement. It displays its results on a “red-yellow-green” basis and is informed by the organisation’s own policies. The risk level of existing clauses and the missing clauses is easy to visualise.
Analyzer is delivered as a Microsoft Word add-on, and it’s possible to analyse inherent risk within an agreement and accelerate its review. If the agreement needs to be revised, it can all be done from one place with a couple of clicks. The results appear in seconds or minutes. Risk scorecards are displayed, and recommended replacement language can be inserted directly into agreements. The contract reviewer doesn’t need to leave Word to perform these functions.
What else does Artificial Intelligence have to offer?
Watch our webinar “DocuSign Analyzer: Negotiate with the Power of AI” to discover how contract analytics powered by AI can make your contract negotiation process more efficient and effective.