A contract in it’s simplest form is an agreement between two parties in which each side is responsible for fulfilling their part of a bargain. In the days when all you needed for business management was to trade your cow for so many bushels of corn, things were relatively cut and dry. But nowadays, what if that cow, whose value got depreciated on a fixed schedule, had been imported from a country with restrictive trade agreements in which 10% of its milk production had to be used for traditional cheese curds and the other 90% used to supplying certain industries? There might also be a stipulation that once the cow passed a certain age, it could be slaughtered, but that the meat needed to abide by stringent standards of production which required the most humane means available.
We’ve grown accustomed to certain amounts of complexity in trade, and we employ the services of armies of lawyers to make sure we get things right. The reason for this is that contracts are an important part of society that reflect the social landscapes we’ve evolved with. But, as society has become more complex, our contracts have understandably followed suit.
Artificial intelligence for contract management promises to simplify complex agreements. The concept of using AI in contract solutions is primarily a question in big law firms who are exploring ways to integrate its capabilities in order to make contract workflow more efficient. Lawyers gain the most directly from its implementation, but all businesses will likely benefit.
What are the ways that AI can be integrated?
AI has evolved from it’s original iterations. As a short introduction, AI began as what is referred to as Narrow AI, then grew into a web of machine learning capabilities, and finally evolving to where we are now, deep learning machines.
With Narrow AI, you could do basic things related to business management. The program could recognize certain patterns, sort contracts into categories, and recognize and maybe recommend keywords. This type of program has already been converted into easy-to-use business apps that have made our lives easier. For more basic contracts, this is a usable and time-saving solution.
Using machine learning opens up the possibility of creating a database of legal clauses which, based upon certain criteria, could be called upon to construct a contract for you from scratch. It could take the business of contract templates to a whole new level by creating a starting point from which negotiations can begin. Remember the cow? Well, a contract management system based upon machine learning could know exactly how to organize all the stipulations relating to that cow, based on the location, state, country, or whatever. It could also evolve and learn based on the decisions you make.
The Contract that Thinks
Using Deep Learning AI, a contract management system could perform some aspects of a human manager. It could actually help you make business decisions. It could do the work of analyzing the risks associated with a new partnership, or scour the markets for new information that could potentially put your company out of compliance. On the other hand, it could uncover new opportunities emerging in new areas based on the changing law or political environments. It may even be able to understand when a human created a badly written contract that needs to be revised.
But can you really replace the human touch in something so sensitive as contracts?
To be fair, any of these systems require a lot of forethought and planning. It is not so simple to say that some well-intentioned business app will solve all your problems. Humans will always be involved in contract management regardless of how integrated AI becomes. As with any technology, AI is a tool that we use to help us achieve our goals. Ultimately, the humans behind these contracts will be liable. Rather than shy away from complexity, we should embrace it and use AI to help us achieve contracts that reflect our ever more complex society.