AI tools offer legal professionals a faster, more accurate way to redline contracts without sacrificing precision. If you are skeptical about moving beyond traditional contract redlining methods, now is the time to explore the significant benefits of this new technology.

AI tools like Spellbook enhance lawyers’ efficiency, offering opportunities to automate and simplify legal tasks. Legal professionals can use AI to improve the speed and accuracy of the contract redlining process.

If you want to strengthen your legal practice with AI and fully benefit from digital redlining, consider the practical features that legal AI tools offer. This article compares AI vs. manual redlining processes in Microsoft Word. We discuss steps for efficient AI-enhanced redlining and the benefits of integrating AI into daily redlining tasks.

What is Contract Redlining?

Redlining a contract involves creating a document that all parties agree on through a series of interactive edits. During revision rounds, parties can correct contract terms and clauses.

Lawyers are familiar with this process. However, introducing AI to redlining offers a fresh perspective on contract review. It reduces errors and shortens the time to close deals.

Both manual and AI-assisted redlining help ensure that contracts do not contain incorrect or unclear terms, minimizing the risk of issues that may require court resolution. The redlining process includes:

• Adding new text or modifying existing text
• Generating new sections for the contract
• Deleting unnecessary content
• Adding addenda and amendments to provide additional explanations or highlight noteworthy changes

Transforming Contract Redlining Processes With AI

Microsoft Word offers a useful “Track Changes” feature that simplifies the redlining process for lawyers. However, this manual redlining process can still be highly time-consuming. Lawyers must read the contract, identify sections and language that need improvement, and delete or write new paragraphs.

When complex contracts require numerous rounds of revisions before approval, redlining can become chaotic. Multiple versions of a document may lead to inconsistencies, confusion, and compliance issues. 

Introducing AI into the redlining process offers several benefits:

• Reduced Errors: AI provides automatic error detection and instant language improvements, leading to fewer mistakes and quicker language checks.
• Faster Review Time: AI automates the detection of changes and discrepancies, speeding up the review process. 
• More Thorough Review: AI can flag missing clauses or inconsistencies that lawyers may overlook in manual reviews.
• Consistency Across Contracts: AI applies standardized benchmarks and criteria for language, formats, and legal compliance, ensuring uniformity.
• More Time for Strategic Thinking: Lawyers can focus on tactical thinking by automating tedious tasks like checking for missing clauses and comparing documents.

How to Redline a Contract with Legal AI Software 

Using AI-powered legal software like Spellbook to redline contracts can significantly enhance your speed, accuracy, and efficiency. Spellbook is a convenient add-on for Microsoft Word that you can download from their app store. With easy integration into MS Word, Spellbook simplifies the redlining process and offers additional benefits:

• Instant Productivity Boost: Increase productivity without requiring IT assistance for app integration.
• Easier for Less Tech-Savvy Lawyers: The tool’s user-friendly design helps lawyers who may not be comfortable with technology.
• No Training Required: You don’t need extra training to use add-ons like Spellbook in MS Word.
• Data Privacy Assurance: Spellbook handles data privacy within trusted and familiar software.

Step 1: Upload the Contract for Redlining

Open your contract in MS Word and enable your AI-powered add-on. Or upload the contract to a separate AI platform.

With Spellbook, the process is straightforward because all you need to do is work in MS Word as you normally would. The only difference is a new window on the side where you interact with AI to give commands and begin redlining.

Step 2: Initiate the Redlining Process

Select the party you represent so Spellbook can prioritize your client’s interests. Start the AI redlining process with simple commands. 

Spellbook provides a general review that identifies clear risks and fixes minor spelling and grammar errors. Importantly, you can view suggestions as strikethroughs or as comments only.

You can revise the entire document with Spellbook. Focus on one section at a time, or work on multiple sections simultaneously. 

Step 3: Allow the AI to Finish the Initial Redlining

Spellbook suggests redlines for your review, allowing you to accept, modify, or reject them based on your judgment. 

