Working Smarter With Contract Summary Software

Nobody likes to spend hours on end poring over a single document. After all, we all have better things to do, right? Yet, contracts, with their dense legal jargon and endless clauses, often steal precious hours from our day, sending even the most seasoned professionals into a snooze-fest.

If you’re reading this, you might agree that the traditional approach to contract summary is a slog. You spend hours squinting at pages, sifting through legalese, and hoping you haven't missed a critical clause. By the time you're done, your brain feels like it's been through a wringer. Yet, you can’t shake off the feeling that you may have skipped something.

But what if you never had to go through all that? What if there was a way to create contract summaries in minutes without worrying about errors and inaccuracies?

That’s where contract summary software comes in. In this post, we will dive into all the details, covering what contract summary software is, how it works, when you need it, and more. 

What is contract summary software?

Contract summary software is an AI-powered tool that leverages Natural Language Processing (NLP) and machine learning to automatically condense voluminous contract documents into concise forms, revealing key terms, obligations, and other details relevant to the contract and its parties.

By extracting and presenting the most critical details, users can grasp the key elements of the contract without having to read the entire document.

How contract summary software works

Have you been curious about what happens in the backend when you upload your agreements into contract summary software?

Indeed, the inner workings of contract summary software, while technical, can be pretty fascinating. Here, we've broken down the entire process into a few key steps.

#1 Data ingestion and preprocessing

1. File upload: You upload your contract document (PDF, Word, etc.) to the software.
2. Text extraction: The software extracts the raw text from the document, stripping away formatting and layouts.
3. Cleaning and normalization: The text is cleaned by removing irrelevant information like page numbers, headers, and footers. It's also normalized by correcting spelling errors and inconsistencies.

#2 Natural Language Processing (NLP)

1. Tokenization: The text is broken down into individual words or phrases called tokens.
2. Part-of-Speech (POS) tagging: Each token is assigned a part-of-speech tag (noun, verb, adjective, etc.) to understand its grammatical role.
3. Named Entity Recognition (NER): The software identifies and classifies specific entities like names, dates, and locations appearing in the text. This helps recognize key players, deadlines, and other vital details.
4. Sentence parsing: The software analyzes the structure of sentences to grasp the relationships between words and clauses. This helps identify the main subject, verb, and object of each sentence.

Also read: NLP for Contracts: How It’s Transforming Legal Work

#3 Machine Learning (ML) and information extraction

1. Clause classification: The software uses pre-trained machine learning models to identify and categorize different types of clauses (e.g., payment terms, confidentiality, termination, etc.).
2. Relationship extraction: The software analyzes the relationships between entities and clauses to understand the obligations, rights, and risks associated with each party.
3. Key term identification: The software extracts and highlights important terms like prices, deadlines, termination clauses, and confidentiality provisions.

Also read: Machine Learning + Contract Review: Unlocking the 10X Legal Counsel

#4 Summary generation

1. Key information filtering: The software selects the most relevant and important information from the contract based on its analysis and user-defined parameters.
2. Summary formatting: The information is then presented in a concise and readable format, often using bullet points, tables, or plain language explanations.
3. Risk highlights: Some contract summary software (such as VerifAI) will flag potential risks and opportunities within the contract, providing helpful insights for negotiation or decision-making.

When do you need a contract summary?

A contract summary proves invaluable in a wide range of scenarios, offering a practical solution for those seeking a quick, accessible, and comprehensive understanding of the key elements within a contract.

The following instances are applicable:

#1 Reporting to stakeholders

If you need to share the essence of a contract with someone who doesn't have the time or legal expertise to read it thoroughly, a summary can be invaluable. This could be your CEO, colleagues in other departments, or even potential investors.

A contract summary allows for quick and effective communication of essential contract details, ensuring stakeholders grasp the crucial aspects relevant to their interests and priorities.

Also read: Prioritizing Contract Reports With Respect to Your Legal Team Size

#2 Bringing new team members up to speed on existing contracts

A contract summary is a quick reference guide for onboarding new team members or transitioning existing ones. It aids in familiarizing team members with the key provisions, obligations, and terms of existing contracts—enabling them to integrate swiftly into ongoing workflows.

