Best AI Contract Review Software
The rise of Generative AI in 2023 has led to a surge in AI contract review solutions. AI contract review is aimed squarely at helping legal teams or business teams review and negotiate contracts with consistency, accuracy, and speed, all at scale.
However, not all of these tools are designed for the same purpose or audience. Some focus on the needs of legal teams, while others cater to business teams, particularly those in financial services.
Additionally, the capabilities of these tools can vary significantly. Some may offer more advanced features or greater accuracy than others. As such, it's important for teams to carefully evaluate their options and choose a solution that best fits their specific needs and requirements.
In this article, we'll take a closer look at the different types of AI Contract Review software available, explore their key features and benefits, and highlight some of the top solutions in the market.
Categories of AI Contract Review Software
The growing need for efficient and accurate contract review processes has prompted the emergence of various categories of AI contract review software in legal tech. As budgets tighten, headcounts remain stagnant, and legal priorities continue to grow, legal teams are looking for solutions to automate tedious work. Contract review is one such process, where line-by-line review and manual redlining is well suited for automation. Contract review software leverages AI to enhance different aspects of legal analysis and improve decision-making.
Below are the categories you need to understand before selecting software:
Lawyer-Trained AI: Superior Tech Requiring Minimal Oversight
Lawyer-trained AI contract review providers combine the speed of artificial intelligence with the expertise of legal professionals. These providers invest in training AI algorithms on vast amounts of legal data alongside expert feedback and training from experienced lawyers. This combination has proven to increase both quality and accuracy. Here at LegalOn, we believe that lawyer training, pre-built playbooks, custom playbooks and data privacy set us apart from all competition and all categories.
How to Identify Lawyer-Trained AI Products
Distinguishing a lawyer-trained AI contract review product involves learning about its training data, testing methods, and the involvement of legal experts in the development process. These solutions have legal professionals on staff who constantly improve the software to prevent AI “hallucinations,” thus improving the overall quality of their product.
Considerations for Lawyer-Trained AI Contract Review
Like any emerging category, not all companies offering lawyer-trained AI have reached the same level of sophistication. So what should you consider?
- Investment in lawyer training: Some companies invest more in lawyer-led training and validation than others. More training generally means more consistency and accuracy. It’s important to understand how much lawyer training has been incorporated into the product and the accuracy of redlines coming out of the software.
- Pre-built and custom playbooks: Some lawyer-trained AI solutions have invested in creating pre-built playbooks for legal teams to use on day one. This can be a significant value-add because many legal teams have yet to formalize contract playbooks. Others only offer services to codify playbooks in their software, increasing cost and time to value. It’s important to understand what is pre-built and how long it takes to build custom playbooks.
- Data privacy and/or security controls: Some lawyer-trained AI solutions take different approaches to data privacy and security controls. This is often an important consideration for buyers and should be understood as part of your due diligence. Given the sensitivity of contracts and business information, legal teams should look at security certificates such as SOC 2 Type II, and ensure that no data is used to train large language models (LLMs).
Contract Lifecycle Management (CLM)
The first question you really need to answer is this: Do you want a Contract Lifecycle Management system or an AI contract review solution? This question is important because there are a number of players in the CLM space, and exploring CLMs involves dealing with a very different set of companies which we are not going to cover in this article.
Many legal teams will find CLMs complex and expensive to implement because they’re meant for the largest of enterprises. Also, while some CLMs include contract review features within their larger solution, many require users to develop and code their own AI playbook, causing frustration around big implementations both for contract management and contract review.
A quick Google search will help indicate that CLM systems represent an entirely different category of software solutions commonly used for managing the entire lifecycle of contracts, from creation and negotiation to execution and renewal.
How to Identify CLM Products
CLM systems major in contract management capabilities (such as post-signature obligations) and minor in AI contract review. As such, CLM benefits are more squarely focused on operational efficiency, particularly post-signature.
That said, some CLMs have recently invested in building out features targeted at AI contract review, but their features tend to be less robust and harder to use than pure AI contract review software.
Considerations of CLM Systems
Despite their strengths in contract management, CLM systems may be a poor choice for many legal teams:
- Higher price point: Given the broader feature set and orientation towards enterprise buyers, the price point for CLMs is frequently well above 2x the cost of a stand-alone AI contract review software. Implementation and ongoing management also often requires full time employees and hiring staff who are experts in a specific CLM system.
- Longer implementation timeline: Most buyers should expect to go through a multi-month implementation process that includes tagging and moving all historical contracts into the new system. This can also entail hiring implementation specialists and add-on services to navigate this cumbersome process.
- Playbook investment: Similar to implementations, many CLMs require customers to go through a heavy process to train and build out custom playbooks for every contract type. Many customers share that this process takes two to six months.
AI-Enabled Services: The Human-AI Combo
If you’re looking to outsource aspects of your business fully, you might want to explore AI-enabled services, also often referred to as “tech-enabled services.” These businesses use both AI and humans to deliver solutions to clients and some companies are applying this model to contract review.
For many legal teams, outsourcing contract review is not practical. However, some financial services businesses explore that approach with companies likand Ontra.
