33 percent of employees find themselves stuck in negotiations for over 30 hours. Imagine the toll this takes on productivity. Valuable resources are diverted from essential tasks, throwing a wrench in the works.
Lengthy contract negotiations are a productivity buzzkill—they slow down the entire organization. Deadlines get pushed, opportunities slip away, and the wheels of progress grind to a halt.
Then there’s the financial factor too. Your employees could have been nurturing client relationships or devising innovative strategies to propel your business forward. Instead, valuable opportunities slip through the cracks, revenue streams get delayed, and your profitability takes a hit—all because of the resource drain caused by never-ending negotiations.
If you're serious about optimizing your organization's operational efficiency and boosting overall productivity, it's time to leverage AI to expedite the negotiation process.
The problem with the traditional contract negotiation process
The conventional contract negotiation process has long been burdened by manual and time-intensive tasks, impeding efficiency and agility. This method typically entails protracted exchanges between legal teams, sales or procurement departments, and external parties. It demands meticulous scrutiny of contract terms, risk identification, and negotiation for favorable outcomes. However, relying solely on manual approaches poses various challenges and constraints.
One major problem is the time and effort it takes to review and analyze contracts manually. Legal professionals often have to review long documents, look for specific clauses, and compare agreements for inconsistencies. This can cause delays in finalizing deals and create problems within organizations.
Another issue with traditional negotiation methods is that they rely on personal opinions and expertise. This can lead to differences in interpretation and biases, making it hard to have consistent and fair negotiations. It's also difficult to assess and measure risks systematically, so legal teams must rely on their experience and intuition to identify potential problems.
Moreover, traditional methods struggle to effectively manage and use the large amount of contract data that organizations accumulate. This data is often scattered across different systems and formats, making it hard to see the bigger picture and use it to make informed decisions.
Benefits of using AI for contract negotiation
#1 Increased efficiency and speed in negotiations
AI tools perform tasks much quicker than humans. In contract negotiations, for example, they can automatically review contracts, pick out important details, and assess risks. This automation helps legal teams work more smoothly, saving time and resources. This means organizations can close deals more quickly and take advantage of opportunities sooner.
#2 Enhanced accuracy and reduction of errors
In contract negotiation, accuracy is important as even small mistakes can lead to big legal and financial problems. AI is crucial in ensuring accuracy by minimizing human errors and oversights.
AI tools use advanced algorithms and natural language processing to carefully analyze contracts. They can spot potential risks, inconsistencies, and deviations from rules or industry standards. By highlighting these issues, AI helps negotiators address them immediately, reducing the chances of making mistakes.
#3 Improved collaboration and communication among parties
“True negotiation is not ‘I win, you lose.’ There may be times when that could be the case, but the party on the other side will hate you and will look for ways to screw you over the first chance they get.”
~ Sterling Miller, CEO and Senior Counsel, Hilgers Graben PLLC
Ten Things: Business Skills All In-House Lawyers Must Know
Negotiations involve different people, like legal teams, sales or procurement departments, external parties, and even higher-ups. Coordinating all these people and making sure they communicate effectively can be difficult.
With AI-powered contract negotiation tools, you get a central platform where everyone can work together on contract information. Functionality like this eliminates the need for long email chains or in-person meetings. It also smoothens collaboration, improves transparency, reduces misunderstandings, and helps make decisions efficiently.
#4 Cost and time savings for all stakeholders
"If you can pull up an agreement very quickly or respond to something more decisively than your competitor, you're able to get into a new market quicker or build a product more rapidly. Furthermore, if you can give insight to the board or the CEO faster, the company will also move at an accelerated pace, which I think is what we all want to do."
~ Doug Luftman, COO & CLO, ScaleWith
The Key to Success as an In-House Legal Counsel & Leader
AI-powered contract analytics not only streamline the contract review process but also enhance contract negotiation efficiency. Traditional manual methods of contract negotiation often involve extensive back-and-forth discussions, consuming valuable time and resources.
