Commercial contract management, once rooted in traditional practices of the professional expert, now faces a turning point. As technology reshapes everything we do, the legal and commercial departments of companies across the globe can no longer rely on outdated methods.
The problem with traditional contract management
Traditional methods of contract management are notoriously inefficient. Processes can often be manual, fragmented, time-consuming, and reliant on poor drafting practices, carried out by expensive personnel with no single owner.
Furthermore, as contracts are rarely managed once signed, they are often lost forever post-signature inside company shared drives. Research by the World Commerce and Contracting (WCC) puts the value lost to organisations because of poor contracting at up to 9% of a company's annual turnover; a wasteful use of resources considering the time and cost implications.
Technology, including traditional AI, has not helped with these problems due to its proprietary nature, implementation difficulties, lack of end to end processes and overall cost. So, what are the options for companies in improving their contract management systems?
The future: GenAI
Generative AI (GenAI) has the potential to dramatically modernise contract management and unearth significant financial value for organisations. Unlike traditional AI that is trained on limited data sets - think, for instance, AI models trained only on property leases, just flagging clauses and pinpointing areas for review - Gen AI operates on an entirely different level.
What makes GenAI revolutionary is that it is trained on much larger data sets, with an ability to handle far more complexity and scope. It can also generate content and perform actions based on that content. For example, it is capable of recognising nuances in a clause and recommending a response or performing an action as a result, which traditional AI simply could not do. With GenAI, contract management can evolve to manage drafting, execution, real-time risk mitigation; apply price rises or discounts; connect financial, employee and customer systems, and more.
GenAI is having a transformative impact on contracting professionals, allowing companies to rethink their entire contract management processes. Applying GenAI will finally allow companies to proactively manage contracts as ‘living' data objects inside their organisations.
The value of GenAI
GenAI is reshaping commercial contracting. Through streamlining processes, tackling risks, enhancing legal compliance, and increasing speed to outcome by reducing the need for human intervention, companies can focus on promoting growth while satisfying governance and risk management requirements.
Panoram has proven the potential of GenAI with its document review solution. We applied multiple concurrent GenAI models for first pass document review for a Renewables Energy Company. The technology performed the initial first-pass review of DD contracts, including complex technical documents and highlighting areas for further analysis and recommendations. The Ai was proven to be faster, more accurate and cheaper than human-led document review.
The future of legal
Companies can use GenAI to connect legal with business to revolutionise their work with customers, suppliers, staff, and regulators, removing the need for the performing of mundane tasks. By taking advantage of artificial intelligence, companies can seize the hidden value of best-in-class GenAI-powered contract management practices to guarantee efficiency, compliancy and cost savings across the business.
For more information visit Panoram
