Contract reviews are time-consuming and meticulous tasks. But what if you could streamline this process, saving time and boosting accuracy?

The answer is AI contract review. It empowers lawyers to work smarter, not harder, focusing on complex legal issues while AI handles routine processes.

Moreover, AI contract review features, like the ones seen in Spellbook, reduce errors and provide instant suggestions, making the review process efficient. Exploring the potential of AI in contract review enables you to harness artificial intelligence to enhance every aspect of your legal practice.

What is an AI Contract Review?

AI contract review is a process where artificial intelligence (AI) streamlines the traditionally time-consuming task of legal document analysis.

Unlike traditional methods where lawyers manually sift through contracts, AI-powered software automates the process by scanning, analyzing, and highlighting key contract areas, significantly improving efficiency and accuracy.

Basic AI incorporates Natural Language Processing (NLP) algorithms, which allow the software to understand human language. However, advanced tasks, such as accurate contract reviews, require cutting-edge technology: 

1. Machine Learning:  AI contract review software uses machine learning algorithms. These algorithms train on vast datasets of legal contracts to identify patterns and subtle differences in legal language.
2. Large Language Models (LLMs): Advanced artificial intelligence systems are trained on actual text. For example, Spellbook is based on LLMs trained on billions of lines of legal text and various types of content, so it can understand and comprehend nuances in legal text and provide contextual understanding, important for contract reviews.

Select the Appropriate AI Tool

The key to experiencing the most benefits from harnessing artificial intelligence is selecting the right AI tool for your needs. 

For example, ChatGPT is a widely recognized AI tool, but it isn't industry specific, like Spellbook, which has been developed for lawyers. ChatGPT has many benefits for lawyers, but for complex tasks and important legal applications, you might want to consider different AI tools.

Consider the key factors when selecting an AI tool:

• Easy installation and set-up – Consider AI tools that don't require heavy download, tuning, and time-consuming setup; For example, Spellbook takes seconds to set up.
• Build into your workflow (Microsoft Word or app-based) – Integration with familiar and widely used apps allows consistency, data centralization, ease of use in the familiar interface, and real-time collaboration which improves overall productivity.
• Features developed specifically for legal contracts – Legal AI tools focus on features that address the challenges specific to the law practice, improving compliance and efficiency and providing a competitive edge by improving overall performance

• Cost-efficacy - Prioritize tools with different subscription models which make it accessible for solo practitioners, small and mid-size offices large companies
• Interactive communication - Quick answers available on legal queries cut the time needed for research, legal advice, and plenty of different daily tasks, making the tool easy to use and allowing immediate benefits
• Personalization - Innovative tools mimic your writing style rather than providing generative and non-specific language suggestions, improving the results and cutting the time needed for final contract reviews and drafts

Here are some of the leading AI tools, currently popular among lawyers:

1. Spellbook - Innovative tool built with legal professionals in mind to improve contracts reviewing and drafting contracts and other tasks challenging in small and mid-size offices
2. Harvey - Developed as an AI-powered legal assistant, great for legal research
3. Lex Machina - Litigation analytics platform useful for outcome predictions
4. Casetext - Fast and accurate AI tool suitable for case law and statutory analysis
5. Everlaw - Excellent for litigators and e-Discovery, enhance litigation efficiency and workflow
   

Train the AI with Existing Contracts

To customize your AI tool for lawyers and give it insight into your contract types and style, you can feed it with a collection of your past documents. That way, the tool will understand the specific nuances characteristic of your common contract types and your language preference. 

Moreover, features such as a contract library like the one in Spellbook, make the entire process much simpler and allow you to work simultaneously on different contracts, so the process is more comprehensive and accurate. 

Feeding the tool with contracts, allows it to identify patterns and terms to use and look for in the new contracts so it can make predictions, suggestions, and corrections. 

In addition, when you continuously use AI for contract reviews, it becomes smarter with every use, improving its ability to adapt and perform a variety of tasks.

