At a time when legal teams are inundated with data, the lack of clear and concise information and how to use that data to make transformational decisions remains elusive to most stakeholders. In recognition of this dilemma, technology is rapidly evolving to capture vast stores of “big data” and analyze them in ways that provide legal with new insights into their operations to manage risks and drive the right kinds of change to improve results. Contractual agreements, a vital and often overlooked corner of operations, can provide legal teams with business intelligence to help reduce risks, uncover waste, and improve business performance throughout the entire enterprise.
Data Helps You Achieve Complete Contractual Visibility
Contract intelligence and AI-driven technology leverages the data of contractual agreements to create analytics for improving enterprise operational performance. The benefit of turning contract terms into actionable data allows for everyone across the enterprise to have a 360-degree view of the risks, rights, and obligations within their agreements. Legal teams need this perspective in order to understand the details, when needed, while maintaining the ability to put the results in context from an enterprise view. Once full visibility into each and every contract has been attained, legal departments can team up with key stakeholders to put a crisis management plan in place, determine if contracts need to be re-negotiated in the company’s favor, and much more.
The Importance of Visibility Before a Crisis
It may be obvious that visibility before a crisis is important! Who wouldn’t want to know how a crisis could unfold and thus limit the costs involved in resolving the matter? A better question may be: why doesn't this happen more often? The surprising answer is that firms underestimate the risk of encountering a convergence of events that perpetuate a crisis. Many people fail to appreciate what it would take to respond.
Contract intelligence can be used to provide important analytical data to create “what-if” scenarios to assess the scope of liability in specific events. Organizations who fail to prepare before a crisis lose credibility when responses to basic questions are incomplete or worse yet, not easy to answer with a degree of confidence. Timely information and confidence in the accuracy of that data often determines success or failure in times of a crisis.
It is helpful to look at real-life trends in contract risk when modeling crisis management mitigation plans.
Before taking any action, firms must make an honest assessment about the tools, resources and people who manage contract risk. In some cases, an external consultant would be useful in providing an independent assessment of contract risk management. However, this can be very costly, and if done manually can be prone to human-error. On the other hand, many firms are well aware of the pain points in contract risk, but lack executive stewardship to drive an enterprise approach and evaluate enterprise platforms to be implemented in-house.
Legal teams who adopt an AI-driven platform to manage mundane tasks of analyzing data can put their focus back onto larger enterprise tasks and risk management plans. The future of AI technology and machine-based learning provides legal teams with new and advanced tools for managing contract portfolios more efficiently than ever before.