It’s no secret that legal teams are notoriously slow in adopting new technologies like contract automation. The work is far from digitalized — most lawyers print, read and annotate hard copies of legal documents (hence the origins of the phrase “redlining contracts”) — and make their final edits within Microsoft Word as the only electronic step in the process.
Without effective contract management tools, the contract review process remains slow, requires enormous attention to detail and is prone to costly errors.
Consider the case of a junior professional reviewing a contract that requires more than a few changes. While reviewing modifications that seem reasonable, but do not fit the corporate standards, the contract professional needs to send the revised agreement to a more senior lawyer for legal review and approval. While this is happening, the line of business manager is emailing the contract team, asking for a status update. Countless emails are sent back and forth while multiple business days are lost.
This bottleneck directly impacts a company’s ability to reach favorable contract outcomes, and ultimately impacts the bottom line.
According to Thomson Reuters, contract review is the primary focus of in-house lawyers, and the volume of contract work is growing. In fact, over 70% of new positions within legal departments are created to handle contracts and legal compliance, yet most legal departments still confront a persistent headcount shortage. Instead of continuing to hire more and more lawyers, legal departments need a new AI solution that delivers significant productivity gains, allowing lawyers to utilize their skills, experience and talent on higher-value business objectives.
Enter authorDOCS, a Word Add-in and legal document automation software that allows lawyers to dramatically streamline many activities typical of legal work, such as redlining contracts, comparing clauses to corporate standards, and ensuring that fine details comply with corporate policy.
In a comprehensive study, McCarthyFinch examined the impact of its legal AI assistant, authorDOCS, on the productivity of in-house lawyers during routine contract review and compliance activities.
The study required lawyers to review contracts across three contract types – supply, service and confidentiality – and perform five tasks – summary, analysis, comparison, repapering and drafting. Together, these tasks reflect the day-to-day activities of compliance checking, standard reviews and contract drafting, all of which are typical of the contract management role.
For each contract, participants had to validate 285 items against corporate standards as accurately and quickly as possible. The participants performed the exercise manually for half of the study, referring to the company clause bank precedents as needed. For the other half of the study, participants were required to install, learn and use authorDOCS to enable contract automation.
The impact of legal AI on the contract management lifecycle:
- Lawyers who were new users were 51.5% more productive when using authorDOCS than when working manually, and that productivity increased the more proficient they became with the contract management tool.
- It took 34% less time for lawyers to perform their day-to-day work. That translates to a team of 19 lawyers being able to do the work of 28, reducing cost to process each contract from $592 to $395.50 on average.
- The manager of the contracts team, a senior lawyer with significant legal and business experience, was able to reallocate 15% of his time to higher-value activities.
- For a typical legal department, utilizing authorDOCS enables lower costs, increased knowledge retention and improved contract quality, delivering an estimated 45x multiple on the cost of the authorDOCS investment.
To see authorDOCS in action and learn more about the return on investment it can bring to your legal team, book a free, 30-minute demo and we’ll show you the ropes.
You can also read the full-length whitepaper for more info on our study, here: “Improving Productivity and Efficiency with AI-Assisted Contract Review and Drafting.”