Contracts are a necessary part of doing business, but most companies would agree that they usually slow everything down. From endless revisions to approval delays, the contract process eats up valuable time that could be spent closing deals.

In fact, contracts take up 18% of the selling cycle, according to Weshare. That’s nearly a fifth of the sales process spent on paperwork instead of revenue-generating activities.

Artificial intelligence (AI) is changing that by taking the tedious parts of contract management off your plate. It has the power to speed up drafting, review, approvals, compliance tracking, and much more.

Businesses no longer have to dig through legal documents or worry about missed details—AI keeps everything accurate, organized, and moving forward. So, if you want to take advantage of the benefits, you’re in the right place.

In this guide, we’ll dive into how AI is transforming contract management, why it’s worth integrating into your workflow, and how AI-powered contract management software helps businesses close deals faster with fewer headaches.

How is AI Changing Contract Management?

AI is changing the way businesses manage contracts by handling the repetitive, time-consuming tasks that slow things down—much like how other industries are taking advantage of AI.

Instead of spending hours reviewing legal documents, companies can use AI to pull out key terms, flag risks, and check for compliance almost instantly.

But AI doesn’t just speed things up—it also spots patterns and inconsistencies that people might miss, reducing errors and improving accuracy.

When it comes to drafting, AI helps by suggesting standardized clauses so teams don’t have to start from scratch every time. It also makes risk management easier by identifying potential issues before they become real problems.

Compliance is another major advantage, with AI keeping contracts aligned with changing regulations without businesses having to track every update manually. And rather than sorting through endless folders or email chains, AI organizes contracts into searchable databases so it's easy to find what you need.

While AI isn’t definitely not replacing legal teams, it’s giving them more time to focus on strategic work instead of routine contract lifecycle management.

Why Integrate AI Into Your Contract Management Process?

AI contract management revolves around making the entire process more efficient, accurate, and cost-effective. Here’s how AI can improve contract workflows and reduce manual effort.

Faster Contract Review

Manual contract reviews can take days, especially with long documents full of legal jargon. On the flip side, AI scans contracts in seconds, pulling key details like deadlines, contract clauses, and obligations.

Instead of spending hours on reviews, legal teams get a quick summary of the most important points. AI also flags inconsistencies and risks so businesses can address issues early and avoid costly mistakes.

Here's an example scenario: A supply chain company with over 500 vendor contracts often needed five days to approve each one. After adopting AI-powered contract review, they reduced that time to just a few hours.

The system identified outdated terms and risky clauses, making it easier to catch problems before they caused disruptions. Faster reviews led to smoother operations and fewer delays in procurement, which helped the company stay on schedule without unnecessary bottlenecks.

Fewer Errors and Better Accuracy

Even the most detail-oriented professionals make mistakes. AI reduces human error by identifying mistakes like:

• Missing signatures
• Ambiguous wording
• Inconsistent terms
• Omitted key clauses
• Formatting and numbering errors

This helps businesses avoid costly disputes and misunderstandings. Since AI tools learn from past data, they improve over time, which, in turn, makes contract management even more reliable.

Stronger Compliance and Risk Management

Laws and industry standards change all the time, and missing an update can lead to fines or legal disputes. AI helps by automatically scanning contracts for outdated terms, missing disclosures, and clauses that could pose a risk.

It also tracks regulatory updates, so businesses don’t have to monitor every change manually. If a contract includes language that no longer meets legal standards, AI flags it before it becomes a problem.

Lower Costs and Increased Efficiency

Managing contracts isn’t just time-consuming—it’s expensive. Legal fees, administrative work, and delays all add up.

AI cuts costs by automating routine tasks, reducing errors, and speeding up approvals. Instead of spending hours on contract reviews, legal teams can focus on higher-value work.

According to the Future of Professionals Report, AI could free up four hours per week for legal professionals, adding up to 266 million hours of increased productivity for U.S. lawyers alone. That’s about $100,000 in new billable time per lawyer each year.

AI doesn’t replace legal teams, but it does help them work faster and smarter.

How Does AI Contract Management Software Work?

AI contract management software automates the entire contract lifecycle to make drafting, reviewing, approving, and signing contracts faster and easier.

Most AI contract management systems use natural language processing (NLP) to analyze contract language, highlight key terms, and flag potential risks.

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But one platform that takes this to the next level is Aline, an AI-powered contract lifecycle management (CLM) tool built for startups and B2B companies.

Aline eliminates the need for multiple tools like Word and DocuSign by offering automated contract generation, AI-assisted redlining, built-in e-signatures, compliance workflows, and so much more.

