Top 7 Things You Need to Know to Negotiate Contracts in the Era of AI

Top 7 Things You Need to Know to Negotiate Contracts in the Era of AI | A World Commerce & Contracting survey found the average Fortune 1000 company has between 20,000 and 40,000 active contracts at any given time.  This is a huge heap of documents and managing them can be a real nightmare.

To aid with this, top contract negotiation training classes recommend throwing artificial intelligence (AI) into the mix. Here’s how this technology can reduce your risks and help streamline your workflow.

Flags Problematic Language

Henry Kissinger, hailed as the father of American diplomacy coined the term “constructive ambiguity.” The term refers to using less-than-clear language to create opportunities for those involved in a negotiation. While famous, this method could be a part of the mistrust, delays, and rejection of contracts and treaties around the world which could lead to longer negotiations and lack of resolution, such as what occurred during the Syrian-Israeli peace efforts of the 1990s.

AI-driven contract management software helps to remove this roadblock by identifying language that could create issues during contract negotiations. If similar terms are used in future contracts, the AI can also flag those phrases so you can consider replacing them.

Spots And Ranks Risk

AI can evaluate the language of an agreement to find words or phrases that may expose you to risk. Then, it will calculate a risk score for the document.

In addition, AI can suggest which phrases to strike out and which words to use instead. That way, you’ll be up to speed on the risk ranking of a contract before negotiations begin. Also, the exacting character of AI means you’re more likely to be safe from common pitfalls in contract negotiation. 

Automates Contract Negotiation Processes

Besides ensuring consistency across document versions, you can utilize AI to carry out simple tasks. These preset actions will save precious time, and in the end, solidify your business’s bottom line. For example, Iltanet says AI can help reduce review time by almost 70%.

As per contract negotiation training courses, the tasks AI can complete autonomously include:

• Data analysis
• Document review
• Feedback
• Contract drafting
• Contract Comparison

Enables Easier Access

By using natural language processing (NLP), AI can organize contracts based on the language used in them for easy access. Entering a search query with specific keywords will filter likely document versions. Also, AI can summarize wordy agreements, offering you an overview of many contracts at once.

As you continue to use AI to manage contracts, its algorithm will gain training from your track record. With time, you can start enjoying the intelligent search feature that curates from your past interactions and feedback. 

Saves Time

A KPMG study found that it takes 30 or more hours to negotiate a solid deal as was witnessed during Microsoft’s acquisition of LinkedIn, a deal that took multiple months of back-and-forth to close. Factors such as valuation, contract reviews, proofreading, and regulatory considerations can knock a negotiation out of schedule.

AI can analyze large data sets and spot any issues at the snap of a finger. This power can help predict the outcome of a deal before the negotiations go too far. What’s more, instead of starting each negotiation on a blank canvas, AI can create a template based on what worked for you in the past.

Ensures Legal Compliance

Using AI to research laws and best practices of companies and states can ensure that you negotiate without crossing legal red lines. By training AI to monitor compliance at all stages, you’ll see alerts of your own or your partner’s potential violations in real time. This can keep you and other stakeholders from committing costly negotiation mistakes.

For example, AI can raise a red flag if it spots inconsistencies such as conflict of interest, price-fixing, or breach of antitrust laws in a contract. In the case of doubt, AI can also clear the air on whether specific terms are legal. 

Offers Deeper Insights

Knowing what makes your partner tick is the first step to winning a negotiation. For example, AI can use NLP to analyze emails and chat logs to pinpoint your negotiation partner’s feelings and emotions. It can also help you dig deeper into your partner’s likes and dislikes.

In addition, AI can keep you abreast of market trends. This can help you tailor negotiation strategies for a win-win outcome. It can also enable you to make the most of contract opportunities within the law’s safety.

All said, AI can be a nifty tool for streamlining the contract negotiation process. With ongoing training, the technology can also offer data-driven insights to help you see opportunities and risks in a contract, making you better prepared from the start. 

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