Lawyers can review contracts, like they normally would do for a client, but as a new first step as a part of the traditional contract review process, by leveraging AI: natural language processing (NLP), machine learning (ML), and deep learning techniques to highlight, understand, analyze, and extract relevant information far faster. Here’s how, technically, AI can effectively review contracts for lawyers:
Critical Steps in AI Contract Review
- Data Ingestion and Preprocessing:
- Optical Character Recognition (OCR): Converts scanned documents into machine-readable text.
- Text Normalization: Cleans and standardizes the text for analysis, removing irrelevant characters or formatting issues.
- Natural Language Processing (NLP):
- Entity Recognition: Identifies critical entities such as names, dates, and terms within the contract.
- Clause Extraction: Recognizes and categorizes different clauses (e.g., termination, indemnity, confidentiality) within the contract.
- Machine Learning (ML) and Deep Learning:
- Supervised Learning: This method uses labelled training data to teach the AI system to recognize and categorize legal concepts and clauses.
- Unsupervised Learning: Helps identify patterns and anomalies within the contracts without predefined labels.
- Deep Learning: Utilizes advanced neural networks to understand context and semantics, improving the accuracy of clause recognition and risk assessment.
- Semantic Analysis:
- Contextual Understanding: AI models, like transformers (e.g., BERT, GPT-4), understand the context and meaning of sentences, helping to interpret complex legal language.
- Comparative Analysis: Compares clauses against standard or preferred language to identify deviations or potential risks.
- Risk Assessment and Compliance:
- Risk Scoring: Evaluates clauses for potential risks based on predefined criteria and legal standards.
- Compliance Checking: Ensures contracts adhere to relevant laws, regulations, and internal policies.
- Automated Suggestions and Edits:
- Clause Recommendations: Suggest alternative language or clauses to mitigate risks.
- Highlighting Issues: Marks areas that require human review or attention.
Practical Applications
- Due Diligence: Quickly reviews large volumes of contracts during mergers and acquisitions to identify potential liabilities and obligations.
- Contract Management: Assists in organizing and managing contract repositories, making tracking key dates and obligations easier.
- Drafting and Negotiation: Provides initial drafts of contracts and suggests language during negotiations to ensure favourable terms.
- Regulatory Compliance: Continuously monitors and updates contract language to comply with changing laws and regulations.
- Classic Contract Review: Provide a summary report of all issues in the contract (from one side's perspective) and advises on improved language and adding or deleting clauses. This is exactly what goHeather contract review AI does.
Benefits of AI in Contract Review
- Efficiency: Significantly reduces the time required to review contracts.
- Accuracy: Minimizes human errors by consistently applying legal standards and rules. But remember, AI can make mistakes, so any reviews an AI does for a contract should always just be done as a first step and then the final legal advice of the review should be done by a lawyer.
- Cost-Effective: Reduces legal costs by automating routine tasks.
- Scalability: Can handle large volumes of contracts simultaneously, which is challenging for human reviewers.
Challenges and Considerations
- Data Privacy and Security: Ensuring sensitive contract data is securely handled and protected for privacy and confidentiality.
- Interpretation of Complex Legal Language: Some nuances of legal language still require human judgment.
- Continuous Learning: AI models need regular updates and training to stay current with legal developments and changes. AI can be out of date. AI models might not show the latest trends and change in the law in their reviews of contracts.
goHeather has a free AI contract analysis trial for any kind of contract in every part of the world here. Try today for free!
goHeather is an AI, not a lawyer. goHeather provides legal information, not legal advice. Our AI can have errors and omissions. Use goHeather as a starting point and always consider retaining a lawyer.
