Today's multinational businesses manage an average of 19,000 contracts annually. This volume would have been impossible to handle in the era of paper contracts, let alone clay tablets.

The evolution of contract management isn't just a story of technology—it's the story of how businesses learned to build trust at scale.

In this guide, we will trace the journey of contract management—from ancient merchants carving deals into stone to modern AI contract management systems processing thousands of agreements at the click of a button.

The need for building trust—Clay tablets and Papyrus scrolls

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The first contracts weren’t written on paper—they were carved into clay rocks. In ancient Mesopotamia, when the barter system was the way to do business, merchants faced a problem that sounded remarkably modern—How could they trust people they’d never met, trading goods across vast distances?

Their solution was to create permanent, unchangeable records by inscribing cuneiform or hieroglyphics into clay tablets.

The scripts outlined terms and conditions that mattered to people back then to establish a trustworthy partnership. Even though these scripts were hard to understand, they weren’t just carvings. Archaeological findings revealed that people used these tablets to inscribe sales contracts, labor contracts, and marriage contracts, similar to the ones used today.

Here's an example of a famous tablet from 2300 BCE detailing a sales contract with specific terms that wouldn't look out of place in today's sales agreements.

Despite being portable, clay tablets’ writing system was complex. 

Papyrus scrolls, made out of Papyrus trees’ wood emerged as an alternative, particularly in the Middle East. These scrolls could store extensive information and were easily transported, facilitating regional trade and communication. But the scarcity of papyrus trees restricted its global adoption.

The first contract revolution: When paper changed everything

Despite the invention of paper in China in the second century BC, Papyrus rolled-up scrolls coexisted with paper-based contracts for a long time. The complete shift from clay to paper happened in the 13th century, and it wasn’t just about convenience; it changed how businesses operated.

Paper’s portability and ease of production meant contracts could move as fast as the trade itself. But this created new problems: How do you prevent forgery? How do you standardize agreements across businesses and regions?

The printing press in the 15th century offered some answers, enabling businesses to standardize contracts at scale. Suddenly, businesses could create consistent agreements at scale. From the 15th century to date, various types of agreements (NDAs, employee agreements, vendor contracts, etc.) have been written and signed on paper.

This standardization laid the groundwork for modern commerce, but it also created a new bottleneck: the sheer volume of paperwork began to overwhelm organizations.

The digital transformation: When contracts became data

By the 20th century, small to large organizations were drowning in paper. A survey of 1,000 SMB owners revealed that 45% of SMBs still rely on paper-based agreements. The file cabinets holding these contracts not only signify storage constraints but also severe bottlenecks that are holding back business growth.

Take international shipping, for example. Till date, it is so paper-dependent that for a business to ship packages, the shipping document involves exchanging 50 sheets of paper, in some cases, among 30 different stakeholders.

Early digital solutions came to the rescue, focusing simply on storage—essentially creating digital file cabinets. Tools like Microsoft Word and Google Docs became godsends for lawyers who needed to generate digital contracts and build a repository.

But these solutions missed the bigger picture: contracts weren't just documents to be stored, they were data to be analyzed, optimized, and automated through contract automation.

The AI revolution: When contracts became intelligent

With large organizations managing an average of 19,000 contracts per year, a simple document-storing solution failed to streamline such a huge volume. 

The drawbacks of legacy solutions led to modern contract lifecycle management systems (CLMs). These solutions transformed how organizations think about contract management. And, with SaaS becoming the norm in the 2010s, CLMs gained traction due to their capability to offer more than just contract storage.

Modern AI contract management systems combine data intelligence and contract automation to handle complex agreements efficiently. By leveraging AI in legal tech, legal teams can automate contract creation, flag risky clauses, and ensure consistency across jurisdictions. These AI-driven workflows mark a major leap from document storage to end-to-end contract automation.

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Here's what's different with modern CLMs:

1. Advanced contract repository: CLMs can store and manage contracts and offer quick retrieval with smart filtering, sorting, and tagging.
2. Contracts as intelligence: Modern systems can analyze thousands of contracts to identify risks, opportunities, and patterns human eyes might miss.
3. Proactive management: Instead of waiting for renewal dates or breaches, AI can flag potential issues before they become problems.
4. Cross-functional collaboration: Finance, sales, and legal professionals can get transparency into the contract lifecycle due to automated workflows and built-in collaboration tools.

Modern CLMs also bring predictive contract analytics capabilities, using data to forecast renewal timelines, potential risks, and compliance gaps before they occur. This helps strengthen contract risk management and ensure faster decision-making for in-house legal teams.

Additionally, legal compliance automation tools built into CLMs help verify each clause against regulatory frameworks, reducing the time spent on manual audits and improving overall contract compliance monitoring.

The evolution of CLM technology also involves deeper CLM integrations with business systems such as Salesforce, HubSpot, and Slack, enabling legal teams to automate approvals and sync contract data seamlessly across departments. These integrations are key for enterprises adopting AI contract management and contract automation as part of their digital transformation.

Perhaps, AI contract management systems are solving the same fundamental problem that Mesopotamian merchants faced: how to create trust between parties at scale.

“Leveraging a CLM has been key because it has reduced a lot of friction from handoffs between legal and business. Rather than going back and forth over email, Slack, Word, Zoom, DocuSign, and a whole tech stack, the CLM acts as a single source of truth.”

