AI vs. Manual Contract Reviews: A Comparison

Contracts are the lifeblood of any business deal, and ensuring that contracts are clear, comprehensive, and aligned with your organization's risk and compliance profile is paramount. In the past, contract reviews were typically done manually. However, with the advent of artificial intelligence and advanced business solutions designed for analyzing complex datasets, more and more contract reviews are being assisted by AI technology. This article aims to examine and compare the benefits and drawbacks of both manual and AI-assisted approaches.

AI Contract Reviews

AI technology for contract reviews involves the use of machine learning algorithms to review and analyze contracts. This approach can provide several benefits to organizations. First and foremost, AI technology is much faster than manual reviews. AI-powered contract review software can analyze thousands of pages in a matter of minutes, compared to the days or weeks it might take for a human reviewer.

Another significant advantage of AI technology is that it can be highly accurate. Once a machine learning algorithm is trained on a set of contracts, it can identify patterns, inconsistencies, and potential problems in other agreements with a high degree of precision. This can help ensure that contracts comply with relevant laws, regulations, and market standards.

AI-powered contract reviews can also be cost-effective. While there may be some upfront costs associated with implementing an AI contract review system, over time, it can save companies money by reducing the need for manual reviews.

However, there are also limitations to using AI for contract reviews. One major drawback is that AI lacks human intuition. A machine learning algorithm may be able to identify inconsistencies and potential problems, but it cannot interpret the context of a contract in the same way that a human can. This can lead to missed nuances and other issues that could affect the interpretation of a contract.

Additionally, AI-powered contract reviews are limited in scope. They can only analyze the data that has been programmed into the algorithm, which may not encompass all the potential scenarios and outcomes that could arise from a particular contract.

Manual Contract Reviews

Manual contract reviews involve having a trained reviewer thoroughly examine the contract, analyzing each clause, term, and condition. This approach has several advantages over AI contract reviews.

Firstly, manual contract reviews allow for greater attention to detail. A trained reviewer can analyze each clause in a contract, looking for inconsistencies, ambiguities, and potential problems. They can also interpret the context of the agreement and apply their experience and judgment to identify any issues that may not be immediately apparent.

Another significant advantage of manual reviews is that they allow for flexibility in interpretation. Human reviewers can consider the specific context of a contract, including any external factors that may impact its understanding. This can lead to more accurate and comprehensive reviews.

Manual reviews also have some limitations. They can be time-consuming, with reviewers needing to dedicate significant time to review even a single contract. Additionally, manual reviews are subjective and can be influenced by the reviewer's personal biases, experiences, and knowledge.

AI vs. Manual Contract Reviews

Several factors need to be considered when comparing AI and manual contract reviews. Firstly, AI contract reviews are faster and more cost-effective, making them suitable for companies that need to review many contracts quickly. In contrast, manual reviews are more time-consuming but allow for greater attention to detail and flexibility in interpretation.

AI contract reviews can be highly precise in terms of accuracy, but they lack the intuition and context that human reviewers can provide. This means manual reviews can provide more nuanced analysis and interpretation of contracts.

Additionally, AI-powered contract reviews are limited in scope, analyzing only the data programmed into the algorithm. On the other hand, human reviewers can apply their experience and training to identify potential issues that AI may not be able to recognize.

AI and manual contract reviews have advantages and limitations. When deciding which approach to use, companies should consider their organization's specific needs, the volume of contracts they need to review, and the level of interpretation required. AI-powered contract reviews can be suitable for companies that need to review a large number of contracts quickly, while manual reviews may be more appropriate for companies that require greater attention to detail and personalized service.

As AI technology continues to develop, we can expect to see further advancements in AI-powered contract review systems. However, it is unlikely that AI technology will replace manual contract reviews entirely. Instead, we may see a combination of AI and manual reviews working in tandem, with AI technology providing fast and accurate reviews and human reviewers providing nuance and interpretation. By understanding the advantages and limitations of both approaches, companies can make informed decisions about which method is best suited to their needs.

TermScout provides state-of-the-art AI and human contract review services to help legal teams complete reviews faster and focus on more important tasks. Contact us today to learn more about our AI and manual contract review services!