The legal teams in modern enterprises have to manage countless responsibilities at once. For this reason, they have identified the need for various workflow automation tools that make their work simpler, smoother, and faster. One such tool is document automation software.
Document automation software can automatically execute the entire process of generating, processing, and managing documents. In the context of legal teams, these mostly mean legal documents but can also cover other supporting documents as well. These tools streamline the entire contract workflow, reduce manual efforts, and improve compliance by reducing errors. They also lower costs for the enterprise and have the potential to significantly transform it over time.
How Does Document Automation Work?
Legal teams have two options for managing their documents and workflows: they can either do it manually or use software specially developed for this. It has been found that the second option reduces manual efforts by up to 80%.
The software automates repetitive tasks like contract generation, version tracking, getting approvals, and ensuring that every document meets the compliance standards set by the enterprise. This technology-driven process for managing contracts is called “document automation” or “document process automation“.
The automation process begins with defining and selecting the right contract template and generating a first draft with it. This is followed by revisions, draft approvals, and the final signing of the contracts to make them legally enforceable.
What Does Document Automation Software Do?
As already mentioned, document automation software runs the entire process of creating and executing contracts, right from drafting to approval and execution, with little or no manual intervention. Its main function is to free the legal teams from having to handle this process manually. For enterprise legal teams, which typically handle hundreds, even thousands, of contracts, document automation software can be a lifesaver.
Other than helping in drafting and approval, document automation software also contains robust features that enable the team members to collaborate with each other in real time. It also maintains the version history, which enables them to track all the changes made and revert them if necessary.
What Is Contract Lifecycle Management Software?
Most document automation software now comes with integrated AI-powered features. These are known as contract life cycle management software (CLM).
These contain features that were unimaginable even a few years back. With the help of its AI, it can intelligently sift through thousands of past contracts and templates, uncovering all the relevant data for the contract under draft. Next, it automatically drafts the contracts and ensures that they are compliant with all the rules and regulations. It can also flag the risky clauses and send out notifications about important events and if any bottlenecks occur.
What Can Document Automation Software Do?
An AI-powered document automation software is extremely versatile and can automate the entire contracting process and not just some parts of the contract generation workflow. Here are some capabilities that stand out:
- Drafting and standardisation of contracts
Document automation software contains a robust library of clauses and contract templates that can be customised and paraphrased as per the needs of the enterprises where it is implemented. The AI can skim through these templates to find out the best ones suited for the contract being drafted and intelligently suggest clauses that can be included. This process helps avoid deviations and keeps contracts standardised.
- Risk management
The software can also flag the risky clauses, which enable the legal teams to rephrase them or avoid them altogether. They can also review the contracts quickly with the help of the AI. The result of these actions is the creation of robust contracts that can withstand the scrutiny of law.
- Collaboration
Legal teams can collaborate with each other using the document automation software to speed up the contract creation process.
- Contract approvals
The best AI tools facilitate the end-to-end contract creation workflow, starting from drafting to getting the contracts reviewed and approved. They contain built-in features that make it easy to digitally sign contracts, making execution a breeze.
- Document storage and retrieval
After a contract has been executed, it is digitally stored in the system safely. This makes it easy to retrieve them and search for information within them as and when required.
- Real-time notifications and alerts
The contract management software keeps a track of the key dates pertaining to every contract and sends notifications for renewal dates and other key events. This guarantees that the legal team doesn’t overlook any crucial deadlines.
Common Documents That Can Be Automated
Document automation tools are extremely versatile and facilitate the automation of various documents. These are some examples:
- Non-Disclosure Agreements (NDAs): These are standard forms that protect confidential information and require quick execution.
- Employment and Offer Letters: HR teams can generate personalised offer letters, terms of employment, and other legally binding documents within seconds.
- Sales and Purchase Agreements: Automatically pull client and pricing data for faster, error-free contract creation.
- Vendor and Supplier Contracts: Maintain consistency and speed up renewals in procurement processes.
- Service-Level Agreements (SLAs): Standardise deliverables and performance terms with minimal legal review.
- Lease and Licensing Agreements: Quickly produce agreements with predefined terms and clauses.
- Partnership or Collaboration Agreements: Ensure accurate, consistent terms across multiple parties.
Automating these contracts saves time, reduces errors, and keeps documentation compliant and consistent.
Business Benefits Of Using A Document Automation Software
For an enterprise handling multiple contracts at a time, managing them manually is practically not feasible. It leads to various bottlenecks and delays and increases the cost of contracting. As the enterprise grows, these problems can snowball into bigger ones and become significant roadblocks to doing business seamlessly. Using a document automation software removes most of these challenges and can bring in the following benefits for them:
- Saves time and improves efficiency:
The software makes the contract execution process faster by handling all the repetitive tasks on its own. Contracts can be drafted, reviewed, and approved in a fraction of the time using automated workflows.
It also improves the coordination between multiple teams involved in the contracting process by giving them alerts whenever they are required to do anything. As a result, the overall speed of contract execution improves, and so does the efficiency of the legal teams.
- Reduces errors and inconsistencies
The document automation software uses approved templates and standardised clauses to create contracts. This minimises inconsistencies and variations between contracts.
- Strengthens compliance
While creating the contracts, the AI runs scans to identify outdated clauses, missing terms, or incorrect details that can cause problems for the business later. If any such clauses are found, it flags them for review by the legal team. These stringent monitoring and quality checks act as an excellent way for the enterprises to reduce their legal risks.
- Cuts costs and prevents revenue loss
Managing contracts manually can be expensive and time-consuming for enterprises since it requires multiple team members and is prone to human error.
Any missed renewals, pricing errors or bottlenecks in the approval process can lead to financial losses. Automating the contracting process largely reduces the chances of these by providing visibility into each stage of the contract process. The efficiency brought in by a document automation system soon outweighs the cost involved in implementing it.
- Improves collaboration and system integration
Most document automation software integrates well with other systems commonly used by them, e.g., the CRM system, document editors, cloud drives, etc. It also brings together stakeholders from various departments, like legal, sales, procurement, and finance, into a single platform. This makes it easy for all of them to collaborate and comment on the contracts in real time. This enables the teams to work smoothly, prevents version confusion and shortens review cycles. All of these bring in tangible business benefits to the enterprise and improve its overall functioning.
Conclusion
With the complexities of the business and legal world growing rapidly, it is no longer practical for modern enterprises to manage their contracts manually. This is where document automation can make a real difference. It brings greater accuracy and consistency to the contracting process and helps legal teams execute contracts faster while reducing risks and costs.
If you are ready to simplify your contract workflows, take a look at Legistify’s Contract Lifecycle Management (CLM) software. It is designed to make contract creation, review, and approval effortless for modern enterprises.
Book a free demo today to see how Legistify’s CLM can transform the way your business manages contracts and delivers the full range of benefits discussed in this article.
