Blog  |  April 10, 2024

Unlocking the Value of Your Contract Data

By effectively extracting data from contracts, organizations can gain valuable insights into their legal and financial obligations, opportunities for negotiation, and areas of risk, thereby making informed decisions that align with their strategic goals.

Understanding the contents of your contracts is crucial for several reasons, as contracts outline the rights, responsibilities, and relationships between parties. Here are key elements to pay close attention to in your contracts:

  1. Parties Involved: Know who exactly is bound by the contract, including any subsidiaries or affiliates. This helps in understanding responsibilities and entitlements.
  2. Scope of Work or Deliverables: Clearly defined expectations help prevent misunderstandings. It’s important to know what services or products will be delivered, how, and when.
  3. Pricing and Payment Terms: Understanding the financial aspects, including fees, payment schedules, and conditions for any additional charges or rebates, is crucial for financial planning and dispute avoidance.
  4. Term and Termination: Know the contract’s duration, how it can be renewed, and under what conditions it can be terminated. This helps in planning and managing the business relationship.
  5. Confidentiality Clauses: Protecting sensitive information is critical. Understand what is considered confidential and the obligations for both parties to protect it.
  6. Liability and Indemnification: It’s vital to understand each party’s liabilities and indemnification rights to assess risks properly.
  7. Dispute Resolution: Know in advance how disputes will be resolved (e.g., arbitration, mediation, litigation) and under what law and jurisdiction, to manage conflicts effectively.
  8. Force Majeure: These clauses free parties from liability or obligation when an extraordinary event or circumstance beyond their control occurs. Understanding these can be crucial in unpredictable situations.
  9. Amendments and Modifications: Understand the process for making changes to the contract. This ensures that any adjustments are properly documented and enforceable.
  10. Compliance and Legal Requirements: Ensure the contract adheres to relevant laws, regulations, and industry standards, including data protection and privacy laws if applicable.
  11. Intellectual Property Rights: Clearly define who owns what intellectual property created before and during the contract to avoid disputes over IP rights.

Understanding these elements can help in negotiating better terms, avoiding legal pitfalls, and leveraging the contract for maximum benefit. To understand these critical elements, you need to extract this information from your contracts.

Extracting data from contracts can be a meticulous task, especially if dealing with a large volume of documents. The process involves identifying, collecting, and managing the information contained within contracts to make it accessible and actionable.

The “old” way of finding this information was by manual extraction. Reading the contracts and extracting the key information into a spreadsheet or database. A very labor-intensive process riddled with the potential for human errors. And, not suited to organizations with a large volume of contracts.

The “new” way to extract information is automated and can streamline the extraction of data from contracts, using technology and CLM software, which help extract and organize key data points from your contracts. Advanced solutions employ NLP and AI to understand, interpret, and extract relevant information from contracts. These technologies can recognize and categorize contract clauses, terms, and obligations, significantly speeding up the extraction process and increasing accuracy. With the advances in technology and AI, automation can extract bulk information, saving you time, money, and valuable resources.  Extracted data can then be reviewed and fine-tuned by legal professionals to ensure accuracy and relevance.

If you do employ a CLM and AI to extract contract data, not all CLMs and implementation partners are equal. In our upcoming blogs, we’ll explore how CLM revolutionizes business operations, orchestrating lifecycles and empowering innovation through contract data insights and automation. Then, we’ll discuss why so many CLM implementations fail, and offer some guidance to navigating the complexities of enterprise CLM implementations. We invite you to stay informed and join the conversation. If you have questions, insights, or thoughts to share, please don’t hesitate to reach out.