Robotic text automation in contract management? There is not a company out there that doesn’t need this, provided it’s done right. And the bigger the company, the greater the potential for revenue-boosting and risk-reducing benefits.
Contracts best suited to this approach tend to be ones with vendors and suppliers, because these typically (1) tend to vary from one to the next, (2) require careful monitoring, and (3) reward close scrutiny with lucrative opportunities. Or they may be employee contracts or other types of contracts with significant variation in document structure or in the terms and conditions of the agreement. Monitoring is required to ensure that the other side is holding up their part of the deal, as well as to eliminate exposure to risk and liability. In the case of keeping the other side honest, the bottom line is kept in line. In the case of ensuring compliance with industry standards – potential multi-million-dollar fines can be avoided.
Contracts Are A Tough Nut to Crack
But control over contracts has long eluded the reach of AI-based automation. Why? Because contracts are a tough nut to crack for most machine learning systems to date (though not for a revolutionary layout-aware solution, such as Applica). Contracts are, in the parlance of the automated text processing category, perfect examples of what’s called “unstructured” text. We may look at a contract and see block caps, bold subheadings, italics, bullet points, and appendices, but this type of editorial structure is not what is invoked by the industry definitions of “structured” or even “semi-structured” text.
In most contracts there is no fixed model or template in play, and from one to the next there is little predictability to the organization of information on the page and to the terms, labels, and hierarchies used throughout the document. Even when a specific in-house team or law firm has a concise template-based system, individual lawyers put their distinct spin on the documents they create, and every contract can wind up with new phrasing or a different set or sequence of terms and conditions. Scrutinizing even a small set of contracts always requires a toolkit for “apples to oranges” types of comparisons. When the set is large – consisting of hundreds or thousands of documents – the structural inconsistency and content variability really are overwhelming. To people, anyway. Even ones who specialize in analyzing legal documents.
Thus, scrutinizing contracts for important information is tedious and error-prone work, which hinges on precisely the kind of needle-in-a-haystack vigilance that people lack but machines have in spades. And the greatest value does not come from expedient searches for known data points – though this would be challenging enough given the complexity of legal language and the amount of redundancy typical of so-called legalese, famous for inflating character counts considerably. Instead, the value lies in finding facts that are easy to miss, because they are buried in small print and because no one knows they are there in the first place.
Truly Innovative AI Joins the Team
Who do companies typically put in charge of the labor of contract management? Usually this is handled by in-house legal teams, which at times struggle to pace workflows. After all, when contracts are managed manually, work cannot be scaled up even when, say, new vendor deals are peaking. And in cases when some important legal crisis takes precedence over business-as-usual, contract management winds up as overflow – and outside counsel can wind up in a position to dictate sub-optimal terms. It’s worth noting that when teams of lawyers perform this work, the attention they must give it is heroic, yet details still get overlooked and the hourly cost of this labor is nevertheless enormous. When paralegals or interns do it, the hourly rate goes down a bit, but costs remain significant – and errors of omission are just as likely, if not more so. It’s only when truly innovative AI joins the team that the results are airtight, expedient, and reliably monetizable.
Contextual extraction of crucial information from a wide range of contracts is essential to optimizing management of a company’s workforce, supplier chain, and profit strategy. And intelligent deep text automation performs with speed and accuracy that humans just can’t match. It’s as simple as that.
To find out more about the ways Applica can help optimize your company’s contract management workflows, connect with an Applica expert today.