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Legal AI Momentum Being Fueled By Legal Teams

Seal Software recently engaged Ari Kaplan Advisors, an authoritative legal industry consultancy, to produce a market research report based on interviews with law department leaders in the U.S. and abroad about their perspectives on the use of  legal AI  for contract analysis, agreement, and contract review (“Contract AI”). The participants were senior legal professionals from both Seal and non-Seal customers.

One of the key conclusions was that the legal team in every organization represented in Understanding Legal AI From the Inside Out: A Benchmarking Report Identifying How Corporate Legal Departments Perceive and Apply Contract Analytics exercises some influence over the adoption and deployment of legal AI. In addition, it is clear that the legal services function has a key role in facilitating broader use of the technology by the different constituencies within a corporation that have responsibility for legal contracts, from drafting to execution.

“The lawyers care about [items like] warranty exposure, regulatory exposure, and GDPR, procurement leaders can advise on whether Contract AI is effectively improving their service, e.g., time to value and whether contracts are affecting decision-making, and contract negotiators can inform their drafting processes,” explained one participant. “Those three items have historically competed and the technology could bring them into alignment so that they complement each other by providing access to meaningful information,” the individual added, explaining that while many contract negotiations were completed vertically based on past knowledge, negotiators can now contract analytics and real-time access to more information that is relevant and valuable.

Ultimately, the legal department is driving a sea of change throughout corporations worldwide because while usage may originate with the lawyers, it often expands. “It is a mixture of business people and legal department personnel, but it is most appealing to the individuals who engage with legal contracts and the software is currently limited to certain departments,” said one individual. “There are potential uses for everyone up and down the value chain and throughout the hierarchy; the people who deal with the actual paper (physical or digital) day-to-day are the people who deal with it the most,” added another. These may include supply chain, procurement contracts, and compliance professionals.

The expansion beyond legal services is driven by a desire to reduce the cycle time for contracts and for data extraction to help professionals understand the nature of their transaction. “The challenge is to make contracts more accessible without needing attorneys to review each one,” explained one participant.

After all, many of the survey participants highlighted the following benefits of its application:

  • Increased clarity and the removal of ambiguity or uncertainty in the negotiating process. “I have historically been playing the game of perceived leverage, rather than actually knowing, which Contract AI allows me to do since there is a way to use it to understand historical behaviors.”
  • A unified approach to drafting legal documents. “Now, we don’t need to rely on a lawyer to insert an insurance clause or a limitation of liability clause because the system knows the specific provisions that are appropriate for which types of contracts.”
  • Reliably capturing information in an automated way. “We cannot manually remain aware of all of the changes to our agreements so we would like to use AI as an assistant for contract checking to ensure that all agreements are consistent with the company’s standards; we want to use it as a monitoring tool via a dashboard for processes and obligations.”
  • Analyzing coverage and gaps within different agreements. “It is helping to compare agreements, study different clauses, and adjust how we move forward.”
  • Saved time and improved accuracy. “If you are saving time and ensuring accuracy, it moves people up the value chain so they can do more important things.”

As Contract AI technology becomes more accessible and widely accepted, training and awareness initiatives are likely to foster additional growth. And, while it may begin in legal AI, that will only be the first step on the road to expanding use throughout the corporation.

To learn more about how law departments are preparing for and using legal AI, download the market research report or attend our upcoming webinar: Understanding Legal AI from the Inside Out.