Tim Pullan writes:
How many times have you heard the phrase ‘it’s stuck in Legal’? Unfortunately, this has become common business parlance—yet it’s unfair to blame slow deal velocity on the legal team. When it comes to contracting, they’re working with one hand tied behind their back. Manual contract review and negotiation processes slow things down and increase the business’s exposure to risk, and can even threaten the deal’s chance of success.
By leveraging automation, the legal team can be transformed from a bottleneck into a genuine enabler of deal velocity. Let’s examine how automation can improve your contract negotiation process, and the impact this will have on your organisation.
The benefits of automation
Automation has a number of wide-ranging benefits that can improve your business’s contract negotiation strategies. In fact, Gartner predicts that by 2024, AI-based contract analytics solutions will reduce the manual effort needed for contract review by 50%. Let’s explore why automation holds such promise for Legal.
Automation organises the contract negotiation process
Currently, legal departments often have to rely on traditional contract negotiation processes that have not materially changed for centuries. Each review cycle requires endless emails back-and-forth to share and discuss issues, waiting for each employee or counterparty to conduct their own review of the issue at hand, and an ad hoc approach to issue-based negotiation (the gold standard in contracting), usually as a word document or pen written to do list.
Automation tools, however, can organise the entire end-to-end process. Initial reviews take a matter of minutes, reducing the time needed by approximately 95%. Key issues that need to be negotiated are automatically highlighted and a digital issues list is created and then kept up to date as issues are worked through. These issues (such as unusual or risky clauses) are not only flagged but safer and already approved alternatives are suggested to speed up remediation.
Automation speeds up the contract negotiation process
It’s been reported that artificial intelligence alone leads to a fivefold increase in legal productivity.
Therefore, it’s unsurprising that automation does wonders for your deal velocity—the time between Legal receiving an initial contract and both parties signing on the dotted line.
This can have a transformative impact on your business. The longer a deal is
‘stuck in Legal’, the less valuable it becomes—and the likelier the chance that it’ll fall through completely.
When the lawyer does look at the contract, any issues are automatically highlighted and suggestions offered. No longer do they have to dig around in the minutiae to spot potential areas for concern. Instead, these are offered up on a plate, meaning inside counsel can swiftly resolve them and send the contract over for the other party to review much faster. Not only does this speed of turnaround increase deal velocity, but it helps you to build a more positive relationship with the counterparty too.
Automation de-risks the contract negotiation process
Increasing your deal velocity can also play a key role in de-risking the contract negotiation process. Junior lawyers may lack the experience necessary to discern between what marks a genuine threat and what’s actually ok under the circumstances. Therefore, they may either unnecessarily flag areas that represent no real threat, creating superfluous redlines, or they could accidentally miss questionable language that opens their organisation up to risk further down the line.
Automation-based tools (like a contract acceleration platform) not only compare new contracts against your policies, but also leverage knowledge of existing contracts to assess whether language is familiar or not—in other words, whether it can be trusted. It analyses contracts that the company itself has previously signed as well as other contracts signed by companies operating in similar industries. This vastly reduces the risk of missing something crucial through human error.
Enables rapid issue-based negotiation
Contract negotiation is a time-consuming process. Therefore, it’s crucial that lawyers are empowered to spend time focusing on key matters. No matter which contract negotiation strategies you use, one thing’s for certain: issue-based negotiation is the top priority.
The best deals are a win-win for both parties. To achieve this, however, you first need to create an issues list outlining the issues, then stack rank those issues to prioritise the negotiations. Which issues will you not budge on, which will the other party not budge on, and where might there be wiggle-room?
A contract acceleration platform like ThoughtRiver instantly unearths key issues and automatically creates this digital issues list. This allows lawyers to get to the heart of the negotiation quicker, instead of being forced to spend hours and hours dissecting complex ‘legalese’ in often poorly drafted contracts.
ThoughtRiver delivers automation to help lawyers work smarter
Manual legal review slows contract negotiations, eats margins, and kills deals everyday. Manual contract negotiation processes are a mind-numbing, thankless grind, and the risk of missing something is still always there.
ThoughtRiver’s contract acceleration platform, on the other hand, leverages automation to transform contract review for the better. It allows lawyers to instantly create a digital issues list, compare current contracts against the existing legal playbook and historic agreements, easily share and liaise on issues with colleagues, and rapidly remediate any contract that’s sent to legal.
In short, ThoughtRiver empowers lawyers to move quickly with confidence.
Key takeaways
Contract negotiation no longer has to be a slow, drawn-out, manual process..
Automation can better organise, speed up, and de-risk the entire contracting process.
Automation-based tools, like a contract acceleration platform, also allows lawyers to focus on issue-based negotiation—the key to effective contracting.