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How AI Accelerates the Legal Contract Drafting Process

Written by: Rachel Vanni

How AI Accelerates the Legal Contract Drafting Process

Artificial intelligence (AI) has changed how we operate in almost every facet of our lives. From digital assistants that anticipate when to order paper towels to cars that can drive themselves, AI is everywhere. Law firms can also benefit from the vast advantages AI offers. More specifically, the way in which AI changes contracts is especially impressive. Contract management, particularly drafting, can be a costly and labor-intensive process. For people dealing with large volumes of contracts, the drafting process can become a full-time job. While contract drafting software has existed for quite some time, the mechanism that drives it has changed considerably. For example, document assembly programs have been in existence since the 1990s.

These programs allow attorneys to fill in a pre-coded questionnaire that would include or exclude particular language based on responses. Once an attorney answers all the questions, the program generates a finished document. While these programs certainly assist attorneys, they have restrictions. An attorney cannot modify the coding to adapt to the particular needs of his or her clients, putting them at greater risk of malpractice.

AI closes the gaps in previous contract drafting software. It offers attorneys the tools to draft contracts, and organize and revise existing data more efficiently, and mitigates the risk of future contract disputes. Here are just a few ways AI and contracts can go hand in hand.

AI Software Can Provide Standardized Contract Templates

With every industry and within every company, specific terms, risk factors, and vital language lead to creation of specific contract templates. Many businesses create their own templates based on years of experience, trial and error, and past legal disputes. However, the shaping of new, applicable templates can take a lot of time and effort.

AI contract drafting is completed by providing the software with the ability to learn from past or similar contracts. The AI-powered software scans previous documents—identifying important terms and analyzing changes—and can draft a pertinent legal contract template in seconds. The attorney can review the drafted contract, make changes, and then resubmit it to the AI software to learn which language qualifies as acceptable and what changes should be made. Any subsequent contracts will be adapted and improved based on the recommended modifications entered by the attorney. Users can teach their AI about new recommended provisions, allowing every attorney to create customized templates for their practice.

One of the most challenging facets of legal practice is that it continually changes. Every day the precedent expands, with thousands of opinions published nationally. All attorneys have an ethical duty to stay informed and on top of any new developments that may impact their clients. AI-created contract templates will always provide up-to-date language, a serious concern for attorneys in rapidly changing practice areas. AI can identify any existing contracts and modify them quickly to remain compliant, preventing a potential source of malpractice. Lawyers can draft contracts with the peace of mind that their templates will never contain outdated language.

AI-powered contract templates can be applied to a wide variety of industries but are especially useful for users who deal with large volumes of contracts that require frequent modifications. For example, let’s say an attorney works as in-house counsel for a business that imports goods regularly from China. The companies exchange contracts on a daily basis for a variety of products that are modified only slightly from shipment to shipment. The price of these particular goods may fluctuate due to the cost of materials agreed upon in the original contract. AI can automatically adapt and change each template to fit the requested goods, modifying the cost up to a prescribed amount. Thanks to AI, companies can easily adhere to any changes in international sales law, and attorneys will be alerted to updates in trade policy. Because the contract templates can be automatically adapted, the attorney will save hundreds of hours in contract drafting each year.

AI Can Screen Existing Contracts More Effectively Than Humans

The ability to draft new contracts is invaluable, but what about existing contracts up for renewal or modification? AI-powered software can screen existing contracts and pull valuable data with remarkable accuracy. As seasoned attorneys know, the devil is in the details. Missing, incorrect, or contradictory language can make or break an agreement. AI can easily sort through existing contract examples and mitigate the possibility of a negative outcome. Even a simple typo can cause catastrophic effects. To demonstrate, let’s look at a common example. Company A contracts with a manufacturer for the delivery of goods to be delivered by the end of the current year. The attorney for Company A mistakenly types “December 31, 2021,” instead of “December 31, 2020.” The manufacturer delays the creation of the goods under a belief that the company misspoke during negotiations. This causes the launch of Company’s A product to be delayed, losing customer momentum and investor interest. Had Company A used AI, they may have caught the error, given that all prior contracts had been completed within one year.

