New legal industry study reveals state of Artificial Intelligence in contract analytics and data extraction, assesses legal department approaches.
According to study participants, more than one-third (37 percent) are currently using AI for analysis and review of contracts and agreements, and half expect their spending on contract AI to increase this year. Based on the findings, the researchers provide analysis and recommendations on how legal departments can get started with contract AI and increase its organizational adoption.
Of the respondents who do not currently use contract AI, fully 47 percent say it is likely or highly likely their organization will implement it in the coming year. The report also indicates, however, that contract AI must overcome popular misconceptions that AI automation will completely replace humans and serve as a panacea for contract management challenges. The research conducted by Ari Kaplan Advisors, supported by Seal Software, gathered perspectives from in-house leaders at a range of companies, including American Express, Hewlett Packard Enterprises, Nokia, Novartis, Atos, and Olympus. The benchmarking research sheds light on how legal departments at large corporations perceive and practically apply AI-driven contract analytics in a broad range of matters. Ulf Zetterberg, ceo and co-founder at Seal Software, commented, ‘these statistics point to expanding investment by corporate legal departments in contract analysis and extraction solutions.’
Users of contract AI, as indicated in the study, now deploy it in diverse areas with 91 percent applying it to risk assessment, sourcing and contract management, followed by compliance and procurement at 82 percent. Moreover, given the rising importance of data privacy and protection, it is not surprising that 55 percent of respondents who use contract AI identified GDPR and similar regulatory mandates among its leading use cases. Study participants also articulated the overall benefits of contract AI in terms of increased clarity and the removal of ambiguity or uncertainty in the negotiating process, a unified approach to drafting contracts, and improved reliability and accuracy in contract analysis with automated identification of inconsistencies in agreements. They emphasized the increased speed with which they can perform these tasks using AI and the value of additional intelligence that can be gathered across an entire contract corpus. Ari Kaplan, principal of Ari Kaplan Advisors, said ‘I hope this report fuels a productive dialogue that drives the legal community forward.’