Spellbook can also identify missing or incomplete sections of your contract. The tool features a thorough database of industry standards to ensure your contract includes all crucial sections. For instance, AI can compare the liability clause in a service agreement with industry standards to flag inconsistencies. AI can compare contract clauses against:

• Legal standards to ensure compliance
• Law-firm-specific templates and customized frameworks
• Negotiation goals to ensure changes align with your client's needs

Redlining with AI is straightforward because it offers structured edits that are easy to navigate, complete with color coding for clarity. When you use Spellbook for redlining, modifications appear as redlines, suggestions, and comments. AI will redline entire contracts with one prompt, boosting productivity and reducing the time for redlining.

Step 4: Review AI Redlines and Suggestions

AI redlines are often accurate, but you must evaluate them to meet professional and ethical standards. You have three options for handling AI suggestions:

1. Accept or reject suggested changes.
2. Review comments that are added
3. Refine suggestions to better reflect your perspective, style of writing, and general positions.

For example, if AI recommends a generic improvement to a clause, you can adjust it to fit the agreement’s specific context.

Step 5: Improve Negotiation Points

After completing the initial round of redlining, you can instruct AI to filter out changes and concentrate solely on the negotiation points. For instance, you can request that it negotiate specific points more assertively.

AI can verify whether your negotiated terms align with business standards during this redlining phase. By gaining insights into specific negotiation points, you can ensure that critical clauses align with your risk management strategy.

Step 6: Share the Document With Contract Shareholders

AI improves collaboration by simplifying the contract redlining process. When you share the document with your team members or opposing parties, they can view your redlines and add changes or comments attributed to their names.

Word & AI Integration vs. Manual Microsoft Word Redlining

In busy law offices, lawyers redlining contracts in Word typically rely on user-friendly tools and systematic approaches. A primary focus is on maintaining version control. AI redlining differs significantly from manual redlining.

Time-Saving Optimization

When assessing or preparing a document for a counterparty, you must pay close attention to critical sections such as indemnification, liability, copyright, and termination terms. The manual redlining process in Microsoft Word involves:

• Reading the contract multiple times to identify clauses that need changes
• Evaluating each section for accuracy, compliance, and negotiation strategy
• Manually applying formatting (such as strikethrough, underline, bold, or red text) to highlight changes
• Inserting new text and adding comments to justify modifications
• Repeating these steps for every change

This can be a time-consuming and error-prone process, especially with complex agreements. 

AI-powered redlining using Spellbook eliminates much of this manual effort. After you upload the document, the AI will:

• Automatically identify and redline fundamental changes, additions, and omissions
• Evaluate and highlight material changes based on legal benchmarks, industry standards, or custom instructions
• Suggest revisions and flag areas that need further review

Automated redlining saves you hours of repetitive manual work.

Version Control

One of the biggest challenges with manual redlining in Word is maintaining version control, especially during negotiations with multiple parties. It is crucial to ensure that everyone works from the latest version, as mistakes can lead to costly errors or confusion. AI-powered version control eases this process by offering:

• Real-time Collaboration: Multiple users can edit and review the same document, with each change immediately visible to authorized users.
• Document Authorization: Control who can view, edit, or suggest changes to ensure only authorized users can make modifications.
• Comprehensive Change History: Easily track who made changes and when to prevent version mix-ups and enable quick audits of the document's evolution.

Impact on Contract Lifecycle Management (CLM)

Contract Lifecycle Management (CLM) covers every contract management stage, from initial drafting to execution. While MS Word has long been a valuable tool for managing contracts, integrating AI into Word enhances the process by:

• Accelerating the contract review and redlining processes, allowing lawyers to handle contracts more quickly
• Enhancing collaboration by enabling multiple stakeholders to review the document without confusion
• Automating repetitive tasks, including formatting, clause detection, and comparison with legal standards

Benefits of Redlining Legal Documents with AI

AI accelerates the redlining process by automating changes and repetitive tasks, allowing parties to focus on negotiations and enjoy the benefits.

Reduced Risk of Human Error

Lawyers may overlook issues in contracts for various reasons. Common mistakes lawyers make during the redlining process include:

• Overlooking contract stakeholders or failing to consider their roles in contractual obligations
• Using inconsistent terminology throughout the contract
• Missing updates made by other team members or parties
• Encountering document merging errors, which can lead to information loss or conflicts during revisions
• A lack of jurisdictional knowledge

AI tools like Spellbook help reduce these risks by consistently following established guidelines when automating tasks. 

