While artificial intelligence is creeping into the facets of many industries, a surprising number of corporate legal departments have yet to embrace AI as a tool to analyze and manage contract data, according to a study released on Wednesday. 

Of the 50 large and primarily U.S.-based corporate legal departments in the survey, 62% said they still use Excel, SharePoint or email to manually sift through contract data, an onerous process that likely explains why only 56% of general counsel offices analyze contract performance.

"I think what's happening is the market is saying, 'Wow, there are a lot of players in the game, a lot of different options and such, but what is it that I can trust?'" said Charles Dimov, vice president of marketing at ContractPodAi. The London-based AI contract management firm carried out the study.

"The industry is still in that nascent space," Dimov added. "I believe that it's maturing a little bit. We're kind of on the edge of that nascent space. But clearly from looking at these results, it means that we've got a fair bit of assuring [companies to use AI] to do." 

The firms in the survey manage thousands of contracts and are from a wide array of industries, including government, food and beverage, energy, transportation and retail. They participated in phone interviews during September and October 2019. 

Nearly 50% of the companies said they planned to adopt AI-based contract risk mitigation technology within the next year. But 64% expected that it would take their company at least a year to implement an AI-based contract management system. Dimov suggested that the process should take only several months.

"That one was a bit of a surprise to us," he said. "If you're looking to customize everything, I think that's where you start getting into a little bit of a trap. If every line has to be customized and everything has to be custom-coded, then it becomes a much longer implementation cycle."

Dimov recommended that companies consider several different AI firms and seek out software that is a good fit right out of the box and needs only minimal tweaks. 

Effective AI software can automate contract risk and mitigation management by, for instance, seeking out deviations and questionable clauses in contracts, allowing in-house lawyers to focus on those issues before they become a serious problem. 

"But at the end of the day, it's still the people who are setting up the software" that are accountable for compliance issues, Dimov said. "Just because you have a new piece of software doesn't mean accountability is gone." 

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