But with AI, things become easier. AI tools use smart algorithms and natural language processing to quickly analyze contract terms, find any potential problems, and suggest solutions. This means negotiations can happen more quickly, with the help of AI tools giving real-time advice and insights. Now, legal professionals can expedite the identification of key clauses, assess contract viability, and evaluate potential areas of compromise.
Strategies for implementing AI in the contract negotiation process
#1 Identifying suitable areas for AI integration
To implement AI in the contract negotiation process effectively, identify areas where AI can add the most value. Conduct a comprehensive assessment of the existing contract management workflows, pain points, and inefficiencies.
Look for tasks that are repetitive, time-consuming, or prone to human error. Examples include contract review, clause extraction, risk assessment, and contract analytics. By pinpointing these areas, organizations can prioritize AI integration efforts for maximum impact.
#2 Training and integrating AI systems with existing processes
Once the AI tools are selected, training and integrating them effectively with existing processes is essential. This involves training the AI system to understand and analyze contract language specific to the organization's industry and legal requirements.
Collaborate with AI solution providers to ensure the AI system is configured to align with the organization's unique needs and objectives. Moreover, work closely with legal teams and other stakeholders to facilitate a smooth transition and ensure their buy-in and understanding of the AI integration.
#3 Ensuring transparency, fairness, and ethics in AI-driven negotiations
"The one thing you have in your professional career is your reputation. If that gets tarnished, it is very hard to recover."
~ Sterling Miller, CEO of Hilgers Graben PLLC
Ten Things: How to Negotiate – Practical Tips for In-House Counsel
You must ensure that AI doesn't create an unfair advantage or introduce biases that could sway negotiations in favor of one party. To uphold legal and ethical standards, you need effective checks and balances in place. This way, you can detect and address any potential biases or unintended consequences that may arise.
Prioritizing transparency, fairness, and ethical conduct in AI-driven contract negotiation builds trust, mitigates risks, and upholds the integrity of the entire process. This solid foundation empowers all parties, ensuring a mutually beneficial and trustworthy negotiation experience.
#4 Selecting the right AI tools and technologies
Choosing the right AI tools and technologies is crucial for successful implementation. Evaluate different AI solutions available in the market and consider their functionality, scalability, ease of integration, and compatibility with existing systems.
Look for AI tools that offer advanced natural language processing, machine learning capabilities, and robust analytics functionalities tailored specifically for contract management. Additionally, consider vendor reputation, customer reviews, and proof of successful implementations to make informed decisions.
Negotiate better with SpotDraft AI
SpotDraft AI is a powerful tool for contract negotiations. It automates the contract negotiation process, making it faster, more efficient, and error-free. More specifically, SpotDraft AI helps you:
#1 Review contracts 7x faster
Instead of spending hours manually reviewing each clause and provision, SpotDraft AI can quickly analyze and extract key information from contracts, including important dates, obligations, and terms. This saves valuable time and reduces the risk of missing crucial details. In fact, SpotDraft users can wrap up their reviews up to 7 times faster.
Also read: How to Redline in Word
#2 Turn hours of due diligence into minutes
SpotDraft AI can identify and flag potential risks and inconsistencies in contracts - regardless of size. Moreover, you can detect ambiguous language, conflicting clauses, or discrepancies within the contract, allowing parties to address issues before signing the agreement. This feature also helps prevent future disputes and minimizes the chances of costly litigation.
#3 Collaborate with team members
Contract negotiation isn't a one-person game. You’re working, first, with your team, and other parties as well. Meaning, you need a platform where you can effectively communicate and collaborate.
SpotDraft provides a centralized platform where multiple stakeholders can simultaneously access and review the contract. This eliminates the need for back-and-forth email exchanges and ensures that all parties are working on the most up-to-date version of the contract.
#4 Capture smart data
SpotDraft's cutting-edge repository employs advanced language models (LLMs) to autonomously extract vital data from your contracts. The result? Effortless access and crystal-clear comprehension. Still, there’s more to it.
SpotDraft goes above and beyond by helping you pinpoint over 1,000 distinct key indicators nestled within your contracts. We're talking about dates, currencies, durations, counterparties, and a whole gamut of other relevant factors.