Contract negotiation is a lengthy, overly complex process. But adopting contract acceleration helps lawyers gain more control, reduce risk and close deals faster.
Contract negotiation is a crucial part of the job for in-house counsel. However, up until now, this process has been overly manual – making it time-consuming and risk-prone.
It’s time for lawyers to adopt an easier, more effective approach.
Contract acceleration uses AI-based technology to review documents accurately, speeding up and de-risking the entire process for the lawyers involved. It enables an issue-based negotiation process, pinpointing key issues that will need to be negotiated, and easily tracking them through to resolution.
This greatly reduces the risk, stress, and complexity of the contract negotiation process, speeding up the time it takes to review, negotiate, and sign a contract.
This blog post explores the current challenges in contract management, what contract acceleration is, why it is so useful, and how to select the right contract acceleration platform.
The current state of affairs
Contract negotiation takes up a large portion of time, with the average lawyer reportedly reviewing 173 contracts per year. Purely manual legal reviews slow contract negotiation down, with the average contract cycle time now said to be around 31 days.
Keen to ensure they don’t make any mistakes, lawyers need to grind their way through a contract poring over every word, making sure nothing escapes them. The process is made even harder given that the contracts are written in complex ‘legalese’. Indeed, it’s been found that these jargon-heavy contracts take 60% more time to review than they need to.
When faced with an unfamiliar clause, an individual lawyer’s instinct is to spend time either amending it (redlining) or referring to others for advice. While this may seem the safest thing to do professionally, it often leads to delays that could have been avoided with a less subjective system for assessing and managing risk.
What is contract acceleration?
With contract acceleration, lawyers can leverage technology to systematise and speed up the legal aspects of contract negotiation. There are three primary benefits to contract acceleration platforms: rapid discovery of issues, helping lawyers effectively organise the issues and collaborate with stakeholders on both sides to resolve these issues, and de-risking the contract negotiation process in its entirety.
Rapid discovery of issues
In any contract, there are certain key issues to resolve, some legal, some commercial. Therefore, it’s important that lawyers identify and manage these key issues appropriately during contract negotiation.
This is easier said than done. The gold standard is to create and manage the negotiation using an issues list. However, this rarely happens except on the larger transactions. It’s a time-consuming process to create the issues list, and it is painful to manage and curate the list as the negotiation progresses.
Worse still, creating and managing an issues list usually takes place over email – meaning even more endless back-and-forth clogging up lawyers’ inboxes.
Thankfully, there’s a solution. Instead of having to painstakingly comb through detailed documents themselves, lawyers can use a contract acceleration platform to create a digital issues list in seconds.
Contract acceleration leverages AI to rapidly analyse lengthy documents, identifying the major issues that lawyers need to focus on. It does this by comparing the meaning of the language against the company’s own internal playbook, their historic contracts, and against a sample of similar external contracts, helping determine whether any particular clause is acceptable or to be flagged as an issue.
Organising and collaborating effectively to resolve issues
Creating and managing an issues list is just the first piece of the puzzle. If lawyers want to move the contract negotiation forward, they need to ensure that the individuals and parties are collaborating as effectively as possible right from the beginning.
Contract acceleration technology provides lawyers with a centralised, well organised, user-friendly hub where they can access and share issues from the digital issues list – thereby aiding internal liaison and collaboration. Research demonstrates that early engagement of the wider team cuts contract cycle time by around 20%, therefore enabling such rapid collaboration is clearly important.
A contract acceleration platform also gives lawyers a quick and easy way to visualise how issues are being resolved in an easy-to-understand progress chart, using the ‘issues-resolved’ metric. They can share this with stakeholders for increased visibility and greater buy-in.
De-risking the contract negotiation process
Issue-based resolution transforms contract negotiation management, ensuring that both parties focus on the key issues instead of losing time on irrelevant clauses.
Junior lawyers can be at a disadvantage when it comes to issue-based resolution. They don’t have the experience (or contract negotiation skills) to understand what the market standard is when it comes to a certain contractual obligation. Therefore, they’re more likely to cautiously redline certain clauses, believing they pose a risk to their client – further delaying the entire contract negotiation process.
That’s where contract acceleration comes in again. By leveraging an automation-based platform, lawyers can compare the text in a contract to their own company’s playbook. They can also compare this to an entire portfolio of current and historic contracts in order to assess familiarity and thus better understand the potential risk.
The system will automatically flag any uncommon content, allowing lawyers to dive in and review it in more detail. A contract acceleration platform essentially ‘tops up’ junior lawyers’ experience. It affords them the benefit of expertise that is usually limited to industry veterans, who have had longer to build their contract negotiation skills.
Not only does this shave a considerable amount of time off lawyers’ contract negotiation cycle, but it also de-risks the entire process.
Contract acceleration done right
Most contract negotiation solutions fall into two camps. They either accelerate the time it takes to review contracts but lack the ability to organise teams around issues, or they effectively organise teams around issues but don’t tangibly speed up the review process.
With ThoughtRiver, however, lawyers get the best of both worlds. The contract acceleration platform leverages AI to instantly review documents, pulling out key issues that need to be managed going forward. It provides an all-in-one hub where teams can collaborate, communicate, and clearly track progress.
Contract acceleration makes contracting fast, predictable, and pain-free. It effectively organises issue management, augments lawyers’ experience, and speeds up the process while mitigating risk, so lawyers can negotiate with confidence.
Key takeaways
- Contract negotiation isn’t going away any time soon. However, the existing contracting process is overly manual, time-consuming, and error-prone.
- Contract acceleration platforms allow lawyers to use AI-based technology to rapidly unearth key issues that need to be negotiated.
- They also aid collaboration and de-risk the process, affording lawyers a greater level of contract-specific expertise that until now has only come with experience.
- With contract acceleration, lawyers can make contracting fast, predictable, and pain-free.
