Artificial Intelligence and Contracts


Standardized contract management processes are key to ensuring due diligence during any contract authoring and negotiation phase. However, given the sheer volume of contracts, organizations must manage reliance on traditional, inefficient contracting processes which becomes increasingly problematic. When done through traditional means (i. e. manual data-gathering), the contract drafting and legal review process can be arduous, error-prone and simply impractical. Lacunas and miscommunications are more likely to occur. This, in turn, may prolong the contract negotiation phase, adding to the workload of the lawyers.


Artificial Intelligence is a term that is highly misinterpreted in today’s society. It strongly transcends beyond simple computer commands. In the simplest term, Artificial intelligence (AI) refers to the simulation of human intelligence in machines that are programmed to think like humans and mimic their actions.

A contract is a promise enforceable by Law. The promise may be to do something, or to refrain from doing something. The making of a contract requires the mutual assent of two or more persons, one of them ordinarily making an offer and another accepting. Where then does the fusion between these two ideals happen? When it is designed to streamline data insertion, data extraction, data protection measures, and risk identification tasks with automated data entry and risk assessment mapping.

AI-powered contract management software transforms static contract documents and contract data into dynamic building blocks, that lawyers need for improved contract oversight, proactive opportunity identification and risk mitigation.

Artificial Intelligence is taking contract drafting and execution to the next level. Gone are the days of manual inputs and sifting through lengthy email threads. The use of AI technology has the potential to improve contract document management in any industry, no matter how extensive or complex a contract portfolio may be.[1]

There is a plethora of importance of AI to Lawyers in the preparation and execution of contracts. These are but not limited to;

  1. AI Software Can Provide Standardized Contract Templates

AI contract drafting is completed by providing the software with the ability to learn from past or similar contracts. The AI-powered software scans previous documents—identifying important terms and analyzing changes—and can draft a pertinent legal contract template in seconds. The lawyer can review the drafted contract, make changes, and then resubmit it to the AI software to learn which language qualifies as acceptable and what changes should be made. Any subsequent contracts will be adapted and improved based on the recommended modifications entered by the lawyer.

One of the most challenging areas of legal practice is that it continually changes. Every day the precedent expands, with thousands of opinions published nationally. All lawyers have an ethical duty to stay informed and on top of any new developments that may impact their clients. AI-created contract templates will always provide up-to-date language, a serious concern for lawyers in rapidly changing practice areas. AI can identify any existing contracts and modify them quickly to remain compliant, preventing a potential source of malpractice. Lawyers can draft contracts with the relief that their templates will never contain outdated language[2].

  1. AI Can Screen Existing Contracts More Effectively Than Humans

AI-powered software can screen existing contracts and pull valuable data with remarkable accuracy. Missing, incorrect, or contradictory language can make or break an agreement. AI can easily sort through existing contract examples and mitigate the possibility of a negative outcome. Aside from finding errors, AI can complete these tasks faster and more accurately than humans.

Although, AI cannot replace the judgement, empathy, reasoning, and creation of complex legal strategies that lawyers possess, it can, however, complement the work and free up valuable time to focus on higher-level work. AI can sift through thousands of contracts in mere seconds, cutting laborious hours for lawyers and reducing excessive fees for clients.

  1. AI Contract Drafting Provides Increased Clarity and Protection from Disputes

AI breaks down written contracts into readable, easily accessible data that can be analyzed and manipulated in endless ways. AI looks at contracts at a deeper level, associating each term as part of a whole. With a logical foundation, it can pull content from a broad portfolio of documents to produce valuable insights and advice. This allows for a detailed, objective review of all indexed contracts, providing unparalleled protection from due diligence, compliance issues, and contract disputes.

Contract disputes often arise due to a misunderstanding, errors or omissions, or a failure to clearly state the duties of each party. While you can’t avoid all disputes, AI provides an unprecedented ability to dodge the most common (and costly) causes. Contract disputes account for trillions of Naira each year, putting a heavy burden on businesses, our legal system, and our economy. AI can drastically cut dispute costs by bringing inaccurate or unclear terms to the attention of lawyers before they result in the basis of litigation.

  1. AI Can Increase the Volume of Contracts a Firm Can Negotiate and Execute

One of the biggest challenges that firms and transactional lawyers face in Nigeria today is the overwhelming number of contracts involved in representing clients, particularly commercial businesses. Ineffective contracting can severely impact the profitability of businesses. Firms can lose up to 40 per cent of value by not approaching contract creation, negotiation, or execution efficiently. The job of creating, editing, and updating contracts is repetitive, tedious, and perfectly tasked for AI-powered software. With the help of AI, lawyers can handle more work more accurately while reviewing contracts more quickly (thus increasing the number of contracts they can review) and reducing the risk of costly contract disputes.

In essence, AI complements the work of lawyers by picking up the slack, providing assistance in data-driven tasks, and leaving context and detailed legal analysis to humans. This is especially good news for mid-sized or boutique law firms that do not have staff members to spare. AI is designed to handle large volumes of tedious work at a lightning-fast pace, allowing attorneys to pick up where they left off.


With the imminent collision of legal practice with AI, the hackneyed view that a lawyer is the “gold standard” of the legal profession is erroneous. Such a perspective circumscribes innovation in the legal profession as it makes it difficult for lawyers to accept AI as “a helper” rather than a threat to the status quo. The emergence of Artificial Intelligence in the legal space debunks the myth that “lawyers are the gold standard of the legal profession.” This myth suggests that only tasks performed by lawyers are qualified as ‘bespoke’ for legal services.

The versatility of technology will bring down the previous barriers to legal practice as diverse professionals will finally be able to solve law business challenges. On the part of the lawyers, the assistance of an AI-driven solution would make them extraordinaire. Lawyers collaborating with AI is the ultimate touchstone – the birth of a new era in legal practice. Undoubtedly, there will be an elimination of specific legal jobs, but more jobs will emerge with the legal tech disruption. The future of law equips lawyers with the resources to create quality work that clients truly appreciate. The new gold standard also positions lawyers to level up to their non-legal competitors – the Big Four, start-ups and digital companies.[3]


  1. Sean Heck, ‘What is AI-Based Contract Management?’ (2021)
  2. Rachel Vanni, ‘How AI Accelerates the Legal Contract Drafting Process’ (2020),legal%20contract%20template%20in%20seconds.
  3. Jeremiah Ajayi, ‘Artificial Intelligence in the Nigerian Legal Industry: A Threat or an Opportunity?’ (2020) accessed 23 July 2022

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