Traditionally, legacy contracts are usually stored in multiple formats — word document, PDF, or even paper, across various locations like internal networks, external networks, personal storage devices, personal computers, file-sharing software, paper filing cabinets, among others.
Just like the new contracts, legacy contracts, too, contain important attributes. They also offer the same revenue opportunities and risk management. Hence, transferring legacy contract data into a well-structured database where the attributes can be searched and reported on makes good sense for any organization.
The best way to manage legacy contracts is to migrate them into a central contract management repository so that all the contracts are stored within a unified location in a consistent format.
Reasons to Migrate Legacy Contracts into a CLM
- Centralized Repository – Systematic arrangement of legacy contracts in a single and unified repository enables easy access to documents across all the departments from anywhere. Thus, it becomes very convenient for the company to look for a document as and when they need it.
- Improved Insights – The contracts are structured in a pre-defined pattern before they’re uploaded on CLM. It involves shortlisting them based on the requirements of the organization. So, the users gain insights into the provisions and obligations agreed upon at their fingertips.
- Timely Reporting – The CLM system continuously reports critical business actions that demand urgent attention. This can include — upcoming expiration or renewals, deadlines, non-compliance, updates regarding performance milestones, etc.
- Compliance Awareness – Migrating legacy contracts into a contract management system can help organizations avoid hefty penalties and losses by ensuring maximum compliance awareness through automated alerts and notifications.
- Risk Identification – Easy access to contracts, along with improved visibility into non-compliance, simplifies identification of risks. Advanced flagging options allow the users to track all the issues and prevent or mitigate them accordingly.
Natural Language Processing Turning Legacy Contracts into Workable Documents
Natural Language Processing or NLP is a subfield of linguistics, computer science, and Artificial intelligence that deals with interactions between computers and human language. It programs computers to process and analyze human or natural language data. Natural Language Processing (NLP), backed by AI and deep learning, is transforming contract language. Let us dig deeper and explore how NLP is helping create or migrate legacy contract documents:
- Legacy contracts parsing with semantic analysis – Owing to its ability to parse words, phrases, and sentences into meaningful text, Natural Language Processing can be used to semantically extract legacy contracts into a contract management software database. It can take a chunk of text and break it into separate words. In the case of ambiguities like one word having multiple meanings, it is smart enough to detect the issue and rectify it according to statistical probability.
- Classifying extracted terms into pre-defined categories with metadata extraction – With the help of deep learning, Natural Language Processing can parse legacy contract documents to extract key metadata like expiry and renewal dates, payment terms, clauses and obligations, and so on into pre-defined categories. It saves time and manual labor of having to go through pages and pages of paper documents in order to find all the key data included in contracts. It also ensures all important terms are highlighted without any manual omissions or errors in capturing all key information.
- Identifying errors and inconsistencies by reviewing key terms – Natural Language Processing with the help of Artificial Intelligence can extract and review the key terms of the legacy contracts. This not only helps organizations to instantly analyze the contracts in one go but also gain a comprehensive overview of their contract universe. It acts as a first-level quality check that enables general counsels and legal operations to identify errors and inconsistencies in key terms. It also helps them to look for critical terms that might need re-negotiation before renewal.
Considering the above benefits of applying Natural Language Processing in dealing with legacy contracts, contract management solutions are steadily incorporating the technology into their software. Ultria’s AI persona Orbit Guide offers unmatched speed and efficiency with Natural Language Processing algorithms. Apart from using NLP on legacy contracts to analyze and categorize attributes, the AI engine also utilizes its capabilities to draft new contracts. Ultria’s Natural Language Processing considers the context of the attribute by the language of a contract document, thus, increasing accuracy.