#3 Reviewing contracts at scale

Traditional contract review is often time-consuming, turning legal teams into bottlenecks and limiting revenue growth for organizations.

A contract summary cuts down the workload by offering quick insight into key provisions and critical details within contracts. By distilling complex legal language into a concise and accessible format, a contract summary accelerates the review process so that contracts can be negotiated and closed faster.

Also read: How AI Contract Review Tools are Transforming Legal Workflows

#4 Building a repository of references

Maintaining a repository of summarized contracts facilitates easy access to essential information. This can be particularly beneficial for legal and compliance teams, enabling them to quickly locate and reference key details when needed without going through the entire contractual document each time.

#5 Cross-comparing terms in multiple contracts

When dealing with multiple contracts simultaneously, it's essential to cross-compare terms for consistency and compliance.

A contract summary provides a structured overview, enabling professionals to efficiently identify and analyze similarities or differences in language across various agreements.

The traditional approach to creating a contract summary

The conventional approach to creating a contract summary involves manually sifting through all the pages of a contract document, capturing every crucial information, and distilling it into a separate document.

Some organizations may have templates or guidelines for generating summaries, while others may prefer to create these summaries in any format that matches the context.

Regardless, doing this for one contract already sounds hard enough. But it gets even more cumbersome when you have to do it for multiple contracts. In a fast-paced modern business ecosystem, this approach comes with several challenges, including:

#1 Time constraints

Imagine dedicating hours, maybe even days, to meticulously combing through legal jargon and dense clauses, piecing together a summary by hand. Multiply that by a handful of contracts, and you're looking at a major productivity drain.

This process eats away at the valuable time that could be invested in tasks driving actual business impact.

#2 Risks of oversight errors

“If you try to read a complex contract carefully, from front to back, and expect to understand it on just the first read-through, that’s wishful thinking (and potentially very messy).”

~Sterling Miller, CEO and Senior Counsel, Hilgers Graben PLLC‍
Ten Things: How to Read a Contract

With manual work comes the ever-present threat of human error. A missed comma, a misinterpreted clause, or an overlooked deadline can turn into delays, financial losses, or even legal disputes. 

The pressure is immense, and the margin for error is razor-thin. It's almost like navigating a minefield blindfolded – one wrong step and things can get messy!

#3 Difficulties with version control

“You can waste hours of time working on a contract only to find there is a newer version you should have used (or a contract with an amendment you were unaware of). Likewise, if the business sends an outdated template to the customer you will have an unpleasant phone call with them explaining why they need to do their redlines all over again on the newer version.”

~Sterling Miller, CEO and Senior Counsel for Hilgers Graben PLLC
Ten Things: Minimizing Risk In Commercial Contracts

Managing different versions of a contract with the traditional approach can be a logistical nightmare. As contracts undergo revisions or amendments, keeping track of the most up-to-date information becomes challenging.

This lack of version control opens the door to confusion, as stakeholders may be working with outdated summaries, leading to potential discrepancies and misunderstandings.

#4 Limited analysis

The traditional method focuses primarily on extracting fundamental information, often overlooking the potential for deeper analysis. By manually summarizing contracts, organizations may miss out on valuable insights and trends hidden within the pages of the agreement.

The inability to perform in-depth analysis limits stakeholders from making data-driven decisions based on a comprehensive understanding of contractual obligations, risks, and opportunities. 

In a landscape where data-driven insights are crucial, this limitation can hinder an organization's ability to stay competitive and agile.

Also read: Understanding The Role of AI In Contract Analysis

#5 Slow contract review processes

The time spent manually summarizing contracts adds significant delays to the entire review process. In today's competitive environment, businesses simply cannot afford the sluggishness of traditional contract reviews.

Relying on manual methods means delays in decision-making, negotiation, and overall contract lifecycle management. It's like being caught in rush hour traffic with no hope of escape—progress grinds to a halt, and opportunities slip through your fingers. 