Aside from catching errors, AI can complete these tasks faster and more accurately than humans. That said, AI can’t replace the judgement, empathy, reasoning, and creation of complex legal strategies that human attorneys possess. It can, however, complement the work of attorneys, and free up valuable time to focus on higher level work. AI can sift through thousands of contracts in mere seconds, cutting laborious hours for attorneys and reducing excessive fees for clients. Kira Systems founder, Noah Waisberg, noticed how junior corporate lawyers spent hundreds of hours doing work that should have taken just a fraction of the time. With Kira’s software, lawyers can save significant time. For instance, global ride-sharing company Integreon reduced overall contract review time by 40 percent with Kira.

AI Contract Drafting Provides Increased Clarity and Protection from Disputes

AI breaks down written contracts into readable, easily accessible data that can be analyzed and manipulated in endless ways. AI looks at contracts at a deeper level, associating each term as part of a whole, not unlike a mathematical equation. With a logical foundation, it can pull contents from a broad portfolio of documents to produce valuable insights and advice. This allows for a detailed, objective review of all indexed contracts, providing unparalleled protection from due diligence, compliance issues, and contract disputes.

Contract disputes often arise due to a misunderstanding, errors or omissions, or a failure to clearly state the duties of each party. While you can’t avoid all disputes, AI provides an unprecedented ability to dodge the most common (and costly) causes. Contract disputes account for trillions of dollars globally each year, putting a heavy burden on businesses, our legal system, and our economy. AI can drastically cut dispute costs by bringing inaccurate or unclear terms to the attention of attorneys before they result as the basis of litigation.

For example, Company A creates an agreement for the exchange of goods with Company B. Company A’s attorney drafts a contract detailing the time and manner of the delivery of goods, including a termination clause that is contradicted in existing mandatory authority. Company A then uses AI-software to review all pending contracts. The AI alerts Company A to this contradiction and provides alternative terms that are in line with the current law. This prevents a costly contract dispute with Company B, allowing both businesses to continue their relationship without delay or conflict.

AI Can Increase the Volume of Contracts a Firm Can Negotiate and Execute

One of the biggest challenges that firms face today is the overwhelming number of contracts involved in representing clients, particularly commercial businesses. Ineffective contracting can severely impact the profitability of businesses. Firms can lose up to 40 percent of value by not approaching contract creation, negotiation, or execution efficiently. The job of creating, editing, and updating contracts is repetitive, tedious, and perfectly tasked for AI-powered software. With the help of AI, attorneys can handle more work in a more accurate manner while reviewing contracts more quickly (thus increasing the number of contracts they can review) and reducing the risk of costly contract disputes.

In essence, AI complements the work of attorneys by picking up the slack, providing assistance in data-driven tasks, and leaving context and detailed legal analysis to humans. This is especially good news for mid-sized or boutique law firms who don’t have staff members to spare. AI is designed to handle large volumes of tedious work at a lightning-fast pace, allowing attorneys to pick up where it left off.

AI Offers In-Depth Information to Assist Attorneys in Contract Negotiation

AI technology isn’t limited to document processing; it can also provide attorneys with more in-depth insight to assist during negotiation. It has the ability to process all data relating to a negotiated contract, including past terms that led to a positive result. AI contract software can also provide statistical analysis based on requested modifications that resulted in an estimate on if and when a party may agree to the change in terms, the odds an offer will be rejected, and a time-cost estimate of the negotiated term. This type of business insight is invaluable, especially when the contracting process is time sensitive or company margins are already thin.

