Cloud Native Consultancy Says App Can Quadruple Contract Analytics Productivity
Time is the single most important asset any business has – and how an organization spends its time ultimately dictates its productivity and success. In business, there are some tasks that are particularly time intensive – and, as a result, particularly costly. One notable example is legal time and costs. Imagine a national retail chain, for example.
Lawyers and paralegals spend countless hours poring over the chain’s procurement contracts to analyze risk, renewal dates and renegotiation terms – valuable time technology experts say can be largely recaptured with the proper implementation of artificial intelligence (AI).
By tapping into the power of sophisticated services like IBM Watson Discovery Services for Element Classification, Coda Global, a cloud-native consultancy and application developer, has created an AI-based Contract Review Automation solution that can be customized for each client to compare and contrast contractual language, discerning what should and should not be included in a contract, flagging only specific wording in contracts that needs human review. Today, the solution is best suited to procurement environments (i.e., retail, government or real estate), but the organization sees a growing number of use cases on the horizon.
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“While AI is still in its infancy, as an early adopter, Coda has found a significant way to employ this bleeding-edge technology to help medium- to large enterprises reduce the complexity and manual labor involved in analyzing procurement contracts,” says Sharan Gurunathan, Executive Vice President and Principal Solutions Architect.
Sharan added, “After investing the time to properly train the system, we have seen customers improve their contract review times by as much as four times their previous output.”
Relying on the power of IBM Watson, Coda Global’s AI-based Contract Review Automation solution uses IBM Watson Discovery Element Classification and Machine Learning techniques to match established patterns for key procurement and contracting language such as payment terms, warranties or subcontracts, alerting on specific words or sections that need to be reviewed by a human being.
If it would normally take a paralegal one hour to review a contract in the earlier enterprise-retailer example, Coda’s solution can significantly speed the process, allowing five or six contracts to be reviewed in the same period of time. By augmenting the reviewer’s intelligence, the solution accelerates the review process and improves productivity, freeing the paralegal or other legal authority from the tedious task of reading reams of legal documents to allow them to perform larger volumes of work in shorter periods of time.
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Three Important Truths About AI
AI is Nothing to Fear
While the buzz today is all about AI and the possibility of artificial intelligence eliminating human jobs, the term “augmented intelligence” may actually be a better descriptor of what today’s technology is designed to do.
Augmented intelligence helps people do their jobs more effectively by delivering insights that accelerate human decision-making processes. Today’s AI-based contract review automation solutions are not a contract reviewer’s nemesis; on the contrary, they are more like a significant helping hand.
Bigger is Better
To determine if an organization is well-suited for AI-based contract review automation, it’s critical to pay close attention to the amount of data being analyzed. Because the solution must be “trained” to recognize patterns within data sets, there is a minimum threshold for success. Recognizing patterns in five pieces of data is difficult while identifying patterns among thousands of data sets is relatively easy. Therefore, the larger the volume of work, the bigger the return on investment will be.
Businesses analyzing 500 or more contracts per month are in the sweet spot for adoption, which typically means an AI-based contract review automation solution is best suited for medium to large enterprise organizations reviewing large numbers of contracts per month.
Training Takes Time
Just like on-boarding a new employee, an AI-based contract analytics solution has a learning curve. It takes time to train the solution to the host company’s exact specifications. To reap the most rewards, clients must be prepared to “teach” the system their own specific terminology – the nuances that the application is searching for inside the contracts it studies for the organization.
Therefore, the time- and cost-savings don’t begin the very moment an automated contract review solution is adopted. Instead, the first 100 or more post-adoption contracts will still need to be manually scrutinized to allow the system to gather enough data to do its job thoroughly. The contract review process will then become automatic.
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