AI Contract Review Software: Transforming the Legal Landscape

Legal teams face an impossible choice: thoroughly review every clause of every contract to protect the company, or move faster to meet urgent business demands. According to LegalOn's 2025 survey of 286 legal professionals, 52% of legal teams spend more than two hours reviewing a single contract.

Breaking this down further: 28% of teams invest 2-4 hours per contract and 24% invest 4+ hours per contract - time that compounds significantly across high contract volumes. For a legal team handling 500 contracts annually, this translates to nearly 188 working days spent solely on contract review.

Legal teams urgently require solutions to accelerate review while reducing mistakes that could expose their company - as well as other stakeholders - to financial, legal and reputational damages. The industry recognizes this need: according to the Association of Corporate Counsel’s latest Legal Technology Report, 75% of in-house lawyers aim to more effectively leverage software to transform contracting.

A new class of AI tools brings long-awaited innovation to contract review processes through automation and legal intelligence. 98% of LegalOn customers report saving significant review time, and 90% report improvements in accuracy and risk detection. The future of contract review has arrived.

This guide will explore the world of AI contract review software, answering common questions about functionality, applications, benefits, limitations, and key selection criteria for legal teams exploring these automation solutions.

What is AI Contract Review Software?

AI contract review software helps legal teams review contracts faster and more consistently. It uses artificial intelligence to scan legal documents, identify potential risks, highlight important clauses, and suggest changes based on your requirements. Think of it as a powerful assistant that speeds up the review process while helping legal professionals maintain high standards of accuracy. The software is designed to complement lawyers' expertise with AI-powered analysis, enabling teams to handle more contracts without sacrificing quality.

Unlike general AI models like ChatGPT, contract review software is purpose-built specifically for contracts and legal documents. The difference is significant: while foundational models like ChatGPT are versatile and can process a wide range of information, they often lack the specialized training necessary to understand and interpret complex legal language and concepts accurately. This can lead to gaps in identifying subtle legal nuances or understanding the context of specific legal scenarios, which are critical in contract review.

Purpose-built Legal Contract AI models are tailored and trained by legal experts to understand the intricacies of legal language and concepts. These specialized models are:

1. Trained on domain-specific data, including various types of contracts and legal documents
2. Refined by legal experts to develop a deep understanding of legal terminologies and clauses
3. Calibrated to assess organization-specific compliance requirements and potential risks
4. Designed to provide precise analysis and recommendations that align with legal standards and practices

By leveraging this specialized AI and natural language processing, AI contract review software aims to complement and enhance manual review processes for accelerated, comprehensive, and cost-effective analysis of legal agreements. The result is amplified productivity and precision, enabling legal teams to turn around business-critical agreements faster while maintaining high standards of accuracy.

How Can AI Help with Contract Review?

Purpose-built AI contract analysis and review software serves as a force-multiplier for modern legal teams. The technology absorbs administrative tasks and speeds analysis to boost productivity beyond conventional capacity. Rather than an extra cost-center, smart integration of AI amplifies limited resources. AI empowers legal teams to:

1. Turnaround Contracts Faster

AI-powered software instantly identifies and resolves contractual risks to accelerate the review and negotiation process. Pre-loaded and customizable playbooks facilitate standardized review while intuitive AI assistance and precedent search simplifies drafting. This expedites end-to-end cycle times, enabling legal teams to save time and swiftly advance deals for their business partners.

2. Focus on Higher Value Work  

By automating mundane, tedious tasks like surface-level reviews, AI minimizes manual effort, allowing legal professionals to focus on judgment-intensive strategic initiatives. Instant analysis and revisions amplify efficiency. More time for strategic tasks lets legal teams handle more high-value work internally, reducing cost and boosting job satisfaction.   

3. Control the Risks That Matter – With Consistency

AI can proactively uncover legal, compliance, and financial risks in contracts. AI can also be customized to an organization’s own standards for more targeted risk reduction. Some AI can make it easy for all users in an organization to review contracts for the same risks, respond to negotiations in the same way, and make revisions using the same language – this helps organizations be confident about what is in their contracts and avoid spiraling complexity. 

AI contract review helps legal teams move past overloaded and error-prone manual processes, so that they can sustainably review high volumes of business-critical contracts.

Who Uses AI Contract Review Software?

AI contract review platforms predominantly serve corporate legal departments and law firms managing high contract volumes with tight deadlines and limited legal budgets. According to LegalOn's 2025 survey of 286 legal professionals, 78% of organizations are either actively using AI for contract review (14%), evaluating solutions (20%), or exploring the technology's capabilities (44%).

In-House Legal Departments 

Facing a river of contract requests and limited growth in headcount, in-house teams seek automation to scale legal operations.