How to Identify AI-Enabled Contract Review Services
Distinguishing an AI-enabled contract review service provider involves a quick glance at their website. You’ll quickly notice phrases like “Managed Services” prominently displayed. These companies have legal professionals on staff who are ready to do your contract reviews for you.
Considerations for AI-Enabled Contract Review Services
Not all companies offering AI-enabled contract review services take the same approach or have the same depth. So here are a few things to note:
- Financial services-focused: Looking at the logos and case studies, you’ll notice that many of them are catering to financial services companies. As such, the software is geared towards contract-types like NDAs.
- Custom playbooks are expensive: Customers who need playbooks beyond NDAs will need a custom playbook built by legal and product teams. Custom playbooks are a more expensive product and typically take weeks or months to build.
- Managed services: These companies focus on managed services. Think of them as an outsourced team of experienced lawyers who use AI or other automation tools to assist in their review. The lawyers doing the review are often based abroad, in India, Poland, or South America, and ensuring they review according to your specific preferences can involve a lot of upfront time training and/or writing down very specific rules to follow for all likely negotiation scenarios.
GPT-Wrappers: Basic AI Requiring Significant Oversight
If you’re looking for AI contract review, one option is a user interface that interacts with a generative AI model like OpenAI’s GPT. These are often called GPT-wrappers. Companies likeuse large language models like OpenAI's GPT (Generative Pre-trained Transformer) to analyze and extract insights from legal documents.
The foundational models that GPT-wrappers rely on are not specifically trained or tested for legal work. As a result, the models have known problems in how well they can spot issues in contracts, and the validity of their answers and suggestions. Lawyers who use ChatGPT, which relies on the same general models, have been sanctioned and fined by courts for creating work with made up case law and facts.
A few points of caution here below:
- AI “hallucination”: In a recent study, researchers from Stanford University’s RegLab and Institute for Human-Centered AI found “that legal hallucinations are pervasive and disturbing: hallucination rates range from 69% to 88% in response to specific legal queries for state-of-the-art language models. Moreover, these models often lack self-awareness about their errors and tend to reinforce incorrect legal assumptions and beliefs. These findings raise significant concerns about the reliability of LLMs in legal contexts, underscoring the importance of careful, supervised integration of these AI technologies into legal practice.”
- AI “misses”: Without proper guards in place and a team to further train AI to consistently identify contract issues, you just don’t know what it’s missing. Said differently, there is no way to test if AI is missing what you want it to find and surface to you.
If either of these issues is of concern, which we think they are, we suggest you avoid this category of players.
How to Identify a GPT Wrapper
Determining whether a product is a GPT-wrapper requires understanding both its functionality and the technology powering that functionality. GPT-wrappers primarily use the underlying language model without extensive customization or fine-tuning for the legal domain.
Considerations for GPT Wrappers
Many GPT Wrappers are missing core functionality to help legal teams review contracts consistently, completely, and accurately. Here’s why:
- No playbooks and low consistency: Many GPT-wrappers lack defined playbooks for reviewing contracts, which means that each contract may be reviewed differently.
- No counterparty redlines and incomplete reviews: Many GPT Wrappers are designed and built only for first pass reviews, meaning they don’t support reviews of counterparty redlines, which may greatly reduce their ability to in day to day contracting.
- AI Hallucinations and low accuracy: GPT-wrappers lack additional training from legal experts, and they lack attorney-drafted content, which leaves their output vulnerable to errors like AI hallucinations. For example, if used to draft new language or redlines, they may come up with legally questionable language or substantially different variations each time. This will make your contracts harder to manage over time and create risk and delay as you have to carefully double-check the drafted language.
What to Look for From the Best
When evaluating AI contract review software solutions, it’s important to ask the following three questions:
- How is legal expertise incorporated into AI training?
- How are pre-built and custom playbooks supported?
- How long does it take to see the value?
How Is Legal Expertise Incorporated into AI Training?
In contract review, combining AI with real legal expertise is essential. Legal experts on staff help train the software to identify issues accurately and provide sound legal redlines. Consequently, lawyer-trained AI contract review software is significantly more reliable than a GPT Wrapper.
When evaluating AI contract review software solutions, we recommend asking where the legal content of the solution comes from and, if possible, talking to the experts who created it.
How Are Pre-built and Custom Playbooks Supported?
Playbooks are essential tools in contract review. They include predefined guidelines, rules, and templates that structure the review process within legal teams. Playbooks promote consistency and efficiency by implementing standardized language and best practices tailored to various contract types and scenarios.
When coded in AI software, playbooks enable a methodical approach that enhances productivity and reduces risks associated with AI “hallucinations.” Always check if a software provider offers pre-built playbooks and if their software supports building your own playbooks.
How Long Does It Take to See the Value?
AI contract review companies have very different implementation timelines. Some AI contract review software providers have invested in building out a library of templates, playbooks, and guidance that can be used on day one. Others rely on customers to codify custom contracts and playbooks, which may take weeks to months.
