Legal contracts are essential for organizations because they create a formal agreement between parties, clarifying their rights, duties, and expectations.
For legal teams, contracts act as a protective tool. They help prevent misunderstandings and disputes by clearly defining the terms of an agreement.
This offers security and a clear way to seek resolution if issues arise.
This blog discusses common contract mistakes legal teams make and examines how AI is changing contract management for these teams.
Legal teams sometimes draft contracts using unclear language or leave out important terms. This can lead to costly mistakes. Though it may seem harmless during the drafting phase, this lack of clarity can result in significant and expensive problems later on.
| Cost Category | Average Cost Range |
| Attorney Fees | $250 – $1,000+/hour |
| Court Filing & Admin Fees | $100 – $500+ per filing |
| Discovery Costs (per case) | $5,000 – $2,993,567+ |
| Expert Witness Fees | $250 – $1,500+/hour |
| Total Litigation Cost (per dispute) | $20,000 – $500,000+ |
Source: US Courts Website
AI-first legal operations software can contracts and flag unclear phrases that might cause problems later.
By removing disputes over interpretation, AI saves legal teams millions in costs.
AI not only points out vague language, but it can also suggest standard wording based on previous contracts, regulations, or best practices.
This promotes consistency and lessens subjectivity.
Some advanced AI legal management softwares use over 200 million cases to examine historical contract disputes in the industry.
They pinpoint which unclear terms caused issues in the past and flag them in future contracts.
Manual legal contract review processes are outdated. Companies that still rely on these processes face various issues, including
When a deal gets stuck in legal review, revenue recognition is delayed. This puts the business at risk of losing the deal to a competitor that moves more quickly.
Repetitive tasks keep lawyers from focusing on the important, complex legal matters they were trained for. This can lead to low morale as frustrated professionals seek more satisfying roles.
Research from LegalTech News also indicates that 60% of contract errors come from human mistakes, often leading to disputes, financial losses, and damage to reputation.
While there is an initial investment in AI technology, the long-term cost savings are substantial.
By automating routine review tasks, businesses can rely less on costly external counsel and improve the productivity of their in-house legal teams.
The boost in efficiency and accuracy also helps to lower risks, preventing expensive legal disputes in the future. Platforms like Legistify’s Contract Lifecycle Management Software, can cut review time by 30 to 50 percent while minimizing risks related to ambiguity.
Manual data extraction and analysis of contracts is a big problem for legal teams. It wastes time, raises costs, and creates significant risks.
Instead of giving strategic legal advice, lawyers get stuck with the boring, repetitive job of searching through documents for key terms, obligations, and dates.
This wasted time can delay the launch of a new product by 6.5 days, leading to millions in lost revenue.
This allows legal teams to focus more on strategic tasks instead of administrative work.
Going through thousands of contracts by hand makes it hard to catch every risk or deviation from a standard approach. AI systems can also learn from a company’s internal policies and a large dataset of contracts to flag high-risk clauses, inconsistent terms, or missing information.
For example, Legistify’s legal tech software is trained on 200 million legal cases to identify potential issues in legal contracts.
The old-school method of managing contracts through email, word documents, and shared drives is not only inefficient but also a major source of risk and a significant bottleneck for the business.
In a legal dispute, it is essential to provide a clear, tamper-proof record of every change, comment, and approval. Manual processes, like saving “v1,” “v2,” and “v3 Final,” do not offer this important audit trail.
AI-powered contract lifecycle management (CLM) platforms, like Legistify’s , aim to solve these issues by centralizing and automating the entire version control process.
A CLM system serves as a secure central repository for all contracts. Every draft and finalized version is stored in one place. This reduces the risk of a lawyer working on a local copy that isn’t the most recent version.
Every change, comment, and review is automatically logged in a complete audit trail. An AI-powered system not only shows you the latest version but also gives you a full history of the contract’s evolution.
This includes who made a change, when they made it, and what the change was, creating a solid record for legal defense and compliance.
Manually tracking contract renewal dates poses a significant financial and operational risk for legal teams.
Without a centralized, automated system, companies face various costly issues, such as being stuck with unfavorable terms or losing valuable clients or vendors.
Legal teams often depend on manual methods like spreadsheets and calendar reminders, which are very prone to human error.
Also Read: Contract Renewal Automation
AI-powered document management softwares aims to directly tackle the risks of manual renewal tracking. AI uses Natural Language Processing (NLP) to read and extract important dates from every contract, including renewal, termination, and notice dates.
This process, which would take a human hours, gets done in minutes, with a near-perfect accuracy.
With all data in one place, AI platforms like Legistify can send automated alerts to relevant stakeholders well before a deadline.
This reduces the risk of human error and gives legal, finance, and procurement teams plenty of time to review, renegotiate, or terminate a contract.