Every hour wasted is a chance lost, and the business world outside keeps spinning, leaving you feeling like you're stuck in the slow lane.

"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, ex-DGC, DocuSign
The Key to Success as an In-House Legal Counsel & Leader

Perks of using contract summary software

Incorporating contract summary software into legal workflows not only addresses the limitations of manual approaches but also empowers legal professionals with tools that align with the demands of the modern, fast-paced business ecosystem.

Solutions like VerifAI showcase the power of this technology, offering a plethora of advantages that redefine contract management for the better.

#1 Improved time efficiency

Time is a precious commodity in business, and traditional contract summary processes are notorious time sinks. Contract summary software, powered by AI, scans and analyzes documents at lightning speed, extracting key information and presenting it in a concise, digestible format.

This frees up legal professionals from the tedious slog of manual review, allowing them to focus on higher-value tasks like strategic analysis, negotiation, and risk mitigation.

#2 Reduced human errors

The human mind, for all its brilliance, is prone to occasional slips. A missed comma, a misinterpreted clause, or an overlooked deadline in a contract can have serious consequences. 

Contract summary software minimizes the risk of such errors. Its algorithms meticulously analyze the entire document, identifying critical terms, obligations, and potential risks with laser focus.

This reduces the chances of human oversight, ensuring that every crucial detail is captured and understood, safeguarding you from costly mistakes and legal disputes.

#3 Enhanced scalability

As your business grows, so does your contractual portfolio. Traditional methods can quickly become overwhelmed by the sheer volume of documents, leading to delays and inefficiencies.

Contract summary software scales effortlessly, processing and summarizing even the most extensive contract collections.

This enables legal teams to manage large volumes of agreements effectively, ensuring timely review, smooth workflow, and seamless adaptation to the ever-evolving business landscape.

#4 Improved deal closing rates

Timeliness is crucial in modern business, and closing deals often hinges on time-efficient contract negotiation and execution.

By providing instant access to key terms and obligations, contract summary software enables you to quickly identify potential roadblocks and navigate negotiations with confidence.

This not only reduces delays but also increases the likelihood of reaching favorable agreements, propelling your deal closing rates to new heights.

#5 Strategic decision-making

Contracts are more than just a collection of clauses. They are treasure troves of valuable data waiting to be uncovered. Contract summary software, with its advanced analytical capabilities, goes beyond merely summarizing agreements. It delves deeper, extracting trends, identifying patterns, and revealing hidden risks and opportunities within the contractual language.

This empowers you to make strategic decisions rooted in a comprehensive understanding of your contractual relationships. You can identify areas for improvement, optimize future agreements, and leverage hidden benefits to unlock the full potential of your business partnerships.

Also read: How to Use Contract Analytics Software to Uncover Insights

Enter VerifAI, your AI-powered contract summary assistant

VerifAI is a revolutionary AI assistant built for legal professionals who are eager to ditch the manual slog and reclaim valuable hours for more valuable contributions in contract lifecycles.

Built as a Microsoft Word plugin, VerifAI leverages NLP and machine learning algorithms to scan contracts against prevetted guidelines, unveiling areas of concern and offering detailed explanations with references.

Thanks to its NLP capabilities, VerifAI allows you to ask open-ended questions, facilitating a more natural, human-level interaction. Thus, you can, in natural language, ask the bot to summarize a contract, pull specific information from the agreement, and implement redlines, among other things.

This gives you a well-rounded understanding of your contracts, empowering you with insights for productive, goal-driven decisions.

Wrapping up

While the traditional approach to contract summary might have served us well in the past, they increasingly fall short in today’s environment that demands speed, accuracy, and insightful decision-making.

However, incorporating contract summary software such as SpotDraft’s VerifAI into legal workflows is not just about saving time or minimizing errors. It is about building an agile and resilient contract ecosystem that doesn’t just meet the standards of the modern business landscape but also thrives in the face of ever-evolving challenges.

If you’d like to take VerifAI for a spin, click here to get access to our 14-day free trial.