Category Leaders of AI Contract Review Software
Navigating an emerging category such as AI contract review software can be challenging (and frankly a bit overwhelming). In this section, we've compiled a shortlist of companies that represent different approaches to contract review, and we identify the pros and cons of each.
Below, we've carefully analyzed their pros and cons, framed around our set of beliefs regarding what’s important for contract review and where AI helps and hurts.As
As of April 1, 2024
Lawyer-Trained AI Category Leader: LegalOn
Pros of LegalOn
- AI Trained by legal experts: LegalOn stands out as a true leader in contract review software, setting the standard for excellence and innovation. We believe that combining cutting-edge AI with training from experienced lawyers delivers a uniquely reliable, consistent, and trustworthy solutionUnlike some competitors, LegalOn is not a mere GPT-Wrapper solution; we have invested significant resources, hired and built an entire legal content team and created playbooks, alerts, guidance, and sample language that make our software helpful. If you’re curious, we invite you to review some of our content around AI for contracts to see for yourself. You’ll quickly gather that the expertise of top attorneys and research scientists provides high-quality, context-aware revisions free from AI hallucinations.
- Pre-Built Playbooks and instant usability: We believe AI contract review should be able to consistently apply reviews across different contract types and on key components within them. This consistency is achieved with playbooks. That said, many legal teams have not formalized and/or invested in building out all the rules, guidance, and language to ensure consistency; we’ve made this investment for our customers so they can see the value of playbooks on day one. In addition, we support our customers’ proprietary playbooks—either through easily codifying their own legal playbooks on our platform or by partnering with LegalOn to custom develop AI to support it. Together, our off-the-shelf playbooks and support of customized playbooks enable customers to see value quickly and grow the value received from our software over time. We believe you’ll quickly see that both are important, and we invite you to book a demo of LegalOn’s software with your actual contracts. Come and see the value for yourself.
- Comprehensive review: It's important to support contract review on original and 3rd party agreements so that compliance and critical contract items are negotiated consistently regardless of who originally authored an agreement and throughout the negotiation process, including consistent review of counterparty redlines. Our comprehensive approach ensures consistency in negotiation and compliance with critical contract items, regardless of the agreement's origin or the stage of negotiation. We provide a robust suite of features, including tools for revisions, redlining, risk flagging, playbooks, contract and clause comparisons, and a template library curated by top attorneys. By offering these resources, LegalOn serves as a true legal resource, empowering users to enhance productivity and efficiency from the moment of adoption.
Cons of LegalOn
- Not a CLM: Unlike larger CLM technologies attempting to add contract review on top of a complicated solution, LegalOn is purpose-built for contract review. We’ve oriented the company around contract review functionality and providing legal teams and business teams with smart tools to accelerate contract reviews and negotiations. As such, we’ve yet to tackle the broader feature set of CLM software. It’s our opinion that this is a strength as it gives us real focus on pre-signature review. For larger organizations seeking a true CLM, LegalOn is not that. Many of our clients choose to pair our software with CLM to realize efficiency across the entire contract process.
CLM Software Category Leader: Ironclad
Pros of Ironclad
- Comprehensive contract management: Ironclad has built a suite of features that focus on enabling highly customizable workflows for generating documents from templates and post-signature contract management.
- Some AI capabilities: As AI has evolved, Ironclad has also begun to build out AI capabilities to streamline various aspects of contract management, such as contract review, data extraction, and reporting.
Cons of IronClad
- Lack of pre-built playbooks
- Time-intensive contract review training
- Multi-month implementation timeline
- Significantly higher price point
AI-Enabled Service Category Leader: Robin AI
Pros of Robin AI:
- Services tailored for Private Equity Firms: Robin AI has tailored its software for Private Equity (PE) firms. They are equipped to quickly turn around NDAs, MSAs, and SPAs with a combination of software and humans from Robin AI doing the review.
- Playbook Creation as a Service: Robin AI has the capacity to build playbooks for clients, but these custom playbooks are a more expensive product offering.
Cons of Robin AI:
- Limited to NDAs and Supplier Agreements
- No attorney-built playbooks or guidance content
- Can require weeks or more to implement
- SOC 2 Type II certification
GPT Wrapper Category Leader: SpellBook
Pros of SpellBook
- Easy to Use for High-Level, “First Pass” reviews: SpellBook is focused on helping lawyers draft documents and do cursory“first pass” review. It is a simple, tailored GPT for single users who predominantly use their original contracts and rarely proceed through negotiations.
Cons of SpellBook
- More susceptible to AI “Hallucinations”
- No pre-built playbooks
- Does not work on PDFs
- No SOC 2 Type II compliance
LegalOn: Choose the Best in AI Contract Review
When it comes to contract review, LegalOn’s lawyer-trained AI contract review software is transforming the way legal professionals negotiate contracts.
With industry-leading features such as lawyer-trained AI and pre-built playbooks, LegalOn offers an unparalleled solution that enhances accuracy, efficiency, and consistency in contract review. Our software is engineered to provide immediate value from day one, reducing the risk of AI hallucinations and empowering legal teams with tools that are tailored to their specific needs.
Click here to book a demo today and experience the future of LegalOn’s technology firsthand.