~ Jonathan Franz, Head of Legal, Crunchbase
Navigating Economic Turbulence and Thriving in Chaos

Also read: Developing an Effective Contract Management Strategy: An Essential Guide

Contract lifecycle management software use cases: Documentation to analysis

Modern CLMs offer an all-in-one solution, eliminating relying on ten different solutions for managing contracts throughout its lifecycle. Whether you want to draft a contract or loop in stakeholders for contract review, CLMs support varying use cases.

Review large volume of agreements

With CLMs, you can create and review contracts without relying on external tools like Google Docs. This software has built-in editors that flag non-compliant clauses, run checks against law rulebooks, and keep audit trails of all the changes. So, you can maintain and share the most updated agreement that complies with your brand's legal guidelines.

“We are able to draft and redline contracts inside the CLM tool. Therefore, we no longer need to rely exclusively on tools such as MS Word and Google Docs. Now, all stakeholders can view and access just one true version of the contract.”

~ Igor Poroger, Director of Legal, EMEA, Vectra AI
How CLMs Empower Legal Teams in B2B SaaS Companies

Modern AI contract management systems not only save time but ensure accuracy and compliance. By integrating GenAI for legal teams, organizations can leverage LLM-based contract drafting to automatically create or suggest contract language that aligns with company policies. Legal professionals can then use legal AI copilots like SpotDraft VerifAI to review and redline documents faster.

This synergy between AI contract management, legal AI copilots, and GenAI for legal teams represents a new level of contract automation that enhances productivity and reduces turnaround times.

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Automate contract workflows, from agreement routing to collaboration

Thhe sales team can establish clear workflows to route contracts to the right stakeholders for approvals, leveraging contract automation and AI in legal tech to minimize manual intervention. 

Here's how an automated workflow might look:

• The sales team can set up a workflow to send contract creation requests for approval to legal when the deal reaches a certain stage.
• By integrating CLM with your CRM, legal teams can automatically populate a contract template with relevant customer data, including company name, contact details, pricing information, etc.
• When the status is changed to approved, the sales team can route the contract to the client for signature.

These CLM integrations ensure seamless contract automation across teams while improving collaboration.

Also read: Why Contract Management Is Important

Maintain legal compliance

The finance department can keep track of upcoming renewals through the CLM solution and commit to fulfilling them without delays. Other departments, like the procurement team, can cross-check vendor agreements against the legal rulebook to conduct due diligence before finalizing the deal.

Maintaining legal and regulatory consistency is now driven by legal compliance automation and contract compliance monitoring. These features automatically scan clauses for deviations from approved templates and flag potential breaches before they escalate, and help legal teams strengthen contract risk management across all agreements.

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Generate contract reports

CLMs house contract data throughout the contract lifecycle. How many contract terms were flagged as non-compliant? How long does it take to get a contract approved? How many contracts did we sign in a given time frame? 

With the contract data collected by CLMs, you get insights into your contract management processes and identify improvement opportunities, bottlenecks, and potential risks.

AI-enabled CLMs go beyond data collection by applying predictive contract analytics to identify renewal opportunities, delayed sign-offs, and clauses that frequently cause friction. These insights are essential for improving autonomous contracting, where AI systems proactively optimize the contracting process with minimal human input.

The Future: Where are we headed?

As we look ahead, the next frontier isn't just about better technology, it's about rethinking contracts entirely.

Smart contracts on blockchain platforms are already enabling self-executing agreements. AI is moving from analyzing contracts to helping write them. Ron Friedmann, Senior Director Analyst at Gartner, analyzed that by 2026, legal teams will use AI tools to generate 1/4th of a contract's first draft and other written documents.

Future-ready solutions will merge AI contract management with blockchain contract management to enable transparent, tamper-proof, and auditable agreements. Smart contracts on blockchain platforms are already enabling self-executing agreements, while AI in legal tech continues to redefine how contracts are created, negotiated, and enforced.

GenAI for legal teams will play a critical role in shaping how contracts are drafted, negotiated, and analyzed. Through LLM-based contract drafting, legal professionals will collaborate with AI tools to generate, revise, and finalize documents faster while ensuring legal and regulatory alignment.

We’re also entering an era of autonomous contracting, where AI not only drafts but negotiates and executes agreements. Coupled with smart contracts, this ensures automatic fulfilment once conditions are met—reducing manual intervention and human error.

SpotDraft is already leading this evolution with its AI-powered tools, SpotDraft AI and VerifAI. Together, they simplify AI contract management, enabling everything from clause analysis to contract risk management, legal compliance automation, and contract compliance monitoring.

But there's more.

Besides contract management, AI will be crucial in ensuring your contracts are compliant. It will heavily impact legal data management and analysis practices, as said by 75% of legal and regulatory compliance teams, while 43% believe AI to be an effective tool for mitigating legal risks.

“AI just may well be the final frontier in terms of how legal services are utilized and provided. As in-house counsel, don’t run away from it and don’t ignore it. Rather, embrace it as, ultimately, it will allow you to do things lawyers love to do: thinking, analyzing, and counseling, while leaving the “grunt” work to the computer.”

~ Sterling Miller, CEO Hilgers Graben PLLC
Ten Things: AI – What Every Legal Department Really Needs To Know

Conclusion: From Clay to Code and Beyond

From clay tablets to AI contract management and smart contracts, every stage of contract evolution has been about one thing: building trust through better technology.

As AI in legal tech and GenAI for legal teams continue to mature, the shift toward autonomous contracting and blockchain contract management will redefine how organizations create, execute, and monitor agreements.

The future of contracts isn’t just digital, it’s intelligent, predictive, and self-executing. In other words, we’re moving from code written on clay to contracts powered by code.

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