A Pramata Article
AI Contract Management Checklist: Must-have features for success with Contract AI
Looking at Contract AI? Here’s a guide to separating the help from the hype.
Artificial intelligence, and specifically generative AI, seems to have permeated every aspect of the business world. From something as simple as helping you write an email to tasks as complex as identifying business risks hidden within your company’s commercial contracts, AI has the real potential to transform business operations from top to bottom.
Naturally, every type of software solution is now racing to incorporate AI into its offerings. Some are doing so successfully and proving to be transformative. Others are merely paying lip service to the idea of AI while providing very little value for all the hype.
For legal teams and others who deal with contracts on a regular basis—like Sales, Procurement, and Finance—it’s imperative to know exactly which features will deliver real business value versus those that look impressive in demos but fail to perform in real-world scenarios. The wrong choice can mean months of implementation delays, poor user adoption, and missed opportunities to transform your contract management processes. Not to mention wasted budgets without any ROI.
Instead of flying blind, use this comprehensive checklist to guide you through the essential AI contract management features you need to evaluate. With nearly two decades of experience in the industry, Pramata can point to the must-have features you need to prioritize when evaluating your legal-tech AI investment.
Why use AI contract management?
Before we dive into the features you need to care about, let’s start with why you might consider adding Contract AI or an AI-enabled contract management system to your legal tech stack to begin with.
Contract AI versus traditional contract management
Traditional contract management systems focus primarily on document storage and workflow automation. AI contract management features (at least in theory) go far beyond these capabilities by actively understanding and analyzing the contents of every contract, as well as the relationships between contracts, to provide actionable insights and intelligent automation.
The difference between traditional contract management systems and those incorporating generative AI lies in the latter’s ability to comprehend legal language, identify complex relationships between documents, and extract meaningful data without manual intervention.
Contract management with AI, or Contract AI?
Adding AI capabilities to a contract management system sounds like a game changer for legal teams and those they serve across the business. However, it’s not that simple. Many of today’s most well-known legal and contract lifecycle management tools claim to have added in artificial intelligence or GenAI capabilities, yet organizations struggle to get real value from them.
This is why it’s important to differentiate between those that have added an artificial intelligence component into their existing contract management tools, and those that have fundamentally built a Contract AI Knowledge Engine to power insights, analysis, and data-driven decision making based on a company’s hundreds, or thousands, of current and legacy contracts and the information locked within them.
Real Contract AI isn’t simply “Contract GPT.” It’s built on a technological foundation that powers, and empowers, legal teams and the entire business to do more with the resources they have by speeding up and finding value in everything from pre-signature negotiations to legacy contract analysis. Keep reading to get a comprehensive checklist of essential AI contract management features you won’t want to overlook during your decision-making process.
Data Preparation & Organization
Regardless of how good your GenAI is, it will struggle to serve your needs if your underlying data isn’t clean and organized. Often, legal teams are tasked with preparing contract data for migration into a new AI system. Use this section of the checklist to track how much manual effort and heavy lifting you’ll be required to perform, across the different AI contract management solutions you’re comparing.
Automated contract cleansing and migration
Does this system:
- Automatically remove duplicate files and non-contract documents?
- Split or merge files as needed to achieve accurate organization?
- Convert all file formats to searchable PDFs using advanced OCR (optical character recognition)?
- Automatically convert diverse file formats (.doc, .docx, .txt, .jpg, .png, etc.) into standardized searchable PDFs for consistent processing?
- Correct scanning errors including auto-rotating misaligned pages, merging split documents that belong together, and separating multiple contracts incorrectly scanned as a single file?
- Handle complex document layouts, tables, and scanned images?
- Process legacy contracts without manual preparation?
- Automatically detect and flag documents in foreign languages for appropriate handling or translation?
- Automatically pull newly executed agreements from e-signature platforms (Docusign, Adobe Sign, etc.), shared drives, or other repositories on an ongoing basis without manual intervention?
Intelligent document organization
Does this system:
- Tag vendor vs. customer vs. other types of contracts?
- Ensure contracts related to one entity are not stored in multiple locations?
- Store transactional documents such as order forms and SOWs that dictate their own terms?
- Automatically create document families and hierarchical, parent-child relationships between related contracts?
- Link master agreements with amendments, orders, and addenda?
- Update relationships automatically when new documents are added?
- Handle complex multi-entity contract structures, particularly when contracts are added through M&A?
Accurate metadata extraction
Does this system:
- Extract critical metadata fields automatically, then incorporate human QA to achieve 99%+ accuracy?
- Identify parties, dates, products/services sold or purchased, financial terms, and contract values?
- Dynamically calculate contract end dates by understanding the full term structure - identifying whether start dates are based on effective date or other triggers, distinguishing initial term from renewal terms, and detecting auto-renewal provisions?
- Automatically update contract status daily based on calculated dates - transitioning from Active to Inactive when end dates pass?
