Contract documents

July 10, 2023

When it comes to Artificial Intelligence (AI) and contract management, everyone has an opinion- from contract managers, the attorneys who write them and, of course, the bosses who sign them everyone has their own perspective. On one side, you have the so-called forward thinkers who embrace AI and laud the technology’s advantages. On the other side of the room stand the traditionalists who prefer the hands-on contract management approach that limits the role of technology.

The argument continues raging, and the noise will grow as contracts align with AI. Both sides feel they have solid ground to stand on, and the only way to decide who’s right is to review each perspective.

Cons

 The loudest argument traditionalists make is that AI sacrifices the relationship. Old contracts, and especially new ones, are often products of relationships. You get to know the person across the table and vice versa, and what began as adversarial becomes personal. When it becomes personal, you’re more apt to bend to make a deal, realizing that one is secondary to what’s on the horizon. You become one another’s advocate, and your interactions develop a rhythm, simplifying both of your lives.

With AI, the feelings, and emotions that fuel relationships aren’t present. There are no relationships, no back and forth, no getting to know one another, and little, if any, strategy. In its place is a sterile, transaction-oriented environment where a deal gets done, but the human portion that is often the framework for negotiations is missing.

In any instance involving a contract, one thing stands out. It’s not the current or future value of the document or the product or service at the heart of the negotiation. The part of the conversation that matters the most is your brand. Above all else, even when the deal becomes sweet, you should always return to your brand values. Negotiators often leave deals knowing that while the numbers look good, the brand impact won’t.

Brand insights aren’t always present with AI. Sure, over time, the technology develops an understanding of your business cadence and how to identify deals that align with your business profile. But the lightbulb moments that take place at the table where you review short and long-term implications often fall short using AI.

Pros

When it comes to AI and contract management there are several benefits. First, using AI increases your efficiency levels. No longer will your staff have to comb through years of contracts to dig out the one clause or phrase that closes a deal. Technology like this allows them to devote their time and energy to other areas and do work that drives your bottom line. Negotiations, something that could take months to hammer out, also become easier as AI delivers contracts that represent the best possible deal for both sides.

AI also reduces risks. Often in a traditional setting, parties walk away wondering if they got the best deal. Even when they got everything they came for, one or both signed off, wondering if meat was still on the proverbial business bone. With AI, you walk away with a clear conscience knowing the deal you signed was the best one possible. The technology at the heart of AI delivers optimal conditions and leaves no room for doubt or wonder.

AI saves money, something that’s music to the ear of any astute, cost-conscious businessperson. Contracts are a minefield and mistakes are bound to happen and when they occur, they’re costly. Fewer mistakes happen when using AI and as a result, your organization saves money that can be put to use in other areas of need.

The final verdict

 When it comes to AI and contract management … it’s not about winning or losing, who’s right or wrong. It’s about deciding what’s best for your team. If you could gain from using technology, move forward, and responsibly make AI a part of your environment. Review your needs and move at a pace that makes sense, gradually introducing it to key stakeholders and allowing them to become comfortable.

On the other hand, if you feel your organization stands to risk more than they stand to gain, keep doing what works. AI is an amazing tool, but if your current status and work protocols are serving your needs, by all means, continue in that direction.

If you’re interested in learning more about AI before making your decision, take a moment to review our latest white paper entitled, Artificial Intelligence in Contract Management – Rhetoric and Reality. In it, you’ll find valuable information that can help you make the decision that’s best for your team.

AIA Contract Documents has provided this article for general informational purposes only. The information provided is not legal opinion or legal advice and does not create an attorney-client relationship of any kind. This article is also not intended to provide guidance as to how project parties should interpret their specific contracts or resolve contract disputes, as those decisions will need to be made in consultation with legal counsel, insurance counsel, and other professionals, and based upon a multitude of factors.