What is contract AI? A guide to AI contracts in 2024

Guides
July 21, 2023
6
min
Contract AI is becoming increasingly popular in the legal industry, with vendors selling the promise of reduced admin and faster contracting processes if they invest. 

But what actually is contract AI, and can it deliver value that other tools can’t? 

The short answer is yes. Juro’s AI Assistant helps you draft, summarize and review contracts ten times faster than with human-led processes. By automating repetitive admin, this kind of contract AI empowers businesses to agree contracts faster and dedicate their time to higher-value tasks.

To find out more about how Juro’s AI-powered contract collaboration platform can transform your contract process, hit the button below for your personalized demo of the tool. If you want to learn more about contract AI and how it works first, keep reading.

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What is contract AI?

Contract AI describes the use of text-based machine learning applied to contracts to make the process of drafting, reviewing, and tracking contracts more efficient. 

Like a human lawyer, contract AI begins by understanding and familiarising itself with the language used in legal contracts. To do this, the algorithms that power contract AI tools are trained to identify and flag patterns and behaviors in contracts. This enables the AI to recognize key terms, phrases, and concepts by repeatedly seeing words and phrases in context.

Contract AI then applies this advanced understanding of contracts to reduce repetitive contract admin tasks throughout the contract lifecycle

For example, contract AI software can automatically extract important contract data and highlight specific terms of interest, like the governing law, effective date, or personal information. Without AI involvement, this information would need to be tagged and captured manually by lawyers. 

Generative AI also uses large language models (LLMs) to generate contract drafts in seconds, with guardrails that you can set and control. These LLMs can also be used to identify key risks within a contract, allowing you to focus on more complex matters when reviewing and negotiating contracts

Different types of AI contract software

Contract AI is a broad category of AI-powered contract tools, so it’s important to understand exactly what AI contract management platforms are available and where they can add value. To help you do that, we’ve listed the three main categories of contract AI below. 

1. AI contract drafting software

AI-powered contract drafting tools can generate contracts in seconds based on the information you provide in your prompt. This means that this type of contract AI can automate the contract drafting process while also allowing you to customize them to meet your specific needs and use cases.

AI contract drafting software tends to be a point solution, though. In other words, it delivers value at the contract drafting stage of the lifecycle but doesn’t offer functionality to help with the other stages of the lifecycle, like getting a contract negotiated, signed, stored, and tracked

2. AI contract review software

AI contract review software is used to automatically find, extract and flag important data points and deviations within a contract. By doing this, the software makes it quicker and easier for teams to review their agreements. 

Certain AI contract review tools, like contract intelligence software and AI contract analysis software, will also evaluate risk within a contract and flag any areas of concern. This is beneficial to lawyers preparing to enter the negotiation phase of the contract lifecycle as it gives them a clear understanding of which points to focus on. 

Again, the main limitation of AI contract review software is that it doesn’t deliver end-to-end functionality for those managing contracts. While you can review your contracts in these tools and prepare for a negotiation, you can rarely collaborate and negotiate within the platforms. You have to move between a separate set of tools instead.

3. AI-enabled contract collaboration software

Unlike the two types of contract AI we just described, AI-enabled contract management software does offer features that benefit teams throughout the contract lifecycle. 

An all-in-one contract collaboration solution like Juro enables teams to leverage AI to draft and review contracts, but it also lets users:

  • Collaborate on contracts in real time, without leaving their browser
  • Set automated approval workflows for high-risk contracts 
  • Instantly query contracts to find key data points 
  • Sign contracts securely with legally binding eSignatures
  • Set automated contract reminders for important dates within a contract
  • Run reports into contracts to identify bottlenecks and blockers

This enables businesses to leverage the various benefits of contract AI while also making the rest of the contract lifecycle faster, more efficient, and less painful. 

Which contract AI solution is best for you?

With AI coming on leaps and bounds in recent years, there are plenty of AI offerings on the market right now, and contract software is no exception. 

But not all contract AI solutions are born equal. Lots of vendors have built AI that delivers value during one stage of the contract lifecycle (e.g AI contract review software).

Few have created a tool that delivers value and drives efficiency at every stage while also protecting your privacy and keeping your legal team in the driving seat. 

Juro’s legal AI assistant does all of these things, making Juro the only platform that combines AI with an all-in-one, browser-native collaboration platform. 

1. Juro is an all-in-one contract collaboration solution

Juro’s AI assistant lives within our contract collaboration platform which already offers features to streamline the entire contract lifecycle. Unlike point solutions built in MS Word, Juro users can manage their contracts from start to finish in one place, without having to leave their browser. 

This means you only need one platform. No more jumping between eSigning tools, Word files and shared drives. Juro has a rich set of features that empower your team to manage contracts within the platform from drafting all the way through to contract reporting and renewals. This makes Juro a business-wide system of record, not just a tool for legal teams. 

2. Juro lets your legal team set the guardrails

Lawyers are risk-averse, and rightfully so. It’s crucial that contracts are drafted carefully and with the right precautions in place.

That’s why Juro’s contract AI assistant allows you to set your own guardrails for contracts. 

For example, Juro users can set negotiation parameters like “we won’t agree to liability caps in excess of $1m” and trust that these will be reflected in the output of the AI when prompted. 

In other words, Juro’s contract AI isn’t free to negotiate whatever it wants. Instead, Juro’s AI Assistant is carefully directed by lawyers and acts as a partner for them - not a replacement.

3. Juro was built with privacy in mind

Amidst the hype of AI, we’re seeing a lot of new vendors entering the market. However, some have forgotten that contracts are your most sensitive business documents, and they almost always contain personal data. This is one of the biggest risks associated with AI.

Meanwhile, Juro’s AI Assistant was designed with privacy in mind. What does that mean? Well, we offer EEA hosting for our interaction with GPT and have committed not to use customer data to train aggregated models.

Juro is also already SOC2 Type 2 compliant and holds the IASME certification for GDPR compliance. We’ve been prioritizing contract management security for a long time now, so our data processes were at the gold standard long before we introduced contract AI. This hasn’t changed. 

4. Juro has a data-rich contract repository for storage and reporting

AI data extraction tools provide a powerful way to capture and compile important contract data. But these contracts still need to live in a contract database or repository. 

Since Juro contracts’ smartfields are actually built as metadata, contractual obligations can be located and viewed quickly in tables and dashboards - even without AI. In fact, Juro users even have the option to set up automatic reminders for certain obligations and dates through using Juro’s intuitive contract repository.

Juro users can create custom contract dashboard views where they can see all of the important contract values like contract type, owner, modification date, client and more at once. They can even filter these to find specific collections of contracts and report on these.

This provides one single source of truth for businesses when it comes to their contracts, making it just as effective, if not more, for legal teams to maintain full ownership and visibility into the company’s contracts

Want to find out more about Juro’s contract AI?

Juro is an AI-enabled contract collaboration platform that empowers your team to create, agree and manage contracts in one unified workspace. 

Juro is the #1-rated contracting platform for ease of use, and the solution of choice for fast-scaling businesses like Deliveroo, Trustpilot and Cazoo.

If you want to join the 6000+ companies already using Juro to power their contracts, fill in the form below to book your personalized demo today. 

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