From hype to must-have: 4 practical uses of AI in contract management

In 2025, the question isn’t whether to use Artificial Intelligence (AI), it’s how to use it effectively to enhance productivity, manage risk, and drive business value.

AI adoption in contract management has entered a new era — less about experimentation, and more about real-world results. As adoption accelerates across the industry, organizations are moving beyond theory and embedding AI directly into their daily workflows.

For legal, procurement, and contract management professionals, this means faster reviews, fewer bottlenecks, smarter decisions, and more time for the strategic work that really matters.

In this piece, we explore five ways AI is actively improving contract management today and why successful teams are treating it not as a replacement for human expertise, but as a powerful collaborator.

The evolving role of AI in contracting

You’ve likely already heard about how AI serves as a powerful collaborator, elevating contract management processes and transforming contracts from administrative burdens into strategic assets. But what can AI actually do for contract management processes?

Broadly speaking, AI allows humans to quickly process unstructured data at a scale that the human eye cannot, as well as identify patterns and anomalies that humans might miss during a manual review. Functions such as metadata extraction, clause identification, and risk scoring can be also be automated by AI. Furthermore, AI can provide decision support based on historical data and predefined parameters. It’s worth noting, however, that none of these AI capabilities replaces human judgment, which is essential for complex negotiations, nuanced risk assessment, and strategic decision-making.

Experienced contract professionals bring irreplaceable capabilities that can’t simply be swapped out with AI, such as the ability to read between the lines when managing vendor relationships, consider organizational goals and priorities, and make the final call based on factors beyond simply what is written in the contract.

Andy Wishart, Agiloft’s Chief Product Officer, once noted that the most successful organizations don’t view AI as a replacement; rather, they view it as a tool to empower  contract professionals and their roles within the organization. Shifting from an execution mindset to an enablement mindset and moving from processing documents to driving strategic value is what unlocks the actual value of AI in contract management.

Four ways AI improves contract management

1. Accelerated contract review and negotiation

Speed and efficiency are two primary advantages of leveraging AI in contract management. Manual contract review traditionally required legal professionals to spend hours examining documents for important terms, obligations, and risks, but AI-powered contract review tools compresses this timeline to mere minutes or even seconds.

AI contract review technology can automatically locate and extract vital information, then evaluate how closely each agreement matches established company playbooks and standardized language. This analysis provides instant visibility and alignment with organizational guidelines, saving time during the review process.

The negotiation process benefits, too. AI suggests redlines aligned with company standards, compares language to approved clause libraries, and enables data-driven negotiation positions. With more 70% of legal leaders either beginning or continuing to implement generative AI solutions in their departments within the next two years, the efficiency gains are clearly worth the effort.

2. Enhanced risk management and compliance

Risk mitigation is a clear priority for many legal departments. AI-enhanced risk assessment transforms this effort from a reactive process to a proactive one by analyzing contract language and assigning risk scores based on prior data and set parameters. It can also flag deviations from standard terms and identify potentially problematic clauses. Rather than discovering issues after contracts are signed, legal teams can address them during the negotiation process.

Contract Lifecycle Management (CLM) platforms also feature compliance monitoring capabilities that extend throughout the contract lifecycle. AI can holistically track contractual obligations across both parties to monitor renewals, payments, and deliverables. It automatically alerts teams to what’s due or overdue, reducing exposure through early intervention and preventing costly compliance failures.

3. Liberated contract data

Contracts contain a wealth of information that traditionally remained locked away in static documents. Structured and searchable contract data goes beyond being just a record of what was agreed upon, instead becoming a tool for deciding what should happen next. This transformation turns contracts from compliance documents into strategic business assets.

AI-enhanced CLM platforms extract and structure contract data, making it accessible through conversational interfaces. For example, stakeholders can query contracts in natural language and receive instant answers with cited sources. These summaries are also tailored to different departments, democratizing contract knowledge across the organization without requiring additional legal expertise.

4. Improved operational efficiency and productivity

By automating routine administrative tasks throughout the contract lifecycle, legal departments empower seasoned contract professionals to focus on higher-value work that genuinely requires human expertise.

By assessing incoming contracts against pre-defined rules, AI automatically routes agreements to appropriate reviewers based on factors such as complexity, risk level, contract type, or value. High-risk contracts requiring human attention receive priority review, while standard, lower-risk agreements are processed through accelerated approval procedures. This eliminates bottlenecks and ensures no one wastes time on agreements that should already be complete.

Creating and maintaining a clause library used to be a labor-intensive process that took months. AI capabilities, such as analyzing executed agreements and proposing standard language based on approved contracts, has reduced clause library development time from months to days. These clause libraries can also continuously self-update based on newly-approved language, saving further time by removing the need for manual edits.

Looking ahead

The proliferation of AI in the contract review stage has fundamentally transformed contract management for the better. This transformation isn’t predicated on choosing between humans and machines; instead, it’s about creating partnerships that leverage the best of both worlds.

It’s clear that contract professionals aren’t being replaced by AI, but it’s also clear that AI isn’t going anywhere. The question is how you can use AI most effectively to deliver better outcomes for your organization. Those who embrace this partnership by understanding both AI’s capabilities and limitations will define the future of contract management.

Ready to transform your contract management with AI? Check out Gartner’s recent research on five GenAI uses cases for revolutionizing contract management in 2025.