Key Features of Aline

Aline is built to optimize the entire contract review process. Here’s how it works:

• Contract automation & management: Aline automates the entire contract lifecycle, from drafting to signing. AI analyzes contracts, flags risks, suggests improvements, and ensures compliance using pre-built templates.
• Workflow automation: Smart routing moves contracts through the right approval channels without delays. Dynamic approvals adjust based on input, while tracking and notifications keep teams informed.
• AI-powered legal documents: Aline uses GPT-4 to assist with drafting, redlining, and contract summaries. It refines language, suggests clauses, and maximizes legal precision.
• No-code template builder: The drag-and-drop builder allows teams to create and customize contract templates. Input fields enable dynamic generation, and Microsoft Word integration supports further edits.
• Electronic signature (AlineSign): Built-in e-signatures eliminate the need for third-party tools. Multi-party signing workflows make sure you have secure, efficient approvals.
• Reporting & data analytics: AI extracts key contract data, tracks renewals, and generates custom reports to improve oversight.
• Collaboration tools: Teams can work on contracts in real time, with role-based access, task assignments, and centralized document storage.
• Compliance & security: Aline provides audit trails, encrypted storage, and GDPR-ready compliance tools to keep contracts secure.

Best Practices For Implementing an AI Contract Management Process

AI can make contract management faster, more accurate, and less frustrating—but only if it’s set up the right way. A poorly planned rollout can create confusion, slow adoption, and even introduce new risks.

So, here’s how to promote a smooth transition and get the most out of AI-powered contract management.

1. Set Clear Goals

Before jumping into AI contract management, figure out what you want to fix. Are contracts stuck in approval for weeks? Are compliance risks slipping through?

A sales team struggling with long contract cycles might aim to cut turnaround time by 50%, while a legal team may focus on reducing manual review errors. Knowing what success looks like makes it easier to measure AI’s impact.

2. Pick the Right AI Contract Management Tool

Not all AI platforms are built the same. Some focus on automation, while others specialize in AI-assisted redlining or compliance tracking.

If your team spends too much time editing contracts manually, a tool like Aline—which offers AI-powered contract analysis and automatic clause suggestions—can make a big difference.

Look for a platform that fits your team’s workflow rather than forcing everyone to adapt to new, complicated processes.

3. Standardize Your Contracts

AI works best when it has clear, structured data to analyze. Instead of letting employees draft contracts from scratch every time, create standardized templates with pre-approved clauses. This makes AI more effective at pulling the right legal language based on contract type.

For example, a startup scaling quickly might use AI to auto-generate NDAs and service agreements without needing legal input on every single one.

4. Automate Approvals and Reminders

One of the biggest bottlenecks in contract management is waiting on approvals. AI can eliminate these delays by routing contracts to the right people automatically.

If a vendor agreement needs sign-off from both legal and finance, AI makes sure it reaches them in the correct order—without someone having to manually follow up. Automated reminders also prevent last-minute scrambles by keeping teams on top of deadlines and renewals.

5. Train Your Team for Success

AI is only as good as the people using it. A legal team skeptical of automation might resist AI-driven contract reviews, while a sales team eager to close deals might over-rely on it.

Provide hands-on training so employees understand how AI enhances their work rather than replaces their expertise. Show them real examples of how AI catches errors, speeds up approvals, or improves compliance so they can trust the system.

6. Track Performance and Adjust as Needed

AI isn’t a set-it-and-forget-it solution. Keep an eye on key metrics like contract turnaround time, approval speed, and risk detection accuracy. If AI keeps flagging harmless clauses as risky, tweak the settings. If approvals still take too long, revisit workflow automation.

A company using AI to reduce contract errors might start by tracking how many mistakes legal teams manually correct each month—if that number isn’t dropping, the AI settings may need refinement.

Speed Up Your Contract Workflow Without Sacrificing Quality

Managing contracts often means dealing with delays, overlooked deadlines, and too much back-and-forth.

Luckily, AI helps businesses avoid these slowdowns by keeping contracts structured and moving through approvals without unnecessary friction. Instead of manually reviewing every detail or tracking compliance updates, AI steps in to handle the biggest time sinks.

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Aline makes contract management even more efficient by automating key processes and improving collaboration. Whether it’s drafting, approvals, or execution, everything happens in one organized system.

Start your trial today and see how Aline works!

FAQs About AI Contract Management

How is AI used in contract management?

AI automates contract drafting, review, approvals, and compliance checks. It extracts key terms, flags risks, and ensures contracts follow legal and industry standards. AI also organizes agreements, tracks deadlines, and simplifies collaboration, reducing manual work for contract managers and business teams.

Is there an AI that can read contracts?

Yes. AI-powered contract management tools, like Aline, use natural language processing (NLP) to analyze contracts. They can extract key details, identify inconsistencies, and highlight potential legal risks, helping businesses review documents more efficiently.

How to use AI to create a contract agreement?

AI streamlines contract creation by using pre-built templates and smart clause recommendations. Tools like Aline allow businesses to generate agreements by filling in key details, ensuring compliance, and using AI-assisted redlining to refine language before finalizing.

What is generative AI for legal contracts?

Generative AI assists with contract drafting by suggesting standardized clauses, adjusting wording for clarity, and summarizing legal terms. It helps businesses create legally sound contracts faster while ensuring consistency across agreements.

What types of contracts can AI handle?

An AI contract management solution can manage various business contracts, including vendor agreements, employment contracts, NDAs, sales agreements, service-level agreements (SLAs), and partnership contracts. It helps businesses maintain accuracy and compliance across all contract types. Some AI models can even draft contracts and other legal agreements.

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