- Advance contract end dates automatically when auto-renewal periods pass without receiving termination notices?
- Process termination notices to update contract status to Terminated and adjust end dates accordingly?
- Track contract succession relationships and automatically mark superseded contracts with appropriate status when replacement agreements are executed?
- Capture service level agreements and performance metrics?
- Tag compliance requirements and regulatory obligations?
- Tag and identify concepts based on your organization’s custom definitions rather than relying solely on standard clause definitions?
Advanced Analysis & Intelligence Features
AI contract management is more than contract storage with AI features tacked on. Generative AI must enable legal teams (and beyond) to get the insights hidden in their contracts with minimal effort and maximum speed and accuracy.
Contract content analysis
Does this system:
- Identify and categorize key clause types across contracts?
- Analyze vendor contracts for overlap, redundancy, pricing discrepancies, risky terms, auto-renewals, and more?
- Compare contract terms against company playbooks and standards for compliance?
- Flag non-standard language and potential risk areas?
- Extract pricing and financial terms from anywhere in the document - including tables, narrative text, footnotes, exhibits, and appendices - regardless of format or location?
- Understand and model complex pricing structures including unit pricing, tiered pricing, volume discounts, milestone-based payments, usage-based fees, minimum commitments, and conditional pricing terms?
- Track how terms get modified over time based on amendments?
- Recognize intellectual property and confidentiality provisions?
Risk assessment and compliance monitoring
Does this system:
- Automatically evaluate contracts against predefined risk criteria?
- Identify regulatory compliance gaps and requirements, and generate recommended changes to address them?
- Flag unusual or problematic contract clauses?
- Provide risk scoring and prioritization across contract portfolios?
Natural language search and querying
Does this system:
- Provide search functions using everyday natural language?
- Understand context and intent behind search queries?
- Find relevant information even when exact terms don't match?
- Provide conversational AI interface for contract questions?
- Search across both extracted metadata fields and full contract text?
- Support queries about relationships between contracts (e.g., “Summarize all active terms with ABC Corp taking into account any addendums and amendments”)?
- Return precise answers with source document references?
Automation & Workflow Features
The best AI contract management platforms don’t just store and analyze contracts—they actively streamline your entire contract lifecycle from request to renewal. Look for solutions that can automate routine tasks, eliminate bottlenecks, and empower business teams to self-service common contract needs without constantly pulling legal resources away from high-value work.
Does this system:
- Auto-generate contracts using approved templates and clauses?
- Customize AI drafting agents based on specific business requirements?
- Generate a first draft of an agreement all through an interactive chat paradigm?
- Ensure compliance with corporate standards and legal requirements?
- Incorporate lessons learned from previous agreements?
- Auto-populate contract fields from integrated systems (e.g., CRM)?
- Analyze successful negotiation positions from prior deals?
- Maintain consistency across different contract types?
Automated workflow management
Does this system:
- Route contracts for review based on risk level and complexity?
- Track contract status and progress in real-time?
- Send automated alerts for renewals, expirations, and deadlines?
- Manage approval processes with configurable business rules?
- Provide mobile approval capabilities for contracts?
- Allow you to initiate contract reviews / requests from other systems (e.g., Outlook, CRM)?
- Generate workflow KPIs / reports that track metrics such as contract turnaround time, % of contracts that are auto-fulfilled vs. ones that require manual handling, # of open contracts by status, etc.?
- Support parallel and conditional approval paths based on contract attributes?
- Integrate with existing business workflow and automation systems and tools?
Obligation and deadline tracking
Does this system:
- Identify and track key contractual obligations?
- Track payment obligations and invoicing requirements?
- Calculate notice periods working backwards from key dates (e.g., renewal, expiration dates)?
- Alert stakeholders to upcoming renewal notice and expiration dates?
- Track service level agreement obligations and penalties for non-compliance?
- Track regulatory reporting obligations and audit requirements?
- Automatically alert relevant stakeholders when newly executed contracts contain critical obligations requiring special monitoring or tracking?
Negotiation & Collaboration Features
Contract negotiation remains one of the most time-intensive aspects of the contract lifecycle, often requiring hours of manual review, redlining and back-and-forth collaboration between internal legal teams and counterparies. Modern AI contract management should accelerate this process by providing intelligent redlining assistance, automated clause analysis, and seamless collaboration tools that work within the systems your team already uses daily.
Does this system:
- Compare any contract draft against your templates, playbooks, or previously signed agreements in seconds?
- Categorize clauses by risk level (red/yellow/green) based on your organization's negotiation positions and counterparty history?
- Generate surgical redlines that modify only the critical words needed to achieve your preferred or fallback positions, with counterparty-friendly explanations to minimize friction?
- Provide instant access to complete relationship history and prevailing terms with any counterparty (directly inside MS Word)?
- Identify and flag material changes, newly inserted clauses, and removed provisions across document versions?
