"You can't manage what you don't measure" is a business truism, but most organizations don't view contracts and legal agreements as business assets that you can quantify and analyze. In truth, contract analytics have always been possible, but the advent of artificial intelligence has made contract analytics practical and perhaps even indispensable.
Let start with a definition of terms: what are contract analytics? Contract analytics are metrics on the legal agreements stored in your contract repository. These metrics give you a precise overview of your legal portfolio and can be used to extract key quantitative data about those agreements.
For example, contract analytics can tell you top-line statistics such as:
- How many total legal agreements are stored in your contract repository
- What stage of contract development (drafting, redlines, out for signature) each contract is in
- How many of those contracts have been executed
- How many contracts are still in effect
- What parties appear in each agreement
- The total number of each type of agreement (lease, employee contract, client sales contract, etc.) in your repository
- Which agreements automatically renew at the end of each term, as well as their renewal dates
Normally, such statistics were manually maintained, usually by paying legal staffers to read (and re-read) contracts and update a Microsoft Excel spreadsheet or similar ad-hoc tool to keep the data usefully structured. Only those organizations that consistently generate a high volume of contracts have incentive to invest in the staffing and tools to manually develop contract analytics.
Artificial intelligence has transformed what is possible and practical with contract analytics. By using natural language-processing AI, contract analytics software can now read and parse contracts almost instantaneously. Because AI can understand the contents of any coherent legal document, what would have taken an intern, paralegal or lawyer hours of reading and form-filling to accomplish can now be done in seconds.
Moreover, with the introduction of AI, contract analytics can categorize and sort your contract repository to a degree that was previously impractical. Artificial intelligence can parse out individual contract clauses and note differences between each contract component. For example, AI can tell you which of your client services contracts contain your "old" service level agreement and which ones fall under your new SLA; which contracts fall under which governing law; or which contracts use your standard payment terms and which use customized payment schedules and procedures.
With the help of artificial intelligence, contract analytics goes from a bookkeeping tool to a strategic asset that can help you minimize the risk and maximize the revenues of your entire contract portfolio. If your contract repository isn't integrated with AI contract analytics, it's little more than a document sharing tool disguised as legal software.
If you want to test-drive the most advanced AI contract analytics tool on the market -- and find out exactly how much artificial intelligence has impacted the measurement and management of your contract repository -- then contact LinkSquares today.