Contract redlining: The process, challenges and technology

Contract redlining is a crucial part of any contract negotiation process. Contract redlining involves editing a contract and flagging specific clauses to condense the requirements into a document that satisfies the terms of all parties.

Any in-house legal professional, such as a General or Legal Counsel, will be aware of the contract redlining process. It can be a time-consuming task that can lead to bottlenecks in the deal-cycle.

However, with the right technology, contract redlining can become much simpler. Read on to find out how.
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What is contract redlining?

Let's recap. Contract redlining is used when parties require amends during the early stages of the contract lifecycle, usually to negotiate better terms and conditions. However, the process will also be used in other scenarios, including when parties create a new contract or edit previous versions.

The term redlining comes from the traditional method of editing a contract. In the past, draft contracts were printed and one party would mark up any amends in a red pen. The contract would then be passed to the other parties so they could make their changes. The nature of marking edits in red made it easy for the next party to see the changes.

Today, legal professionals often redline contracts in Microsoft Word using the tracked changes tool.
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Contract redlining challenges

As with any contract process, redlining is incredibly important, but it also comes with its challenges:

• Difficulties with interpretation – As the parties increase the number of changes to the contract, it will become increasingly difficult to read the amends, and mistakes can be made in the interpretation of clauses.
• ‍Formatting issues – When multiple contractual changes are made, the contract's format can change which may result in unnecessary time spent reformatting the document.
• ‍Software compatibility – Companies may use different software to carry out the contract redlining process, resulting in incompatible file types when working collaboratively.
• ‍Untracked changes – When changes are made to the contract digitally, they must be tracked within the document. If any changes are made and not tracked, it can slow down the process and cause costly errors.

Contract redlining software

Contract redlining software helps legal professionals speed-up and simplify the contract redlining process.

This technology can not only save legal teams significant amounts of time, but can improve the risk mitigation process. Combined with secure artificial intelligence (AI) functionality, the process can be even faster and smarter!

• Compliance checks - AI contract redlining technology will firstly check your contract against your contract's playbook or rulebook to judge if any clauses don't comply with your rules.
• Assessment - The AI technology is able to detect if a clause does not comply, or is even missing, in your contract.
• Red flags - Once your assessment is complete, which can be done in as little as 60 seconds, the AI software will provide a list of any clauses which need a review. Leading AI contract redlining software will provide an explanation detailing why a clause may have failed.
• Redlines - Within your results, the AI redlining software will redline any contract words or phrases that do not meet your requirements. Some AI redlining technology will redline the entire clause, whereas leading solutions (such as Summize) will only redline specific words.
• Suggested amendments - Alongside your redlines, the contract redlining software will provide a suggested amendment, guided by the terms in your contract's playbook. Assess these amendments and simply accept, edit or decline their addition to your contract.
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AI contract redlining software in action

Take a look at the intuitive process in our AI contract redlining walk-through - all complete within Microsoft Word!

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Business use case

Utilising the correct tools to facilitate and enhance the redlining process will reduce the number of errors and time spent on redlining tasks. Summize’s contract lifecycle management software enables efficient redlining and encourages collaboration with shareable links and activity tracking.

“The basic contract summary is one of the best time-saving tools I have. The integration with Word makes redlining a much cleaner process. Everything is just quicker now that we have Summize”.
‍Tabitha Studebaker
Director of Presale and Contracts at Day Wireless Systems                  

Explore Day Wireless System's customer success story to learn more about how they use Summize's Contract Lifecycle Management (CLM) software.
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Summize's contract redlining software

Contract redlining is a crucial component of the contract lifecycle to execute a successful contract. However, like many traditional contractual processes, it can be manual, costly and prone to mistakes and oversight.

Summize’s integrated CLM platform is underpinned with AI, allowing legal teams and commercial users to review and analyse contracts quickly and efficiently.

Here are the benefits:

• Microsoft Word - Our AI redlining technology exists within Microsoft Word, making it even easier for legal professionals to carry on redlining contracts in the tool they are already used to.
• Surgical redlining - Save time with our surgical redlining, a functionality not available by all CLM providers. Surgical redlining only redlines specific words or phrases that don't comply with your contract's playbook, rather than the whole clause. This saves time and also protects the integrity of your contract's content.
• Assessment and amends - Our AI redlining software provides an explanation of each redline and suggested amendment, which you can assess and edit if necessary. AI technology does most of the heavy lifting for you, but also provides you with the opportunity to make further amends if needed.
• Security - Any use of AI should be checked and comply with your business' AI mandate. At Summize we take AI security and privacy seriously. Our AI works within siloed practices, meaning that customer AI data is not available to other customers, OpenAI or used to improve OpenAI models.

Cut down the time you spend on contract redlining tasks and accelerate the contract review process for your business. See the technology in action for yourself by booking a Summize demo with our team today.