To ensure a comprehensive approach, supply the tool with different documents:

• Industry variations - To ensure the tool can cover a wide range of industry-specific terminology, ensure contracts from different industries - healthcare, tech, finance, etc; For example, Spellbook has already been trained of the non-legal text so its understanding is broader than the tools that have been trained solely on legal documents
• Different contract types: Include NDAs, leases, employment agreements, etc.
• Jurisdictional Variety - If possible, include contracts governed by different jurisdictions
• Complexity - Pick simple and complex contracts from different periods to capture evolving laws and different complexity

Initiate AI-Driven Contract Review

Once you've picked the AI tool and uploaded your contract, you can begin the AI-driven contract review. For example, with Spellbook, there are two ways to complete the review, selecting the task from the list menu or with the help of the chatbot.

What's more, Spellbook doesn't only offer a qualitative analysis of the contract, it also has drafting features, which means it can draft the missing clauses and rewrite the poorly worded contract parts for you.

When reviewing contract reviews with AI software, keep a few things in mind:

• Clause identification - Once you start the review, AI recognizes key clauses and provision extractions to evaluate them with the help of the AI
• Risk assessment - AI software highlights potential risks and flags inaccurate, unusual, or ambiguous clauses
• Comparison against laws - AI will quickly flag the clauses and contract parts that aren't aligned with the applicable law.
• Annotation - Highly useful AI features with summaries and annotations of key contract terms
• Validation - Approve or reject each suggestion of AI to ensure it matches the contract
• Feedback - Correct AI's mistakes to prevent the AI from making the same mistakes in the future, making it more accurate with every contract.

Review AI Findings

While AI offers valuable insights, it's critical to carefully evaluate its findings. You should manually review its findings (like key dates and clauses) to ensure they're accurate, especially in the beginning phases of testing and getting used to AI for contract reviews. 

This approach offers numerous advantages that extend well beyond improved contract reviews. During the thorough review process, your AI findings will:

• Spark new ideas useful for your other contracts
• Provide different perspectives
• Flag inconsistencies you may not be aware of, applicable to your other contracts too
• Improve your legal writing by suggesting and replacing poor language choices.

Collaborate and Train Your Team

AI contract review tools are most effective within a collaborative workflow that uses the strengths of human expertise and AI capabilities.

To foster collaboration among legal team members when using AI tools, you should encourage open communication and discussion about the AI's findings.

Another solution is to develop a knowledge-sharing culture around the AI tool. You could train team members to interpret the AI's outputs and effectively use its insights within the review process.

AI technology, when implemented properly into software designed for legal professionals relies on their expertise and has a small learning curve. For instance, when you pick a straightforward tool that integrates into a familiar interphase, such as MS Word, it may take a couple of days to unlock all the advantages of the new tools.

Criteria for Choosing the Best AI Tool to Review Contracts

Selecting the right AI contract review tool requires careful consideration of several factors to ensure it seamlessly integrates with your existing workflows and delivers the most value for your legal practice.

To choose the best AI tool to review contracts, consider the AI tool’s accuracy and reliability, how easy it is to integrate it with other software, its user interface, cost-effectiveness, and whether the vendor provides ongoing support and training.

Also, don’t forget about the features. Here are the critical features that can enhance the functionality and usability of AI tools for contract reviews:

1. Detecting risky clauses and issues
2. Language improvements 
3. Automatic negotiations
4. Automatic or instructions-based clause drafting
5. Clause library 
6. Multi-document workflow
7. Accessible chatbot for simple navigation through the process 

Accuracy and Reliability

Your AI contract review tool should be reliable and accurate in its analysis, saving valuable time for your legal team to focus on more complex issues.

The following criteria can help you evaluate the accuracy and reliability of AI tools:

• Independent benchmarks: Look for tools with high success rates in identifying key terms, clauses, and potential risks within your contracts.
• User reviews and case studies: You can also research user reviews and case studies from other lawyers who have implemented AI contract review tools. This data can provide valuable insights into the tool’s performance and effectiveness.
• Training data and methodology: Research the type and quality of data used to train the AI tool you’re considering. Prioritize tools trained on comprehensive datasets that reflect the specific legal domain and contract types your practice encounters most frequently.

Ease of Integration

The first thing to distinguish about legal AI tools is the way they work, whether they integrate with other apps or they work as separate applications. 

