The contract AI space has its targets set on a new emerging market, this one focused on the pre-execution stage of the contract development lifecycle—otherwise known as negotiation and drafting.

It's an evolution based primarily upon old pain points. Contracts are filled to the brim with terms that today's newest artificial intelligence-powered contract solutions can likely review with more expediency than the standard-issue human. 

But it's not all blue skies and open spaces. While the need powering the growth of this burgeoning market may be awfully appealing to other companies looking to plant their flag in lucrative terrain, the AI infrastructure that foots the cost of admission could make it difficult for newcomers to gain entry.

"Building an AI platform for contract analysis is no easy feat. I mean, there's a lot of work to be done. Part of that has to do with just work flow, document ingestion and user interface. There are some fundamentals that have to be in place to build the platform," said Jim Wagner, president of Seal Software, which last week launched contract negotiation platform Seal Now.

However, Wagner also conceded that the pre-execution space does constitute an emerging market, driven by clients and corporations looking to substantially reduce negotiation timelines and drive overall efficiency within the organization.

As a result, Seal isn't the only the player looking to get in the game. BlackBoiler, for example, has a self-named tool on the market that redlines potential issues lurking inside of a contract during negotiations. It's also automated, meaning that the solution learns from how each client has marked up contracts in the past to build user-specific models for editing.

Per Dan Broderick, BlackBoiler's founder and CEO, high-volume contract review and negotiation touches every single enterprise. He said that Fortune 1000 and Global 2000 companies spend $35 billion dollars a year on those pain points alone.

While the need is great, it's still an area that Broderick believes has traditionally gone unaddressed by service providers in favor of workflow tools or solutions geared towards steps like due diligence.

"A lot of the technology in the [pre-execution] space right now is really re-purposed from one of these other buckets," Broderick said.

That approach can yield results that are less than ideal. According to Broderick, solutions that just add a layer of analytics to a preexisting process can actually drive down efficiency by failing to take into account the contract revision classifications or risk ratings that are specific to the way that each individual organization approaches a deal.

In other words, they potentially create more work for a human instead of less.  Still, accommodating those unique variations presents the challenge of having to continually build custom AI models.

Constructing those vital components — as well as the underlying but equally necessary AI-engine — can be difficult for companies attempting to balance developing pre-execution ability against maintaining other contract management services.

"There just aren't that many companies at this scale that are able to solve both sides of the equation," Wagner said.

But patience is a virtue, one that may reward fledgling companies pushing into the pre-execution space. Just last month, a startup named Pactum released its AI-powered negotiating tool into the marketplace.

The solution is used to automate the negotiation of basic terms like cost inside corporate vendor contracts. Martin Rand, Pactum's CEO, told Legaltech News that the tool will become smarter over time they continue to accrue more data on how people negotiate.

"We're not claiming that we'll start negotiating M&A deals or really big and complicated commercial contracts," Rand said.