For many companies, a contract is seen as something to be signed, filed away, and forgotten about until something goes wrong. Yet when that something does go wrong, it is often a mad scramble to find the necessary documents to understand the implications for business.
Tragically, the COVID-19 pandemic is bearing this out. As the virus spreads and containment efforts change by the day, companies with global operations need to understand who they are doing business with and on what terms. While contracts are the single source of truth for this information, many companies have no single system of record to reference in order to analyze these documents.
This is not the case, though, for companies that have digitized their contracting processes and deployed an enterprise-wide, AI-infused, contract management platform.
With AI, digitized contracts can be analyzed—not only on a case-by-case basis but at scale—to quickly surface risks and provide a holistic view on contractual relationships in ways that are simply impossible via manual review. Due to the very nature of AI, queries run against contracts do not need to be standardized within the system but can address complex questions specific to the company and the situation.
As Icertis customers take stock of COVID-19, here are examples of a few on-the-ground questions they are using the Icertis Contract Management (ICM) DiscoverAI application to answer:
Which of our contracts contain force majeure and/or business continuity clauses, and do those clauses contain language relevant to pandemics and/or quarantines?
Do our client service contracts allow our employees to deliver those services remotely from home in the case of office closures?
Which of our contracts require employees to be in a specific geographic location to work (for example, due to the handling of sensitive data)?
What suppliers do we have in Italy (or any other affected geography)? And, do we have suppliers that are not in affected geographies that we might be able to pivot to quickly?
Can we postpone our events without financial consequences from our venues?
Even in the best of times, these kinds of contract insights are extremely valuable, and we’ve been evangelizing the need for companies to have “always-on” contract monitoring (contrary to the belief noted above, contracts are not only useful when things go wrong).
Now, though, this information is must-have, as evidenced by best practices and legal guidance now being shared by many law firms focused on what contract language companies should be reviewing in light of COVID-19. This is where best practice and process collide.
Some clients, in an attempt to follow this good guidance, will be at a disadvantage as they manually review contracts.
If left to humans going through contracts stored on shared drives or disparate/unconnected networks, this kind of review is beyond difficult. And, as large swaths of employees transition out of their offices to work from home for their safety, accessing physical filing cabinets becomes impossible.
Meanwhile, those companies with an enterprise contract management system infused with AI are able to incorporate this legal guidance quickly and at scale. Cloud-based contract management allows remote colleagues to work off one source of truth, assisted by AI able to crawl through volumes of agreements to, for example, surface language related to specific geographies or identify affected clauses (like force majeure).
Again, these are not hypothetical scenarios, but real queries Icertis customers are running against their contracts. Surely more will arise as the situation develops across the globe. And after the COVID-19 pandemic passes, another “black swan” event will be in the offing.
Let us know what queries you are running on your contracts. What changes to your agreements or to your contract management processes are you contemplating? No matter how well prepared you were for this crisis, what’s important is to use the lessons learned to prepare for the next one.
Icertis Is a Leader in Gartner’s First Magic Quadrant for Contract Lifecycle Management
Icertis is proud to be named a Leader in the first ever Gartner Magic Quadrant for Contract Life Cycle Management (CLM) based on its Completeness of Vision and Ability to Execute. Gartner evaluated 12 vendors on 15 criteria and positioned Icertis furthest right for its completeness of vision.