For example, an attorney represents Company A, a shipping company that transports goods within their home state. Company A is successful and wants to expand nationally but is concerned about the exponential increase in client contracts they will need to manage. Using AI software, Company A can draft, negotiate, and execute contracts in record time while relying on their existing legal team. They are now free to grow as they desire, without the burden of excessive legal fees.

Conclusion 

Business is all about building partnerships with others, evidenced by agreements made to reflect promises and expectations of that relationship. Efficient contract drafting is the foundation for healthy and functional business partnerships. AI provides an unparalleled ability for lawyers to negotiate effectively, predict potential pitfalls, and avoid disputes. It isn’t far-fetched to think of a future where there is an ethical obligation for attorneys to use all tools at their disposal, including AI-contract drafting software. In fact, it may eventually be considered legal malpractice to not use AI.

Resources:

https://scholarship.law.duke.edu/cgi/viewcontent.cgi?article=1306&context=dltr

https://www.lexology.com/blog/2019/07/how-your-legal-department-can-benefit-from-ai-

contract-management

https://www.nanalyze.com/2019/03/artificial-intelligence-legal-contracts/

AI

MemryX: a new Edge AI startup that has developed a highly efficient and scalable AI accelerator.

Keith Kressin, President & CEO, MemryX

MemryX: a new Edge AI startup that has developed a highly efficient and scalable AI accelerator.

As the CEO of MemryX, Inc., an innovative Edge AI startup founded by professors at the University of Michigan in Ann Arbor, Keith Kressin has been a passionate entrepreneur. Prior to joining MemryX, Keith was a SVP at Qualcomm, leading a spate of activities including the Snapdragon roadmap, technologies for application processing, company strategy, competitive analysis, and more. In an interview, he speaks on an array of topics. Excerpts:

Conception of MemryX

“Our team wanted to develop an AI accelerator that was customer friendly in terms of ease-of-use and scalability, while providing excellent technical metrics.” Adds Keith that the team wanted to develop a hardware accelerator that could be adapted to any trained AI software model, rather than needing to train and then modify the model to run well on target hardware. “So our focus from the start was on developing technology to meet a key customer need and hence MemryX was born.”

Challenges galore – AI technology

AI continues to grow in a variety of different applications and industries as it is used to make cities, companies, and hospitals smarter, help increasing manufacturing efficiencies, better support education inside and outside the classroom, and more.  “AI can add a layer of intelligence into any device that computes. Of course, every new technology is just a tool and those tools need to be used to increase to increase productivity and quality of life, rather than the limit freedoms or increase natural biases.” MemryX envisions accelerating Edge AI by providing a highly efficient and scalable solution that is simple to deploy and support.”

The key is the company’s innovative MemryX architecture.  “Our architecture was designed to natively support pre-trained AI models with high efficiency and utilization.  If one doesn’t consider model structures and framework, and only focuses on HW efficiency the result is theoretically strong, but practically weak.  MemryX architecture was designed not for white papers or theoretical achievements, but for broad customer scale and deployment.” The combination of at-memory computing, pure dataflow, and our unique memory-based fabric interconnect all support our ability to scale verified models into high volume with a very simple to use software SDK.

One trap for AI is focusing on the core technology itself, rather than the practical application of that technology throughout the entire value chain.  As in most industries, solving customer needs be in the forefront. AI is extremely complex with many facets.  It is also very exciting and dynamic field that attracts individuals with a wide variety of background and skills. The key is to stay focused on the larger picture while being extremely adaptable to market and technology changes.

Leadership traits

“It all starts with clear and transparent organization & communications.  People need to understand objectives, timelines, and be given the tools/resources to achieve well defined goals.  Teams need to be encouraged to be open and honest.”  Realistic, approachable, in-tune with all functions of the entire organization, humble, goal-centric, empowering, and one who honestly cares about the company, the team, and the individual. Keith’s leadership style is approachable with realistic expectations and stays in-tune with all functions of the entire organization. He honestly cares about the company, the team, and the individual.

