One of the widely circulated memes going around during these COVID-19 times is on digital transformation – and how it has become front and center in organizations’ efforts to tide over this period.
The impact is profound than in how we have adapted to remote and flexible modes of work. Internet and cloud have enabled Telecommuting to become a norm, especially within the Internet / Technology space – while other sectors have quickly adopted (read: forced to) similar policies, even though many never worked from home prior to the ‘stay-at-home’ orders.
Covid19 could very well be a Dinosaur extinction (or Pre-Cambrian explosion, on how one views it) event in businesses’ ability to evolve and adapt. Teams that are agile to embrace scalable hardware and software are the ones that can run out of the blocks, post the pandemic period –Legal being no different.
Legal contracting during COVID-19
With contract review and negotiations increasingly happening on a remote basis, legal firms are looking for technology-enabled solutions that provide access from everywhere, have easy to reconfigure workflows to address team availability in real-time and make the contract execution seamless.
One of the most important pre-requisites for remote and flexible work is a single view/repository of agreement, which can be accessed in a secure and seamless fashion. Solutions, especially those powered by the Cloud help legal departments to manage exactly this, and more.
System availability and security have been long-standing concerns over adopting Cloud-based infrastructure, but the 2020 Coronavirus pandemic and restricted workforce mobility have shown that Cloud systems have in fact better business continuity and more secure systems.
The more intelligent solutions also support deep integration to other systems including ERPs, CRMs, and Procurement software, thus, reducing a great deal of duplicate data entry and validation efforts.
On the process side, these solutions must have clearly defined workflows about who, which section of the agreement, and by when, the internal review of the draft contract will be done. Likewise, for negotiations, tracking contract versions and changes, and linking changes back to the respective reviewer, are critical.
The flexibility of the workflows for various review modes is an area of importance. For example:
(a) certain clauses will be reviewed based on the reviewer role (e.g.: credit terms by the finance department, while warranty terms by-products department, etc.)
(b) reviews can be done in serial mode [first operations team, then finance team, etc.], parallel (each section mapped to different reviewers) or even hybrid. Solutions must be able to create, track and notify such workflows.
This becomes especially important during ‘lock-downs’ with limited direct interactions with other associates – within as well as across departments. This is where AI and ML (Machine Learning) can especially help, with a proactive and suggestion-based approach throughout the contract lifecycle.
AI in Legal Contracting:
Technological developments like Artificial Intelligence (AI) help legal departments overcome many of the challenges in contracting. They help businesses navigate turbulent times, providing quick insights to assess contractual impact across the organization.
According to a Gartner 2019 report by 2024, the manual effort for contract review will be reduced by 50% due to the adoption of AI-based contract analytics solutions. The report highlights that by 2023, 90% of multinational global enterprises will have contract lifecycle management solutions in place.
AI-based contracting tools and solutions like Zycus Merlin, help to seamlessly navigate thousands of contracts quickly, precisely and draw insights in real-time. In addition, they help clients resolve complexities of a rapidly shifting regulatory landscape and ever-increasing compliance risks, quickly reinforcing a greater value proposition.
These next-generation tools can easily extract data and clarify the content of contracts, review contracts more rapidly, organize and locate large amounts of contract data easily, decrease the potential for contract disputes and increase the volume of contracts that can be negotiated and executed.
In these challenging times, when legal operations are being asked questions regarding resilience vs the risk of contracts, both on revenue as well as supply-side, such solutions are a boon. Contract clauses and terms like Force Majeure and Termination of Convenience, as well as Event Triggers and Penalties, are in ever-greater scrutiny. With tens of thousands of agreements to be re-evaluated, AI-based solutions become a ‘must-have’ rather than a luxury.
What the future holds
Artificial Intelligence has always had a ‘bad-boy’ image among individuals and even organizations, focusing on the human-work replacement angle while demoting its ability to improve organizational resilience. But events like the COVID-19 pandemics have shown that AI can be the front-line defense in protecting us from unpredictable shocks, and help lawyers to focus on what is most important, which is providing counsel and solutions to manage risk – rather than document drafting and review. And this will be only a good thing for all parties involved.