Increased Efficiency

AI-generated suggestions and redlines are just a click away, making contract review much faster than manual redlining. For example, Spellbook offers a range of convenient features that:

• Ensure legal compliance by automatically cross-referencing applicable laws
• Enhance clarity and consistency by flagging unclear language
• Identify risky clauses that may cause disputes or legal vulnerabilities

Reviewing for Compliance with AI

The capabilities of AI law software extend beyond automation and contract drafting and review improvements. Your contracts must also comply with relevant regulations and laws.

Spellbook is particularly helpful for compliance checks because it contains billions of lines of legal text, laws, and regulations in its database. When you open a document with Spellbook, it automatically recognizes the document's jurisdiction and provides compliance suggestions. It can:

• Automatically scan for compliance issues, saving lawyers from manually reviewing lengthy legal texts
• Offer compliance insights by flagging changes that could impact the contract's legality
• Detect vague or inaccurate clauses, ensuring that the contract language is precise and legally sound

What Doesn't Change with AI-Assisted Redlining vs. Traditional Process

AI advancements enable lawyers to use AI software to review contracts, allowing them to identify sections that need improvement quickly. This technology can help them complete daily tasks in just a tenth of the time it would otherwise take. While AI automates much of the redlining process, some human aspects of legal practice remain just as important.

Active Professional Collaboration

Even with AI, successful contract redlining relies on a professional collaborative approach. While AI provides automated insights and efficiently consolidates feedback from multiple stakeholders, active communication with clients and counterparties remains crucial. Incorporating feedback, explaining rejected changes, and aligning on contract terms keeps everyone on the same page.

Thoroughness Without Delay

Both AI and traditional redlining emphasize thoroughness. AI does not rush the process – it optimizes it. By automating error detection, clause comparison, and compliance checks, Spellbook enables a more thorough review in significantly less time. However, legal professionals must evaluate significant changes, such as liability clauses and termination terms.

Accuracy Checks

Lawyers often double-check contract facts as a crucial part of the redlining process. While accuracy remains a top priority, AI significantly reduces the need for redundant reviews, which can create confusion and additional mistakes. Before finalizing the document, use Spellbook to ensure that every clause is up to date to prevent discrepancies and errors. Key areas to check during the final review include:

• Contract scope and values
• Termination terms
• Ownership modifications
• Essential compliance and regulatory clauses

Key Takeaways

AI tools like Spellbook significantly reduce the time to redline contracts by automating the review process, identifying discrepancies, and suggesting accurate and relevant changes. Incorporating AI into contract redlining offers several benefits:

• Increased precision and accuracy
• Faster and easier workflows
• Reduced human error
• Enhanced negotiation and compliance

To experience the advantages of AI-assisted contract redlining, sign up for a risk-free trial period with Spellbook. Explore multiple review options and see AI in action today!

Frequently Asked Questions

Is There a Standard Procedure for Initiating Redlining in a Contract?

No, there are no standard procedures for initiating redlining in a contract. However, specific steps are usually initiated depending on whether you use Microsoft Word or AI.

For Microsoft Word, you begin by uploading the document and activating the Track Changes tool. This feature tracks all changes made during negotiations, automatically color-coding the redlines so everyone reviewing the contract can see the modifications.

AI tools follow a similar process for redlining but operate automatically, making the process much faster and more straightforward.

Can Redlining Speed Up the Contract Approval Process?

Yes, redlining can speed up the contract approval process because it allows parties to spend less time agreeing on proposed terms. AI-powered redlining ensures accuracy and consistency in final agreements, significantly reducing the time for redlining.

Can Parties Ensure Fair Contract Negotiations During the Redlining Process?

Yes, parties can ensure fair contract negotiations during the redlining process. To maintain fairness during redlining, both parties should acknowledge different perspectives while discussing suggested edits in the contract. An effective strategy for fair negotiation is to offer counterchanges when rejecting a suggested modification or to propose a new edit that aligns with your interests after accepting edits from the other party.