Three Practical Ways Legal Teams Are Using AI to Manage Contracts

Artificial intelligence has moved from theory to practice in corporate legal departments.

Because contracts are made of natural language, AI’s ability to parse, classify, and analyze text is redefining how agreements are drafted, reviewed, and monitored—accelerating work while tightening risk controls.

With that said, the task of identifying the right use case to apply AI to is nontrivial. AI deployments require dedicated attention, and realizing ROI from those deployments is critical for securing future budget. 80% of c-suite leaders surveyed by Icertis said it is difficult to determine which AI investments will have the biggest ROI for their business.

At the same time, there is general recognition that waiting on AI is not an option – in the same survey, 83% of respondents expect AI agents—generative AI systems set to perform specific tasks--to negotiate customer or supplier deals on behalf of the business within the next 12 months.

83% of c-suite leaders expect AI agents to negotiate customer or supplier deals within the next 12 months.

To help you navigate these new waters, we have pulled together three practical ways we are seeing legal teams like yours applying AI to their contracts and realizing ROI from it.

1. Real-Time Risk Review

Finding risk in contracts can feel like the proverbial needle in the haystack. Massive amounts of benign language nonetheless require close review just in case nonstandard, risky language has snuck in. This reality lengthens review cycles, drives up costs, and introduces an element of human error as busy legal teams struggle to keep pace with the demands of the business. Leveraging AI to triage high-volume, low-risk contract review was quickly identified as an obvious use case.

AI can compare incoming contracts against pre-approved playbooks and automatically assign a risk score to each clause.

Packaging leader ALPLA applied such a system for its NDA review process, using a red, yellow and green “stoplight” system to guide reviewers.  Chief Legal Counsel Dr. Christian Sparl notes that AI makes risk reviews fast and intuitive.

“They just need to understand red, yellow, or green to know which contracts need review,” he notes.

With AI, ALPLA has been able to reduce outside legal costs by an astounding 60%.

With AI, his team has been able to reduce outside legal costs by an astounding 60%.

Impact: Lawyers focus their attention where it matters most, reducing wasted review time while ensuring high-risk provisions never slip through.

2. Surgical Redlining

Of course, when non-compliant language is identified, legal teams need to replace it with language that better serves the business. Here, too, AI is delivering in big ways.

Beyond triage, AI can now recommend precise word-by-word redlines to bring agreements in line with corporate standards. This matters as demand for legal services continues to climb and teams must find ways to work quicker and more efficiently—more than 80 percent of legal departments expect rising demand, and 85 percent of general counsels anticipate increased corporate risk (CLOC).

AI-powered redlining tackles this challenge head-on, a topic that was explored in detail during a recent a recent Icertis-hosted webinar on the three biggest contract negotiation/redlining headaches AI addresses

Impact: Legal teams cut negotiation cycles and outside-counsel spend, meeting growing workloads without adding headcount.

3. Portfolio-Level Contract Analytics

It’s a common misunderstanding that legal’s responsibility with contracts ends at execution.

While it’s true that the responsibility of fulfilling contractual obligations falls on operations teams, legal still has a huge stake in post-signature contract visibility. AI supercharges that visibility through the ability to review massive contract portfolios at scale.  

AI can surface critical trends across thousands of agreements—such as identifying every customer contract containing a Termination-for-Convenience clause, a clear commercial risk. HERE Technologies, for example, uses AI-driven analysis of its sales contracts to deliver actionable commercial insights to business leaders, turning static documents into a source of enterprise value.

Impact: Legal departments evolve from risk managers to strategic advisors, informing pricing, procurement, and revenue strategies with data that was previously unreachable.

A Key Opportunity for Legal

As artificial intelligence continues to reshape the legal landscape, departments that embrace these innovations are finding themselves not only keeping pace, but leaping ahead. By transforming redlining into a strategic advantage and unlocking meaningful insights from contract portfolios, AI empowers legal teams to drive efficiency, elevate their role, and proactively shape business outcomes.

Want to see contract AI in action? Check out our recent webinar: 3 Common Contract Negotiation Challenges – And How AI Fixes Them.