Why Modernising Contract Drafting and Review Processes Matters for Business Growth

Efficient contract management processes are crucial to ensuring a company’s growth and competitiveness. 

Contracts are the backbone of business relationships, establishing the legal framework for transactions, partnerships, and operational workflows. In turn, professional services firm EY has found that 94% of 170 businesses surveyed are working to transform outdated and inefficient contracting processes. 

Their aim is to alter the way they draft, handle, and store contracts to streamline operations and cut costs. For businesses looking to scale and thrive in a competitive market, modernising contracting processes is not merely an option—it’s a necessity.

Furthermore, research stresses the importance of efficient contract management. Data from the World Commerce and Contracting Association reveals that poor contract management costs businesses up to 9% of their annual revenue. 

In the UK, where the business landscape is marked by rapid change and regulatory complexities, this figure highlights a significant challenge. Companies that fail to modernise their contract management processes are at a distinct disadvantage, missing out on potential savings and growth opportunities.

Downsides of traditional contract review processes

Traditional contract review processes are often laborious and inefficient, relying on a patchwork of programmes such as word processing software, email, and spreadsheets. Typically, a contract passes through multiple hands—legal teams, department heads, and external stakeholders—before it is finalised. This manual approach is time-consuming but also costly. For example, an article from Consultancy.uk found that the average loss for businesses without a fully automated agreements process is over £10 million a year, while a staggering 28% of firms cited losses of £1 million or more as a result.

Moreover, the reliance on several disconnected programmes can create communication silos, where crucial information is lost or misunderstood. This can lead to delays, increased legal fees, and, in some cases, supply chain issues that affect business opportunities. According to the Chartered Institute of Procurement & Supply (CIPS), on average, 26% of large businesses in the UK were late in paying suppliers, delaying contract completion that ultimately risked their reputation among suppliers. 

These inefficiencies extend beyond just time and cost. In today’s competitive market, businesses need to be agile, responding quickly to changes in the market, regulations, and customer needs. Traditional contract management processes, with their inherent delays and risks, hinder this agility, making it difficult for businesses to scale and grow.

AI-powered solutions

As businesses recognise the limitations of traditional contract management, many are turning to AI-powered solutions to streamline their processes. In a Sky News Daily podcast, a leading researcher in artificial intelligence, Professor Stuart Russell, discussed AI's strengths and its potential for disrupting various industries. He compared using natural language processors like ChatGPT to playing chess against a computer capable of looking farther ahead than humans. In the legal sector, a Verdict article indicates that AI is already showing promise, able to generate legal documents, and even use predictive analytics to estimate case outcomes. 

One such tool that has gained prominence in the UK legal tech landscape is Definely. This AI-powered platform simplifies the contract drafting and review process, offering features such as automated clause identification, real-time editing, and advanced search capabilities. Definely allows legal professionals to focus on high-value tasks, rather than getting bogged down with repetitive, low-value activities.

For instance, the platform’s AI-driven clause identification reduces the risk of overlooking critical legal terms, a common problem in manual reviews. Moreover, Definely’s ability to integrate with existing legal systems and databases ensures that all relevant information is accessible in one place, reducing the likelihood of errors and miscommunication.

Another notable AI tool is Skej, a scheduling and task management platform that uses AI to automate and streamline business processes. While not exclusively focused on legal contracts, Skej’s capabilities in managing deadlines and coordinating team activities can enhance the efficiency of contract management. By automating administrative tasks and ensuring that key dates and milestones are met, Skej helps businesses stay on track, reducing the risk of costly delays and missed opportunities.

The advantages of modernisation

Modernising contract drafting and review processes has numerous advantages that directly impact a company’s ability to scale and save on costs. Firstly, when these processes are streamlined, businesses can decrease the time it takes to finalise contracts. According to a Forrester study, organisations that implement AI-powered contract management systems can reduce contract cycle times by up to 80%. This accelerated pace allows companies to seize opportunities more quickly, negotiate better deals, and improve overall business agility.

Secondly, modern contract management systems help businesses save on legal costs. Traditional contract reviews often require extensive input from legal professionals, which can be expensive. A report from Gartner cited by World Commerce & Contracting estimates that these costs can set businesses back by as much as $2.7 million (£2.04 million), on average. With AI tools like Definely, routine tasks are automated, minimising the need for extensive manual reviews and cutting legal costs. 

Finally, automated processes reduce the administrative burden on employees, allowing them to focus on more strategic tasks that drive business growth. This improves productivity and boosts employee satisfaction, as workers are freed from the monotony of manual contract reviews.

Traditional contract drafting and review processes are no longer sufficient to meet the demands of modern business, leading to delays, increased costs, and missed opportunities. By modernising these processes with AI-powered tools, businesses can enhance their operational efficiency, reduce costs, and better position themselves for growth. As the UK business landscape continues to evolve, those who embrace these innovations will be the ones to thrive.

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