For example, ChatGPT is a separate online application, and Everlaw is a cloud-based tool. These tools don't integrate with MS Word and require adjusting to the new interface. 

On the other hand, some AI tools, like Spellbook, integrate directly with Microsoft Word, offering a ton of benefits with such an approach, including:

• Reduced costs 
• Minimal disruption of your daily work habits
• Enhanced automated document drafting 
• Fast consistency check and error detection
• Instant analysis and reviews without the need to upload documents into separate apps
• Seamless collaboration between all team members
• Improved version control 
• Simple user interface and great accessibility without the need to install additional drivers or use tech support for installation and tool tuning

Cost-Effectiveness

The cost-effectiveness of AI contract review tools requires a balanced assessment of the upfront investment (initial price, monthly/yearly rates, fees, etc.) against the long-term benefits they offer. 

For example, complex tools tailored for both small teams and big law firms can cost hundreds per month per single user for basic features with limitations, to several thousand for pro versions. In addition, such pricing makes these expensive tools less accessible to small and mid-price offices with less volume of work, looking for ways to automate time-consuming tasks.

For example, Harvey offers customized solutions for large corporations with high price tags. On the other end of the spectrum, you can explore the benefits of Spellbook AI, priced carefully to provide the best ROI for small and mid-size teams of transactional lawyers.

You should consider factors such as the effectiveness and efficiency of its features too, as these can determine the cost savings through fewer hours spent on contract review and the potential to take on more clients.

Here’s how you can maximize ROI with an AI contract review tool:

• Routine tasks automation - Relying on AI to complete document drafting and review, saving time for high-value assignments
• Legal research speed-up - Fast and accurate legal research 
• Client services improvement - Harnessing AI features to provide faster turnaround time and improve client service
• Billable hours reduction Automating manual tasks brings significant cost reduction
• Compliance check-up - Use AI software to make sure your documents are fully compliant with the law, to mitigate the non-compliance risks.

What is the Best AI Contract Review Tool for Lawyers?

The best AI contract review tool for lawyers‌ is Spellbook - it helps you draft and review contracts ten times faster with advanced AI that’s been trained specifically for law. In addition, the integration, the benefits, the ease of use, and the cost-effectiveness of the tool, make it more accessible for various lawyers and different-sized offices.

Here are some recommendations for the best AI contract review tools based on specific criteria (such as user feedback, feature set, and cost):

• Spellbook
• Ivo
• Juro
• Lex Machina
• ContractPodAI
• Lawgeex
• Conga CLM
• Icertis

Key Takeaways

AI contract review tools can be a game-changer for legal teams. These AI-powered software programs use machine learning to analyze contracts, automating tasks like scanning, highlighting key clauses, and identifying potential risks. 

Tools like AI contract review save lawyers time for complex issues while improving overall review accuracy and efficiency.

However, it's important to remember that AI is a helpful assistant, not a replacement for human expertise. Lawyers should always use their judgment for complex matters and seek expert advice when necessary. To maximize effectiveness, teams should collaborate openly on AI findings and receive adequate training to interpret them accurately.

Frequently Asked Questions

Can Small Law Firms Afford to Use AI in Contract Reviews?

Yes, AI contract review tools can be affordable for small law firms - although the cost depends on the needs and budget of a law firm. Pricing is usually flexible and most AI tools are easy to learn and integrate with your existing software, minimizing setup costs. This makes AI a scalable solution for smaller firms to streamline reviews without breaking the bank.

Is AI Contract Review Secure Enough for Confidential Agreements?

Whether AI contract review is secure enough for confidential agreements depends on a platform (provider). AI contract review comes with security concerns, especially for confidential documents. Look for tools with industry-standard compliance, encryption (data storage and transfer), access controls, and regular security audits to protect sensitive information.

Can AI Contract Review Handle Complex Legal Agreements?

The simple answer is yes. While not a substitute for human expertise, AI contract review can efficiently analyze vast amounts of data to identify key clauses, potential risks, and inconsistencies. However, complex legal agreements with unique terms or industry-specific language require careful human review.