Most in-house legal teams have checklists of the key provisions that should appear in different types of contracts, and many also have employees who are assigned to manually go through and ensure those terms are included. These processes can be time-consuming and are far from fail-proof.
The contract lifecycle management (CLM) provider Ironclad says its new AI-powered playbooks will help legal departments more efficiently review and negotiate contracts, as well as ensure they can contain required provisions.
The technology detects and alerts users to clauses that should not be in an agreement and suggests alternative language. It also highlights key language that is missing and offers negotiation options based on a legal department’s specified guidelines.
Jason Boehmig, Ironclad’s CEO and co-founder, said the playbooks feature is the most exciting and innovative element of the CLM platform’s artificial intelligence-driven layer called Ironclad AI.
“Where Ironclad is on the leading edge is actually getting involved in the workflow, getting involved in the creation [of contracts] and delivering an insight at the moment at which that insight could help a professional knowledge worker make a better decision,” Boehmig told Legal Dive.
Common use cases
Ironclad’s playbooks feature, which was formally launched last month, is in beta mode currently and is expected to be made more broadly available in the coming months.
Cai GoGwilt, Ironclad’s co-founder and chief technology officer, said the playbooks technology is most frequently being used by customers to assist with both buy-side and sell-side contracts, as well as non-disclosure agreements (NDAs).
During a recent demo, GoGwilt showed how the tool could assist with a vendor agreement.
The feature first flagged that the governing law jurisdiction needed to be California or Delaware and that listing any other jurisdiction would require a higher level of approval. The technology then highlighted that a non-solicitation provision should not be in the agreement.
“Instead of the vendor agreement paralegal reading line by line, Ironclad AI has gone through and read the entire agreement, pulled out the key clauses, found out some additional information about those clauses and then consulted the playbook for the company about what's acceptable and what's not,” GoGwilt said.
This not only accelerates contract review, he said, but it also improves accuracy.
“If you're going through 10 or 20 of these as a human, it's very routine,” GoGwilt said. “When things are very routine for humans, we often get bored and start to miss things. The AI doesn't get bored.”
Additionally, as a company’s position on a certain contract clause has changed, Ironclad users can update a playbook in real time so the technology makes sure the updated provision is included in future agreements.
The software also brings in the right approvers to the platform at the time their approval is needed, such as looping in finance when the payment terms in an agreement are updated.
Mix of customers
Boehmig said the playbooks feature is poised to have a broad impact among the company’s customers because it can be used to assist with a wide array of contracts.
This aligns with Ironclad’s philosophy that contracts across industries are very similar at their core, so Ironclad aims to serve a wide swath of businesses.
“We're giving insights to chains of franchise restaurants, we’re giving insights to professional sports teams, and we're giving insights to global beauty companies,” Boehmig said.
One of Ironclad’s well-known customers is the global cosmetics brand L’Oréal, a company which has offered praise for the CLM platform’s AI-powered functionalities.
"When you're dealing with 20 to 30 page vendor contracts, the manual review process takes a massive amount of time – but it's critical work," said Charles Hurr, associate general counsel at L'Oréal. "Ironclad AI automatically reviews these contracts, flags language and clauses that don't work for us, and suggests L'Oréal-approved provisions to swap in. This cuts the review process from hours to minutes, improves our team's efficiency, and frees up time for the team to focus on more high impact work."
Earlier this year, Ironclad issued a report finding that its users have reduced contract turnaround times in 2022 by 60% compared to 2019.
The company’s co-founders said the platform plans to roll out additional AI-powered features in the months to come.
