Key takeaways

• AI adoption in legal is accelerating: 26% of legal organisations are already using generative AI (up from 14% last year), and over 95% of legal professionals believe it will be central to workflows within five years.
  
• Clear benefits for legal teams: AI reduces costs, improves productivity, speeds up deal closures, and ensures consistency and compliance across contracts.
  
• AI enhances every stage of contract management: From negotiation and review to analytics, lifecycle management, and e-signature, AI streamlines processes and reduces risk.‍
• Responsible AI use is crucial: Leaders and vendors must focus on transparency, trust, compliance, and training to ensure safe and effective adoption.‍
• Legal ops are evolving into strategic leaders: With AI, legal ops can move beyond admin tasks to become change leaders, driving faster business decisions and long-term value.

AI in Contract Management

The Future of Automation in Legal Workflows

The legal industry is going through a fundamental transformation, with artificial intelligence (AI) and automation at the centre of this change. Traditionally, contract management has been one of the most resource-intensive functions for legal teams, requiring countless hours of manual review, negotiation, and tracking. Today, AI-powered solutions are reshaping how contracts are created, analysed, and executed, helping in-house legal teams and law firms move faster while reducing risks.

This shift isn’t just theoretical; it’s already happening at scale. A 2025 Thomson Reuters report found that 26% of legal organisations are now actively using generative AI, up from 14% a year earlier. Another survey revealed that over 95% of legal professionals believe generative AI will become central to their workflows within the next five years. Already, 55–58% of law firms and legal departments are using AI tools for contract analysis, review, or management.

Tools like SpotDraft are leading this wave by offering advanced AI-driven capabilities that streamline every step of the contract lifecycle, right from drafting and negotiation to compliance tracking and renewals.

AI in contract management is not just about reducing manual work. It also helps legal teams become strategic business enablers. Faster deal closures, consistent compliance, and lower costs all lead to one outcome: a more efficient and future-ready legal function.

Benefits of AI and Automation in Legal Workflows

AI and automation bring clear benefits to contract management. They make legal work faster, more accurate, and less expensive. Here are some of the key advantages:

Reduced cost

Manual contract work takes a lot of time and effort. Lawyers and legal ops teams spend hours on drafting, reviewing, and tracking contracts. AI tools cut down these hours by handling repetitive tasks. This lowers the cost of contract management and lets teams use their budgets more wisely.

To better understand the benefit of AI-powered tools, you can go through the statistics that AI contract lifecycle management (CLM) software can reduce contract lifecycle time by about 50%, which means fewer lawyer hours and lower fees. Moreover, manual contract creation and management costs for simple contracts average around US$6,900, rising up to US$49,000 for more complex ones. Automating these tasks can reduce those costs significantly. 

To learn how AI investments translate into business value, read The ROI of AI in Legal Tech.

Better productivity

Using AI tools, contract review times can drop by 50 - 80% in many organizations. In another study, lawyers using AI saved 82% of their time when working with automated contract management solutions versus doing everything manually. A comparison of traditional vs automated review shows just how big this productivity gap is. AI Contract Review vs Traditional Review breaks it down.

Repetitive tasks like extracting data, checking clauses, formatting, or routine compliance checks are handled by AI. This frees legal teams to focus on high-value work: strategy, negotiations, risk assessment, counsel. 

AI frees legal teams from low-value tasks. Instead of spending time on checking clauses or searching for terms, they can focus on negotiation and strategy. This shift makes teams more productive and improves collaboration across departments.

Faster deal closure

Delays in review and negotiation are big blockers. AI is helping here, too. Automating contract workflows leads to shorter negotiation cycles: automation can halve (50%) the time needed. Contract management tools help legal teams move from days to hours in many routine tasks (drafting, review, approvals). 

Automated reviews, smart suggestions, and quick approvals help contracts move faster through the pipeline. As a result, businesses close deals sooner and improve revenue cycles.

Enhanced consistency and compliance

Human review can sometimes miss details or create inconsistencies. AI ensures that contracts follow the same rules every time. Mistakes like missing clauses, inconsistent wording, formatting problems, or outdated legal references are flagged automatically. This leads to fewer costly disputes. Plus, automated compliance checks (for regulations, obligations, or industry standards) help ensure contracts stay valid and enforceable as laws change. This visible compliance reduces risk.

Using standardized templates, clause libraries, or playbooks plus AI allows legal teams to enforce consistency across contracts; same style, same standards, same protections. This builds trust inside and outside the organization.

