Table of contents
In this blog, we explore the overview of automated contracting, why it matters, who is impacted, the key challenges it presents, and best practices for successful adoption including how digital assistants are transforming consumer contracting.
What is Automated Contracting and Why Should You Care?
Automated contracting refers to the use of software and AI-powered tools to draft, review, negotiate, execute, and manage contracts with minimal human intervention. These systems utilize natural language processing (NLP), machine learning (ML), and rule-based automation to standardize and streamline contract workflows. Can we get rid of the lawyers in this process? – The clear answer is no! We cannot get rid of the lawyers because these tools cannot function independently and the output for legal interpretation reasons has to be checked by a lawyer to ensure things do not go sideways.
For businesses, automated contracting removes bottlenecks in legal operations, speeds up deal cycles, and ensures consistency in contract terms. Whether you're managing high volumes of vendor agreements, employment contracts, or sales negotiations, automation can reduce errors, enhance compliance, and free up legal teams to focus on strategic work.
For consumers, AI-driven digital assistants are making contracts more accessible and understandable, simplifying complex legal language, and allowing users to generate and manage agreements on demand.
Use Case: Automated Contract Generation and Execution
Companies like Ironclad (Ironclad) and DocuSign CLM (DocuSign CLM) also allow businesses to auto-generate contracts using pre-approved templates. Platforms like DoNotPay (DoNotPay) use AI-driven chatbots with all the small consumer day-to-day requirements like unsubscribing some service flight compensations etc.
A growing SaaS company, for example, can instantly generate Non-Disclosure Agreements (NDAs) or Master Service Agreements (MSAs) based on inputted terms, reducing reliance on manual drafting.
Use Case: AI-Powered Digital Assistants for Consumer Contracts
Who is Affected? (Hint: It’s Not Just Legal Teams)
Automated contracting benefits a wide range of industries and business functions, including:
- For Legal Teams & In-House Counsel – It automates contract review, negotiation, and approvals, reducing workload while ensuring compliance.
- For Sales & Procurement Departments – It speeds up contract execution with automated workflows and approvals, shortening deal cycles.
- For Finance & Compliance Teams – It supports financial and regulatory consistency across all agreements, reducing risk exposure.
- For Human Resources (HR) – It simplifies employment contracts, onboarding agreements, and benefits documentation.
- For Consumers – It allows individuals to generate and manage contracts using AI-powered digital assistants, reducing dependency on expensive legal services.
Use Case: AI-Assisted Contract Negotiation
Platforms like Luminance (Luminance) use AI to analyse contracts in real time and suggest favourable clauses based on past negotiations. For example, an enterprise procurement team can automatically detect unfavourable supplier terms and negotiate better pricing or service level agreements (SLAs) using historical contract data.
The Challenges of Automated Contracting – What to do to Solve Them?
Despite its advantages, automated contracting presents several challenges that businesses and consumers must address:
1. Legal & Regulatory Compliance
Automated systems must adhere to contract law principles, industry regulations, and jurisdiction-specific requirements. AI-drafted contracts should be regularly reviewed to ensure they align with evolving laws.
✔ Solution: Implement AI-powered compliance monitoring tools like Clause (ClauseBase) that automatically track regulatory updates and flag non-compliant contract terms.
2. Data Security & Privacy Risks
Contracts contain sensitive business and personal data, making them a prime target for cyber threats. Automated contracting tools must have robust encryption, access controls, and audit trails.
✔ Solution: Choose platforms with built-in security features, such as Evisort (Evisort), which offers end-to-end encryption and AI-driven risk assessments.
3. Lack of Human Oversight
Over-reliance on automation can lead to critical contractual oversights, especially for complex, high-value agreements.
✔ Solution: Establish a hybrid approach, where AI automates routine contracts while human lawyers handle complex negotiations and strategic decision-making.
4. System Integration Challenges
Many businesses rely on legacy contract management systems that don’t easily integrate with AI-driven platforms.
✔ Solution: Opt for cloud-based contract lifecycle management (CLM) platforms that offer API integrations with enterprise resource planning (ERP) and customer relationship management (CRM) systems.
5. Consumer Awareness and Trust
Many individuals are unaware of their rights and responsibilities when using AI-generated contracts, leading to potential legal pitfalls.
✔ Solution: Consumer-focused AI tools should prioritize clear disclosures, plain-language explanations, and user-friendly interfaces to build trust.
Best Practices for Successful Automated Contracting
To maximize the benefits of automated contracting, businesses and consumers should follow these best practices:
1. Define Clear Automation Goals
Before implementing an automated contracting solution, define specific goals—whether it’s reducing contract turnaround time, enhancing compliance, or minimizing human errors.
2. Implement AI Governance Policies
Set policies to regulate AI usage in contract management, including data privacy, bias mitigation, and ethical considerations.
3. Use a Contract Analytics Dashboard
Leverage AI-powered analytics tools to track contract performance, renewal dates, and compliance risks in real time.
4. Train Employees on AI Contracting Tools
Ensure legal, sales, and procurement teams receive proper training to effectively use automated contracting platforms.
5. Educate Consumers on AI-Powered Legal Tools
Encourage transparency by providing consumers with educational resources on AI-generated contracts and their legal implications.
Use Case: AI-Powered Contract Compliance & Risk Analysis
Companies like Kira Systems (Kira Systems) help businesses analyze historical contracts to detect potential legal risks. For example, a multinational company undergoing an acquisition can use Kira’s AI engine to identify hidden liabilities, change-of-control clauses, and indemnity risks across thousands of agreements within minutes. But once you identify them, you will still need lawyers to interpret those for you in line with the jurisdiction in which you operate.
Final Thoughts: The Future of Automated Contracting
Automated contracting is not just a passing trend, it’s the future of legal and business operations. As AI and automation technologies advance, contract management will become more streamlined, cost-effective, and data-driven.
At White Bison, we are here to help both businesses and consumers navigate the complexities of automated contracting. We recognise the challenges of integrating AI-driven tools into contract management and are dedicated to ensuring that your adoption process is smooth, compliant, and efficient. Whether you’re looking to streamline your contract workflows, adopt AI-powered review tools, or use digital assistants for everyday contracts, we’re ready to guide you through the process.
If you’re ready to future-proof your contract management, let’s talk.
