Robot scary contract Image credit Pixabay/ComputerizerIcertis has published a report in partnership with World Commerce & Contracting titled AI in Contracting: From Untapped Revolution to Emerging Evolution. The report looks at the sentiment and use of AI within legal and procurement teams worldwide. The report was based on a survey of 500 professionals and found a disconnect between personal and organisational enthusiasm towards AI. While individually, the respondents are enthusiastic about AI (80%). Only 40% feel that their organisation is (up 10% in the last few months). What is notable is that the 80% is twice that of June 2023. This indicates that the change management aspect of implementing AI is occurring.

The report has some interesting insights as it looks at the different types of AI. It also details the five benefits of GenAI:

  • Risk Analysis
  • Benchmarking and optimization
  • Innovative problem-solving
  • Enhanced negotiation strategies
  • Fraud detection and compliance
Tim Cummins, President of World Commerce & Contracting. Image credit - LinkedIn
Tim Cummins, President of World Commerce & Contracting

Tim Cummins, President of World Commerce & Contracting, said, “As AI rapidly evolves, this study from World Commerce & Contracting and Icertis points to its power in redefining commercial practices and creating value as a strategic asset capable of enabling both innovation and efficiency.

“AI can analyze vast amounts of contract data with speed and accuracy, uncovering patterns and anomalies that might go unnoticed by human oversight. This supports real-time improvements in contracting cycle times, more vigilant compliance monitoring, and proactive cost management – all of which are priorities in today’s business environment.” 

What is in the report

The full report is twenty-five pages and is divided broadly into two parts. The first contains details about the survey and the different responses gained. The second presents several case studies that look at where AI has been implemented. They present positive stories of how AI-powered Contract Lifecycle Solutions have made a significant difference across multiple industries and functions.

The report itself has a different focus on each page and provides an interesting mix of thought leadership, data analysis and insights. It provides some useful information about GenAI. Including details of the differences between nine of the leading AI alternatives to ChatGPT. However, the list has some notable absences, such as Bedrock from Amazon.

The data points are presented in a complimentary visualization, which is useful. And at times, has a comparison with the survey conducted in June 2023. While only a few months have passed, notably, some of the data points have changed significantly.

The report ends with a brief look at some of the differences between sectors and regions. However, few data points were pulled out to compare the industry sectors, possibly because the size of the data set is not large enough.

It is notable, though, that Asia (36%) and North America (30%) are far ahead of implementing AI in their contracting process than European respondents (22%), with Oceania (11%) even further behind.

Key findings from the report

There is a slow shift towards the usage of AI in the contracting process. With 30% either having implemented or implementing AI in the contracting process (2023 June 28%). The key barriers that still seem to hinder implementation are:

  • Privacy and Security – 57%
  • Data Output quality – 46%
  • A general lack of trust – 46%

The survey also highlighted where AI is most commonly used. The results spanned a large number of use cases within Metadata extraction (12%), clause extraction (11%) and contract summarization (10%), the top three. AI is also not the utopian solution that some fear.

Monica Riederer, Vice President, Digital & Enterprise Operations Counsel with Northwestern Mutual, commenting in the above WCC report said, “These tools appear to be best at issue spotting and conducting an initial review, but there is clearly still a need for the subject-matter expert ‘human-in-the-loop’ to determine how to appropriately address those issues or fill the gaps in a way that is consistent with the company’s individual risk appetite.”

The survey also identified where practitioners feel that AI will make a difference. The authors asked a similar question of ChatGPT, which gave different answers. It isn’t, however what data set ChatGPT used, as this could be quite dated. For practitioners, the top three were:

  • Analyze risk and compliance in contracts (94%) (2nd by ChatGPT)
  • Assist in contract negotiations (88%) (5th by ChatGPT)
  • Generate contracts (87%) (3rd by ChatGPT)

ChatGPT ranked freeing up time for strategic work as the top answer, and practitioners ranked it fourth, with 84% saying that AI will help with this.

The case studies

The second part of the report should appeal to readers from the industries listed. Each case study is a summary of how AI is positively affecting either an enterprise or a sector. While the people behind the entries are not named, they are senior within their organisation and give some interesting insights about how AI can help. The case studies have a varied format. Some are a reflection of how a company has leveraged AI (banking, Multinational energy company), while others feature insights from consultants working in the industry.

What is useful about this section are the insights and actions that the commentators offer the reader. A partner at a leading consulting firm gave four practical insights about what they see in customers and then provided a call to action. They commented, “The future of AI in contracting and organizational strategy calls for a reimagined approach to participation and value creation.

“Stakeholders should not only engage with AI proactively but also advocate for a standardized and strategic integration of AI capabilities. Embracing the fear of failure and learning from it is essential for growth and innovation. By doing so, organizations can move beyond limited implementations and explore the full potential of AI in creating strategic value and transforming contracting processes.”

Enterprise Times: What does this mean

This is a well put together report that has a different layout than many others. It is very readable and contains a good mix of insights, information and advice. Some readers may consider each section quickly and decide whether it is the information they are interested in. However, while they may not read every section there is something in here for every business leader, whether a legal practitioner, IT leader or business leader.

With only a six-month gap between the two surveys, it will be interesting to see whether another report is produced in six months or a full year. What is clear is that AI is having a huge impact on the legal world, and that impact is changing quickly.

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