Lexical Labs automatically risk scores your contracts
April 29, 2022
‘Risk comes from not knowing what you are doing’ - Warren Buffett
Tiro, from Lexical Labs, is the most advanced AI based automated contract review system available. Tiro reviews contracts - using both deep learning and logic based algorithms - just like a lawyer or specialist contract reviewer would.
Recently, Tiro has successfully deployed a contract scoring system for manufacturers of high value equipment.
These manufacturers have hundreds or thousands of high value and high risk contracts every year, which were previously reviewed manually. Challenges they faced in their contract review process included:
Slow and labour-intensive contract reviews, meaning new sales were subject to delays
Limited visibility by central Legal and Risk teams on contract risks during negotiation
Difficulties in tracking the overall liability of portfolios of signed contracts.
Tiro now automatically scores each contract across more than 20 issues, assigns an overall risk rating (see screenshot below), and creates a risk report.
Each contract is linked to a more detailed risk report as follows:
The contract can be further analysed and amended in Tiro.
A common workflow involves:
Business managers upload a draft contract to Tiro which performs a business critical review. The draft contract is risk scored and a digital issues list created in Tiro.
The business manager may also send an initial list of issues to the counterparty
Depending on the risk score, the contract is assigned to the business team or assigned to a specialist contract review (either a lawyer, contract manager or paralegal).
The assigned team member uses other contract playbook features in Tiro to negotiate and/or amend the contract.
The final version is risk scored by Tiro
A copy of the final contract is stored in Tiro, along with all the risk data, in a digital form. This helps contract and risk management after signature.
The benefits include:
Time and cost savings in contract review. Accelerated new sales and revenue from faster contract negotiations
Visibility - It takes a few seconds and gives instant visibility over hundreds or thousands of contracts
Better risk outcomes - High value or problematic contracts and clauses can be spotted early - meaning legal resources can be automatically deployed to these contracts. It can be an integral part of contract triaging.
Leveraging a contract playbook - A digital contract playbook takes a few hours to set-up but can then be applied to all contracts.
Value added during negotiations - The value contributed by the contract review and negotiation team can be assessed by comparing the score of the first and final version.
Improved risk management - Each contract and risk report is stored digitally and accessible after signature. Risks can be assessed in each individual contract and in the overall contract portfolio of an enterprise. The contractual impact of shock events such as pandemics or natural disasters can be instantly analysed.
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