Contract review software does what it says on the label: it reviews contracts. But how it does this is a bit more complicated than that.
Fortunately, this buyer's guide covers everything you need to know about contract review software, from what it is to how it works, and which providers are best. It also explores the pros and cons of the software, and whether you need it at all.
What is contract review software?
Contract review software is the technology that reviews and analyzes the key provisions of a contract, often using AI and machine learning. By doing this, it automates the contract review process, making it easier to screen contracts for errors and risks than using a manual process.
Who uses contract review software?
Contract review software tends to be used by law firms and in-house legal teams that are tasked with reviewing thousands of PDF contracts, but simply don't have the time to do it manually.
How does contract review software work?
Contract review software is designed to extract information from contracts at scale. This process can often be likened to contract analysis.
Specifically, this type of contract tool is trained to recognize and extract basic information from large quantities of contracts. This contract data is then condensed to create actionable insights for contract owners.
For example, most contract review software is trained to recognize inconsistencies between a contract’s language and approved policies and terms. By flagging these inconsistencies, contract managers have the opportunity to revise any risky contract terms before a contract’s sent out for negotiation and signing.
The software is able to recognize these patterns and deviations through the use of artificial intelligence (AI). AI seeks to enable technology, like contract review software, to learn and develop without the need for constant programming. Instead, AI enables the software to learn by doing, rather than through coding.
In fact, you’ll often find that most contract review software has been ‘taught’ to recognize patterns in datasets and complete certain tasks. This teaching process usually involves using the software to review thousands of contracts. The exposure trains the software to spot and respond to patterns in contracts, and as this exposure continues, AI contract review software continues to learn about these patterns.
Contract review software is a complex tool, so there are both pros and cons to using it. We’ll go through these now.
Benefits of contract review systems
There are a few benefits of using a contract review system to review your agreements. We’ve listed a few below.
❗Useful for identifying contract risk
One of the biggest benefits of using a contract review tool is that it can help legal and commercial teams to mitigate contract risk with greater accuracy. Contract review software can be used to flag unclear or outdated terms, and hopefully any mistakes, too.
These thorough checks will prevent nasty surprises later down the line, and ensure that your contracts are as robust and compliant as possible.
🏃♀️ Faster review cycles
Using an automated contract review tool means that lawyers spend less time going over a contract with a fine-tooth comb, which can often be very time-consuming.
By using a high-quality contract review tool, legal teams can minimize the time contracts spend at the review stage, and this helps sales close deals faster. It also empowers legal teams to reduce the time they spend on contract admin and prioritize higher-value work.
Essentially, by reducing the time spent the different stakeholders spend reviewing standardized contracts, contract review software can make the contracting process and legal function more efficient.
Limitations of contract review systems
However, there are also some important limitations to be aware of before taking the plunge and investing in contract review software. Let’s run through some of the main concerns now.
🤔 Concerns about accuracy
While some studies have found that AI contract review software can be more accurate than human review, not all contract review software platforms are born equal.
Some are still in the early stages of development, and all platforms are continuously learning.
Unfortunately, this means lawyers should be wary when removing human oversight from the contract review process altogether. This is particularly true for high-value and complex agreements.
🔍 Only useful during the review phase
Perhaps the biggest downfall of contract review tools is that they are only helpful at the review stage of the contract process, and less so at the other stages of the contract lifecycle.
For example, teams that use contract review software will still need to spend large sums of their time drafting a contract, approving, and signing it. If these bottlenecks still exist in other stages of the contract workflow, then faster review processes will have limited success. This is because these bottlenecks can still block deals and prevent them from closing quickly in a fast-growth business.
If you truly want to transform your contract process, then a comprehensive solution that delivers value at every stage, like Juro, will be a better fit.
🏆 There are better solutions out there
Although contract review software exists to help you read your own contracts and understand what’s in them, you wouldn’t need to do this if you created your contracts as structured data in the first place.
By building and saving contracts in a PDF or Word, you create your contracts as unstructured data. This means that your contracts are static files, and therefore challenging (if not impossible) to search through and query.
By contrast, if you created your contracts in Juro, you’d be building them as structured data from the beginning. There are a few benefits of this:
- You can update and collaborate on your contracts in real time
- Juro’s OCR functionality makes searching within contracts effortless
- Users can query contract data at any time, without the need for extensive tagging
Since tools like Juro let you query, report on, and analyze your contracts right through the lifecycle, there’s no need to fork out for expensive contract review software.
Juro's dynamic, browser-based contract tool gives you the data you need to power your processes from day one. It also provides an all-in-one solution for contract management, so you can manage your contracts all in one place.
To find out more about how all-in-one contract tools like Juro compare to contract review software, hit the button below. Otherwise, read on.