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Contract automation allows employees to quickly draft correct contracts themselves based on pre-approved templates and clauses — instead of copying individual documents and constantly involving the legal department. This saves time, reduces the risk of errors, and ensures consistent, compliant contracts. It benefits not only large corporations with tens of thousands of contracts; SMEs with hundreds of agreements do as well. Below, you can read how it works and what it delivers.
Why is contract management such a challenge?
Research shows that the average large brokerage firm has 20,000 to 40,000 active contracts. However, SMEs also easily manage hundreds to thousands of agreements. With limited resources and budget, this is difficult to do efficiently — and problems arise even with smaller numbers. Optimizing and automating the contract process prevents a lot of trouble later on.
The problem of drafting contracts by hand
Suppose a sales colleague wants to draft a contract. The common scenario is that he copies the text from a similar contract and adjusts some details. The risk: the new contract is non-compliant, contains errors, or lacks essential provisions — especially if the original contract was intended for a completely different situation.
In the best-case scenario, the draft then goes to the legal department for review. That costs time and money, especially if every detail has to be checked or assessed by external specialists. With contract automation, this process changes fundamentally.
What is contract automation?
Contract automation is the process by which contracts are automatically generated based on pre-recorded (customer) information. Specialized software works with a library of approved templates and clauses. Employees then only draft concepts based on that library and add, for example, a compensation clause or a termination clause .
By automating these routine tasks, contracts are generated faster and more accurately, with standardized language and a consistent level of quality.
What are the benefits of contract automation?
- Time savings: employees draft contracts themselves without having to involve the legal department every time.
- Fewer errors: only approved, compliant clauses appear in the contract.
- Consistency: standardized language use in all agreements.
- Scalability: even large numbers of contracts remain manageable.
- Focus for lawyers: the legal department has time left for complex, truly important matters.
What should you pay attention to during implementation?
- Library quality: the templates and clauses must be legally sound and remain up-to-date — otherwise, automation also multiplies the errors.
- Maintenance: will you appoint someone to maintain the clause library in the event of new legislation?
- Limits to self-service: determine which (deviating) contracts must still be reviewed by a lawyer.
- Workflow and approval: define who is authorized to draft what and who approves it.
Frequently asked questions about contract automation
Is contract automation only for large companies?
No. SMEs also often manage hundreds of contracts and benefit from speed, consistency, and fewer errors. You can tailor the scale of the solution to the size of your organization.
Does automation make the lawyer redundant?
On the contrary. The legal expert is shifting from reviewing standard contracts to building and maintaining the clause library and assessing complex cases. The quality of the system stands or falls with sound legal input.
How do I keep the automated contracts compliant?
By having the library periodically checked and updated in response to new laws and regulations. A fixed maintenance schedule prevents outdated clauses from spreading unnoticed throughout all your contracts.
Help with contract automation
The legal experts at MKB Juristen assist with drafting templates and standard clauses for your clause library, ensure they comply with current laws and regulations, and advise on your contract workflows. View our expertise in contract law or schedule a no-obligation intake.
