Here's the lowdown on contract analytics software
Updated: It's time for another post focusing on a specific type of software, explaining how it will solve a problem for your law firm, and discussing the options available. In this column I’ll cover contract analytics software, a new breed of legal software grounded in machine learning that assists lawyers in analyzing contracts more effectively and efficiently.
This software will likely appeal to all lawyers who work with contracts, since reviewing and drafting contracts is legal work that is performed by lawyers from firms of all sizes.
This software works by constantly “learning” from new contracts, such as nondisclosure agreements, as they are uploaded into its database. The software then applies this knowledge to contracts submitted by users. It compares the document under review against a multitude of similar documents contained in its database. Then the software typically provides a report that includes recommended revisions drawn from its analysis of the components of similar contracts, including suggesting paragraphs that appear often in other contracts but are missing from the one uploaded, and highlighting outlier paragraphs in the uploaded document that are atypical.
But before discussing the software options available to you, let’s address the elephant in the room: artificial intelligence. Yes, the contract analytics software I’ll be discussing is powered by AI, but that shouldn’t dissuade you from considering it as part of your law firm’s technology arsenal.
There’s been a lot of hype about AI lately, but there’s a reason for that: When used wisely, it increases your efficiency by removing mundane legal work from your plate, allowing you to focus on more interesting, high-level tasks. Rather than replacing lawyers, as many fear, the judicious use of AI software offers firms large and small the potential to save both time and money.
Of course, one of the main roadblocks to AI adoption by lawyers is the element of trust. Lawyers are unlikely to use the software unless they trust the results it provides.
The good news is that a recent study commissioned by LawGeex, one of the software products I’ll be discussing, offers evidence that AI can perform some legal tasks far more quickly—and just as accurately, and in some cases, more accurately—than lawyers.
In this study, 20 experienced U.S.-trained lawyers each reviewed five NDAs to locate risks, as did the AI software. The study was audited by four independent individuals to ensure accuracy. The results showed that the output of machines was significantly more accurate than that of the lawyers performing the same tasks, with the machine’s accuracy level at 94 percent and the lawyers’ at 85 percent.
Also of note was how much more quickly the software performed the task than the lawyers. The lawyers took an average of 92 minutes to review the contracts, whereas the AI software took a 26 seconds.
Certainly the accuracy of the AI’s results may vary from one software product to another, which is why it’s important to thoroughly vet each product when you’re comparison shopping. Review a few contracts and track your time while doing so. Then run those same contracts through each software product that you’re considering and see how long each analysis took and how the results compare to your own work product, and to the results of the other software tools.
So let’s move on to the software. Without further ado, here are three of the leading contract analytics software programs to consider if you’re in the market for this type of technology.
First, there’s LawGeex, the Israeli company that sponsored the study I discussed above. With LawGeex, contracts are analyzed by the software, which then suggests revisions based on the firm or company’s preset policies and language. You can edit the document within the platform, including redlining. Pricing is not available on the website, but is reportedly around $1,000 per month, depending on a number of different factors.
Another option to consider is LegalSifter, a new entrant in this space. Like the other software products, LegalSifter uses AI to review and compare uploaded contracts to those in its database, and the software then highlights any unusual clauses. It can be used to analyze a number of different types of documents, including:
- 1) Purchase or sales agreements for goods or services.
2) General terms and conditions.
3) Business associate agreements.
4) Nondisclosure/confidentiality agreements.
Once the analysis is complete, you can export the contract and accompanying advice into Word, where you can edit the document to comport with the advice provided. Pricing is based on the number of documents analyzed and drops as the number of documents analyzed increases. And the more years you commit to, the less it costs. Prices start as low as $27 per document per year for 1,000-plus documents with a four-year commitment, to as high as $49 per document per year for a one-year commitment. A two-year subscription for 75 annual documents would cost $2,925 per year for two years ($39 x 75 documents = $2,925). You can learn more about the pricing scale here.
Finally, there’s Bloomberg Law’s Draft Analyzer, which is part of Corporate Transactions, a research and software tool suite for corporate transactions attorneys. With this tool, you can quickly and easily determine how your contract compares to the market standard, or, as Darby Green, Bloomberg Law’s commercial director for bankruptcy and litigation, recently explained to me: “Draft Analyzer will help you pull out different clauses and see … different templates from different law firms and try to find the best language for you, and redline where there are differences.” Pricing for the Corporate Transactions suite of products is not available on the website.
So, if your practice involves a significant amount of contractual drafting and analysis, then one of these software products may very well be worth the investment. Certainly these software tools aren’t cheap, but imagine the benefits of saving hundreds of hours per year while still providing the same high-quality work product to your clients. What you do with the recouped time is up to you: you can take on more work or enjoy some well-earned leisure time. The choice will be yours, and it’s one that will only be made available by using these cutting edge, 21st-century tools in your law practice.
Updated to clarify the types of documents supported by LegalSifter.
Nicole Black is a Rochester, New York, attorney, author, journalist and the legal technology evangelist at MyCase, legal practice management software for solo and small-firm lawyers. She is the nationally recognized author of Cloud Computing for Lawyers, and she co-authored Social Media for Lawyers: The Next Frontier.She also co-authored Criminal Law in New York, a Thomson West treatise. She writes regular columns for The Daily Record, Above the Law and Legal IT Pros, has authored hundreds of articles and regularly speaks at conferences regarding the intersection of law, mobile and cloud computing, and internet-based technology. She can be contacted at [email protected].