“Fear in failing is usually rooted in the reaction to the failure in terms of embarrassment or punishment. However, if leaders encourage an intelligent risk-taking culture where we learn from our failures, then we grow to become a stronger organization. Further, failures from risk-taking can be minimized through proper hiring, organization, funding, and goal setting.”

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AI

RAIN Defense + AI: Creating synergies between AI and defense sectors

Norine MacDonald KC, President & Founder, RAIN DEFENSE + AI

RAIN Defense + AI: Creating synergies between AI and defense sectors

Norine MacDonald is the President and Founder of RAIN Defense + AI, an exciting new global platform on AI and Defense. She was formerly President and Founder of The International Council on Security and Development (ICOS), an international security and development think tank founded in 2002. Ms MacDonald is a former Distinguished Research Fellow for National Defense University in Washington and a graduate from Massachusetts Institute of Technology Sloan School of Management program in Artificial Intelligence (AI). In an interview, she speaks on an array of topics. Excerpts:

Conception of RAIN Defense + AI

For Ms Norine MacDonald it is clear that the business of war is being overtaken by the advent of AI, and a competitive and fast-moving global environment. Western governments need to be competitive with other countries, primarily China, that have been investing heavily in the sector.

The AI + Defense sector offers significant investment opportunities, particularly for non-traditional business players. The global AI + Defense market is projected to grow to $61 billion by 2027.

“There is no specialized single company or platform for the AI + Defense sector to source comprehensive, intelligible and relevant knowledge/data and connect to all the players globally” said Ms Norine MacDonald.

RAIN Defense + AI is an exciting new venture working at the critical intersection of AI and Defense:

  • RAIN INDUSTRY provides access to expert knowledge and data analytics on current and emerging AI technologies on defense platforms for all market participants across sectors and geographies.
  • RAINCLOUD creates a global community content platform with a validated network of multidisciplinary professionals, with curated data and news and product info in AI and defense.

RAIN, the AI and defense solution: the RAINCLOUD global platform

To understand and unpack the complex world of AI and defense, RAIN  produces commercial INDUSTRY Reports which provide:

  • benchmarking  various defense sector platforms and AI, along with trends and forecasting.
  • complete information “Who’s Who” data on individuals working in the field of AI and defence.
  • a data and directory on Venture Capital players active in AI and defense. Norine says: “We have mapped the 500 most influential individuals in the US in our RAIN 500 and we have done an extensive report on the 40 main venture capital firms in the US and the 150 defense and dual-use startups they invest in.”

As a gateway to RAIN Research data and content platform RAINCLOUD will be launched in 2023.

“For RAIN, our access to government clients has been made much easier through our business connection as a data provider with Grist Mill Exchange, which functions as a data marketplace for government and national security enterprises. Through Grist Mill Exchange we will be able to provide our INDUSTRY reports to  government stakeholders and to onboard them to the RAINCLOUD global platform where they can connect with  AI startups, venture capitalists, defense companies and scientists working in the broad field of AI and defense.”

AI and Defence: a new Ethical Challenge

“AI solutions in defense are now more than ever driven by the commercial sector and dual-use technology. While onboarding such technology in the military world is revolutionary in terms of competitiveness, we cannot ignore the important ethical questions inherent in their adoption.”

AI enables unprecedented opportunities for more autonomy, and this changes the human-machine interaction. Therefore, we decided from the beginning that RAIN would also have an Ethics Division, which helps unpack the ethical and legal arguments involved and supports discussion and debate on these issues, she observed.

Leadership Traits

“The RAIN team has been working together for more than 20 years on international security and policy issues in Afghanistan, Latin America and the Middle East. To launch a new company requires both creativity and stamina. We are lucky to have a close-knit team that works well both independently and together.” Norine believes in having a hands-on approach to the work in the sense that she involves herself in the conception, research and implementation of projects, from field work in conflict zones contexts to testifying at the highest levels of government. “If you have a good business idea stick to it –  but at the same time be flexible and adapt as you go along. Hard work, high standards and discipline will never fail.”