- Automatically detect contract health issues including conflicting terms, undefined capitalized terms, and unused definitions?
- Connect and evaluate related clauses throughout the document to ensure consistent redlining positions?
- Transform hours of manual review into minutes with comprehensive AI-powered analysis?
- Generate AI-ready playbooks from your existing templates, current negotiation guidelines, or any policy document to ensure consistent application of your standards by AI?
Real-time collaboration capabilities
Does this system:
- Track changes and maintain complete version history?
- Integrate with Microsoft Word?
- Track and differentiate between internal draft versions and counterparty revisions throughout the negotiation lifecycle?
- Capture and consolidate internal team comments from both email threads and platform discussions into a single view?
- Create internal approval workflows before sending redlines to counterparties?
- Generate negotiation summaries showing internal positions versus final agreed terms?
- Maintain audit trails of all negotiation activities?
Reporting & Analytics Features
The true business value of AI contract management lies in transforming static contract documents into actionable business intelligence. Your solution should provide comprehensive reporting capabilities that surface insights across your entire contract portfolio, enabling data-driven decisions about everything from vendor consolidation to revenue optimization without requiring manual contract review.
Portfolio-wide contract intelligence
Does this system:
- Generate comprehensive reports across entire contract portfolios
- Identify trends, patterns, and revenue optimization opportunities
- Provide spending analysis and cost optimization insights
- Track vendor performance and relationship metrics
- Support data-driven contract strategy decisions
- Automatically refresh reports as new contracts enter the system without manual intervention?
- Dynamically update analytics when amendments modify key terms (e.g., payment terms, contract values, renewal dates)?
Customizable dashboards and reporting
Does this system:
- Create role-specific dashboards for different user types
- Enable custom report generation with flexible parameters
- Provide real-time visibility into contract metrics and KPIs
- Export reports in multiple formats for detailed analysis as well as for executive presentations?
- Support automated report distribution and scheduling
- Integrate with CRM, ERP, and data warehouses?
Integration & Scalability
Enterprise AI contract management must seamlessly connect with your existing technology stack and grow with your organization’s needs. The most successful implementations deliver contract intelligence directly within the systems your teams already use—like Salesforce for sales teams or Microsoft Word for legal professionals—rather than forcing users to adopt entirely new workflows.
Business system integration
Does this system:
- Have native integration with major CRM platforms (Salesforce, Microsoft Dynamics)?
- Connect with procurement and ERP systems?
- Integrate directly with Microsoft Word and Outlook for seamless contract workflows?
- Import legacy contracts from existing repositories (SharePoint, Google Drive, Box, etc.) without complex migration projects?
- Sync contracts back to your document management systems until enterprise-wide change management steps are completed?
- Automatically pull newly executed contracts from any e-signature platform without manual intervention?
- Embed Docusign and Adobe Acrobat Sign directly within the platform to send contracts for signature without leaving the system?
- Support single sign-on (SSO) and identity management?
API and data connectivity
Does this system:
- Provides comprehensive REST APIs for custom integrations?
- Supports real-time data synchronization across systems?
- Enables data export in multiple formats (both one-time bulk and ongoing delta changes)?
- Maintains data consistency across integrated platforms?
- Include detailed API documentation and sandbox environments for testing?
Enterprise-grade performance
Does this system:
- Handle thousands of contracts without performance degradation?
- Proactively manage context window and message token limits to avoid hallucinations?
- Provide structured reasoning by default?
- Include methods to increase consistency and reliability in responses?
- Process complex multi-document relationships at scale?
- Support concurrent users across organizations?
- Maintain fast response times for searches and queries?
- Scale automatically based on usage demands?
Security and compliance
Does this system:
- Provide enterprise-grade security and encryption?
- Meet industry compliance standards (SOC 2, GDPR, etc.)?
- Offer role-based access controls and permissions?
- Maintain comprehensive audit trails and logging?
- Support data residency and privacy requirements?
- Use RAG-E vs. traditional RAG to maintain data encryption?
Resource
Interested in exploring the technical challenges that come with using Gen AI for contracts, and how Pramata is specifically engineered to solve them? Read our whitepaper: 9 Technical Challenges that Come With Using AI for Contracts.
Moving beyond the checklist: Get proof before you invest in AI contract management
This checklist covers more than 80 capabilities across six categories that we think everyone should consider when evaluating an AI-powered contract management system. But it’s not enough just to ask these questions of your potential vendors.
Many legaltech solutions, including those that now incorporate generative AI, show off impressive demos using their own dummy data. What happens when your organization tries to use the software in the real world is often a whole other story.
To truly know you’re making the right investment, it’s essential to conduct a proof of concept using your own documents.
If you’re ready to see what Enterprise Grade Contract AI that actually works looks like, contact Pramata today. We’ll be happy to show you how our solution addresses each of the evaluation criteria you’re looking for, and provide a proof of concept with your own data.