Different Steps in Contract Management and the Role of AI and Automation

Negotiation

AI tools make negotiation faster and more transparent. They can suggest alternative clauses, highlight risks, and show which terms may delay agreement. This helps legal teams reach fair outcomes quickly. AI also learns from past negotiations to guide future ones.

SpotDraft’s negotiation intelligence can detect risks early and flag red flags automatically.  You can also use its contract playbooks to standardize what your team accepts (or doesn’t) in negotiations. This reduces back-and-forth and makes decisions faster. 

Review

Contract review is one of the most time-consuming tasks. AI can scan contracts in minutes and flag missing clauses, unusual terms, or compliance risks. It ensures nothing is overlooked and reduces human error. Teams can then focus only on the issues that need judgment.

SpotDraft’s editor supports real-time collaboration, comments, version control, and visibility into which user changed what. This helps legal teams avoid mistakes and oversights. Moreover, the VerifAI tool in SpotDraft speeds up contract reviews by using AI-powered playbooks and risk checks inside Microsoft Word.

Analysis

Once contracts are signed, AI helps track obligations, deadlines, and renewals. It can extract data like payment terms, expiry dates, and liability limits. Legal teams can analyse this data to improve forecasting, reduce risks, and strengthen vendor or client relationships.

SpotDraft’s contract analytics gives teams dashboards and reports that show cycle times, negotiation bottlenecks, renewal pipelines, and risk exposure. These insights help legal leaders prove their impact on business outcomes and make data-driven decisions. 

Contract Lifecycle Management

AI-powered contract lifecycle management (AI CLM) platforms manage contracts from draft to renewal. They help legal teams automate contracts, streamline approvals, send alerts for renewals, and integrate with business systems like CRM or ERP. This keeps every contract visible, organised, and easy to track.

SpotDraft offers end-to-end contract management software with features like templates, clause libraries, and self-serve contract creation. Business teams can draft NDAs, MSAs, or vendor agreements on their own, while Legal stays in control of high-risk contracts.

eSignature

Digital signatures are now a standard part of contracting. AI makes eSignatures more secure by verifying identity and monitoring for fraud. Automated workflows also send reminders and ensure signatures are collected on time, which helps speed up deal closure. SpotDraft has native eSignature support. You can collect legally compliant signatures within the platform.

Real-world scenarios

AI in contract management is not just a theory. SpotDraft customers are already using it to solve everyday challenges, scale faster, and reduce risks. Here are two examples:

Odessa: Gaining Full Visibility into Contracts

Odessa, a leading provider of asset finance software, manages a large number of vendor and client contracts across different teams. Before SpotDraft, their legal team lacked visibility into contract statuses and key deadlines. This created bottlenecks and increased the risk of missed obligations.

With SpotDraft, Odessa built a centralised contract repository where all contracts are stored, tagged, and searchable. Automated reminders and analytics dashboards now give their legal team full visibility into upcoming renewals, obligations, and bottlenecks. As a result, Odessa improved collaboration across business units, reduced manual follow-ups, and freed up legal bandwidth to focus on strategic initiatives.

Read the full Odessa story.

Doral Renewables: Faster Contract Turnaround

Doral Renewables, a renewable energy company, needed to scale quickly while keeping contracts compliant. Their challenge was long contract cycles that delayed project execution and slowed deal closures.

SpotDraft provided Doral with end-to-end contract management software. Business teams could self-serve routine contracts using templates and clause libraries, while approvals and signatures moved through automated workflows. SpotDraft’s analytics gave leadership insight into cycle times and bottlenecks, helping them continuously improve.

The impact was dramatic: Doral cut contract turnaround times significantly, reducing what once took weeks to just a few days. This speed helped them accelerate renewable energy projects and build stronger relationships with partners.

Read the full Doral Renewables story.

Many other businesses across industries are using SpotDraft to simplify contracting and empower their legal teams. From faster negotiations to lower risks, the outcomes show the power of AI in action.

Explore more SpotDraft Customer Stories here.

Best practices to follow

Adopting AI in contract management brings clear benefits, but success depends on how responsibly organisations use it. Here are some best practices for legal teams and vendors.

Using AI responsibly - Role of leaders and vendors

Leaders play a key role in setting the tone for responsible AI adoption. They need to define guardrails, choose the right tools, and train teams to use AI effectively. Vendors also have a responsibility to be transparent about how their AI works, how data is handled, and what risks exist. Questions around bias, data privacy, auditability, and compliance with regulations are also crucial. For a deeper understanding of this, check out The EU AI Act: 7 Questions to Ask Legal Tech Vendors Today.