AI, the Defense sector and start-ups

In the AI and defense sector, there are exciting new companies developing defense and dual-use technology. These start-ups benefit from new ways to work directly with the government to develop and test their prototypes. At the same time, there are new venture capital firms that focus especially on defense and national security-oriented startups.

“We want to bring all these actors together on our RAINCLOUD platform for mutual benefit. Companies will be able to showcase their latest products and services in our virtual trade show”, MacDonald said.

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AI

Optimizing Industrial Business Processes with AI

Rudolf Felix, CEO, PSI FLS Fuzzy Logik & Neuro Systeme GmbH

PSI FLS Fuzzy Logik & Neuro Systeme GmbH: Optimizing Industrial Business Processes with AI

Rudolf Felix is the CEO of PSI FLS Fuzzy Logik & Neuro Systeme GmbH, a German company that specializes in developing and providing software solutions for complex technical systems. Rudolf Felix has been with FLS in the PSI Group since 2008 and has been the CEO since already 1992. Under his leadership, the company has grown to become a leading provider of software solutions for technical systems, particularly in the fields of energy, industry, and transportation. Rudolf Felix has also been involved in various research and development projects related to fuzzy logic and artificial intelligence and has published numerous papers in these fields. In an interview, he speaks on an array of subjects. Excerpts:

Conception of PSI FLS Fuzzy Logik & Neuro Systeme

Says Rudolf that making decisions is crucial for successful and efficient operation in every industrial business process. Decision-making processes that are based on business goals must reflect both long-term strategies and the current operational situation. If the decisions are based on data and the pros and cons between the business process goals are machine evaluated, machine learned and optimized, business process owners and operators get the best possible benefit. “An optimized and explainable decision support is particularly helpful here. And this is exactly what PSI FLS and the specially developed Qualicision AI technology is all about. It combines both technical and economical business goals. An efficient, easy-to-use, and explainable software that is used for business process optimization is what we deliver. It is data-based, and balances out conflicting business process goals ahead of classic algorithms and provides for the performance that our customers across many industrial sectors appreciate.”

AI- Challenges galore

According to Rudolf, many of the industry’s industrial AI use cases have long been developed and in use. Perhaps in the pandemic time, the constant work with computers at home is an additional momentum. “But in my view, business processes in industry have evolved in their objectives rather because of the growing importance of topics such as digitalization, exploitation of data, sustainability and green energy or new possibilities to integrate automatized decision-making in context with many new important aspects in business processes. Therefore, the complexity of the processes has rather increased.”

PSI FLS Fuzzy Logik & Neuro Systeme AI solution

Qualicision AI stands for qualified support with decision-making when optimizing business processes. Qualicision technology was originally based on fuzzy logic which has been extended by a full stack of AI methods that combines the advantages of all of them. In this combination Qualicision AI helps to integrate decision-making expertise of people with business process know-how and connects it with data-driven AI. In addition, the Qualicision AI software has been extended by highly automated deployment. Machine-learned explainability mechanisms are part of it, too. In business processes there are a lot of pros and cons when decisions must be made. Therefore, uncertainty is intrinsic even if all data is clearly measured and in good shape. Automated recognition of these kinds of uncertainty, in particular stemming from the variety of the data and interaction between decision options, is extremely important. “Our Qualicision AI based tools help to identify and to exploit tolerances in the business processes and to optimize out uncertainty. Many use cases show that once Qualicision AI is introduced the business process efficiency increases by 10 to even 25 percent compared to the previous unoptimized status quo.”

Leadership traits

Trying to get inspired from people for whom and with whom you work and trying to inspire them, too. Everything else is the right technology you must have and the passion to work with it.  “When you work on something with passion, the thought of possible difficulties is more of a drive. This is especially true when you are working on the implementation of something you have been involved in from the beginning on.”

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