Automated Contract Analysis with AI for Risk Assessment Workflow

Automated Contract Analysis and Risk Assessment

1. Document Collection

1.1. Gather Contracts

Collect all relevant contracts from various sources such as cloud storage, email, and document management systems.

1.2. Standardize Formats

Ensure all documents are in a standardized format (e.g., PDF, Word) for uniform processing.

2. Pre-Processing

2.1. Optical Character Recognition (OCR)

Utilize OCR technology to convert scanned documents into machine-readable text. Tools such as Adobe Acrobat and ABBYY FineReader can be employed.

2.2. Data Cleaning

Remove any irrelevant information and ensure that the text is free from errors and inconsistencies.

3. AI-Powered Analysis

3.1. Natural Language Processing (NLP)

Implement NLP algorithms to analyze the text for key clauses and terms. Tools like IBM Watson Natural Language Understanding and Google Cloud Natural Language can be utilized.

3.2. Risk Assessment Algorithms

Employ AI-driven risk assessment tools to identify potential risks associated with contract terms. For example, LawGeex and Kira Systems can be used for this purpose.

4. Review and Validation

4.1. Automated Alerts

Set up automated alerts for flagged clauses that may pose risks, ensuring legal teams are notified promptly.

4.2. Human Oversight

Incorporate a review process where legal experts validate the AI findings, ensuring accuracy and compliance with legal standards.

5. Reporting and Documentation

5.1. Generate Reports

Create comprehensive reports summarizing the analysis and identified risks using tools like Tableau or Microsoft Power BI.

5.2. Documentation Storage

Store all analyzed contracts and reports in a secure document management system for future reference and compliance audits.

6. Continuous Improvement

6.1. Feedback Loop

Establish a feedback mechanism for legal teams to provide input on the AI tools’ effectiveness and suggest improvements.

6.2. Regular Updates

Continuously update the AI models based on new legal standards and feedback to enhance accuracy and reliability.