Building trust

AI adoption requires trust from both legal teams and business users. Trust grows when AI systems are explainable and consistent. For example, if a contract review tool flags a risky clause, it should also explain why. Vendors should also provide clear documentation and regular audits to show that the system is working as intended.

Legal considerations of AI

AI tools in contract management touch sensitive business data. This makes compliance with privacy laws and industry regulations essential. Teams should:

• Check whether vendors comply with frameworks like GDPR, CCPA, or the EU AI Act.
  
• Ensure AI tools have strong data security measures and clear data ownership policies.
  
• Review how AI-generated outputs can be validated before being used in negotiations or legal advice.
  

By combining leadership oversight, responsible vendor practices, and strong legal safeguards, organisations can unlock the benefits of AI while protecting against risks.

Change Management and Training

Even the best AI systems fail without proper training. Teams should run workshops, create internal guides, and encourage hands-on use so employees feel confident using AI in daily work.

Data Quality and Governance

AI performance depends on clean and structured data. Establishing data governance policies ensures that contracts are standardised, searchable, and reliable. This makes AI insights more accurate and useful.

Measuring Success with KPIs

Defining success upfront is important. Metrics such as contract cycle time, cost savings, or accuracy of risk detection can help legal leaders measure whether AI is delivering the expected value.

Collaboration Between Legal and Business Teams

AI adoption is most effective when legal teams collaborate with sales, procurement, finance, and IT. Cross-team alignment ensures that automation works across the business, not just in the legal function.

Continuous Improvement

AI adoption is not a one-time project. Regularly collecting feedback, monitoring performance, and updating processes keeps systems relevant and effective as business needs evolve.

The evolving role of legal ops

Legal operations is no longer just about managing budgets or tracking outside counsel. With AI in contract management, legal ops teams are moving into a more strategic role.

They now act as the bridge between legal, business, and technology functions. By implementing AI-powered tools, legal ops can streamline contract workflows, provide real-time insights, and reduce friction between teams. This positions them as enablers of faster business decisions rather than back-office support.

AI also allows legal ops to shift their focus from routine admin to higher-value projects. Instead of chasing signatures or updating spreadsheets, they can spend more time improving processes, managing risks, and shaping business strategy.

As adoption grows, legal ops professionals will be the ones guiding responsible AI use. They will set policies on data governance, vendor evaluation, and compliance. In doing so, they help their organisations balance innovation with trust and accountability.

In short, AI transforms legal ops from process managers into change leaders who ensure legal teams are aligned with business goals and ready for the future.

Preparing for the Future of AI in Contract Management

AI in contract management is no longer a distant idea; it is already reshaping how legal teams work today. From negotiation to e-signature, AI and automation are making processes faster, more accurate, and easier to manage. For legal ops, this shift opens the door to becoming true business enablers, helping organisations close deals quickly, stay compliant, and operate with confidence.

The key to success lies in adopting AI responsibly, building trust, and ensuring that legal teams are equipped with the right tools and training. With the right strategy, AI not only reduces cost and risk but also transforms legal functions into growth drivers for the business.

At SpotDraft, we help legal teams achieve this transformation with end-to-end AI contract automation software. From AI-powered contract drafting and review to analytics, templates, and seamless integrations, SpotDraft equips your team to work smarter and scale faster.

FAQs 

1. How is AI used in contract management?

AI helps legal teams automate repetitive tasks like contract drafting, review, and clause extraction. It also improves compliance monitoring, speeds up deal closures, and reduces overall contract risk.

2. What are the main benefits of AI in legal workflows?

AI lowers contract management costs, boosts team productivity, ensures compliance, and makes negotiations and deal closures faster.

3. Can AI completely replace human lawyers in contract management?

No. AI supports lawyers by handling routine and time-consuming work, but human judgment is still needed for strategy, negotiation, and handling complex legal risks.

4. How does AI improve contract review?

AI tools can quickly scan contracts, flag unusual terms, compare against templates, and highlight risks. This reduces review time by up to 80% and increases accuracy.

5. Is AI in contract management secure and compliant?

Yes, when used with the right safeguards. Many platforms, like SpotDraft, follow strict data security and compliance standards, and also align with evolving regulations such as the EU AI Act.

6. What is the role of legal operations in adopting AI?

Legal ops teams act as enablers. They evaluate AI tools, manage vendor partnerships, oversee training, and ensure the technology aligns with business goals.