• Smaller Companies (under 1000 employees): Leverage pre-built expert playbooks and templates to implement professional-grade contract review processes without the time and resource investment of creating their own systems.
• Mid-Sized Companies: In addition to efficiency gains from pre-built playbooks, teams can quickly create automated rules that check contracts against company standards and make precise redlines using the teams’ preferred language. Learn more about LegalOn’s AI playbooks here.
• Enterprise: Large companies are beginning to integrate their own comprehensive playbooks with AI software, resulting in even greater efficiency and improved risk management. Further, AI-driven playbooks can be rolled out to sales and procurement teams and to support a global business.

Contract Management, Procurement, and Compliance Teams

Across industries, contract managers, procurement managers, sales contract teams, and compliance officers are responsible for ensuring that their contracts conform to company and legal standards. These teams are responsible for a wide range of contractual issues, including managing liability, protecting intellectual property, ensuring data security and privacy, and enforcing compliance with legal requirements and company standards. Here, AI can help teams check compliance responsively against evolving requirements within a variety of  sectors, including: 

• Business and Professional Services
• Credit and Banking
• Construction and Real Estate
• Education
• Healthcare, Life Sciences & Pharmaceuticals
• Manufacturing, including Automative, Industrials,and Consumer Products
• Private Equity
• Software
• Technology

Law Firms

AI contract review tools have emerged as valuable assets for law firms of all sizes that are looking to save costs and increase revenue. For smaller firms, contract review software can help firms take on more clients, review and negotiate faster, and do so without hiring more associates. For larger firms, contract review AI can enable taking on lower complexity work at more affordable rates that clients are willing to pay, rather than giving it up entirely, and demonstrating a commitment to efficiency and cost-effectiveness.

By reducing the time spent on line-by-line review, contract review software frees attorneys to focus more on their highest value advisory work. Further, this new software enables firms to help their clients in building and operationalizing their playbooks to enable more consistent treatment of key terms.

How AI Contract Review Software Works with Playbooks  

Contract review playbooks are essential guides that define how legal teams evaluate agreements. They contain an organization's standards, preferred language, fallback positions, and review protocols. Beyond ensuring consistent review standards, playbooks serve as a critical safeguard against risk by codifying legal expertise into clear, actionable guidelines.

Contract playbooks are particularly vital when working with AI tools - they act as the guardrails that keep AI analysis accurate and reliable. By providing structured guidance, playbooks prevent AI from hallucinating or making incorrect assumptions about legal standards. They align the AI with an organization's specific requirements, preferred positions, and negotiation strategies, ensuring that automated contract review produces trustworthy, consistent results that match legal team standards.

The Playbook Gap: Recent industry research reveals a significant challenge - according to LegalOn's 2025 survey of legal professionals, 95% of legal teams have gaps in their playbook coverage, with 54% having no playbooks at all and 42% relying solely on basic clause libraries. Only 5% report having fully comprehensive playbooks for every contract type they review.

Playbooks enable consistent standards-alignment checks before signing. When integrated with AI contract review systems software, they accelerate and strengthen reviews. However, building extensive playbooks requires significant time investment, which can delay the productivity curve and ‘time to value’ for legal teams working with AI contract review software.

Companies and firms of varying sizes see the benefits from AI contract review software in different ways. Smaller legal teams tend to have fewer defined contract playbooks that define negotiating positions and language to resolve issues. These teams often see the value in using pre-built industry-standard AI playbooks made and trained by contract lawyers alongside the technical staff within AI contract review software companies. 

At larger organizations, many legal teams have established their own standard agreements with corresponding playbooks. As such, larger companies frequently seek to customize their AI contract review software in line with their current standards. Both pre-built and customized AI playbooks offer significant value, but have different timelines to see efficiency gains. Teams using pre-built playbooks often see value on Day 1, while larger teams looking to customize their AI by building and training playbooks will see value as soon as they operationalize their standards and depending on the implementation speeds of the provider they choose.

Below we’ve outlined the different types of contracts suited for AI alongside the time to value:

Out-of-the-Box Review for Common Contract Types

Time to Value = Day 1

Contract playbooks are often at the top of an in-house team’s wishlist, but it takes a significant amount of time, coordination, and resources to create them.. To meet this challenge, some AI contract review software companies offer pre-built playbooks developed by legal experts, enabling teams to start reviewing contracts against industry standards on day one. These expert-developed playbooks combine technical AI capabilities with practical legal guidance, providing comprehensive coverage for both buy-side and sell-side positions.

At LegalOn, the team has built a comprehensive suite of AI playbooks for common agreement types, including the following examples:

• Non-Disclosure Agreement
• Data Processing Agreement
• Data Use Agreement
• Master Services Agreement
• Service Agreement
• Service Agreement with Deliverables
• Consulting Services Agreement
• SaaS Terms of Service
• Sales Agency Agreement
• Software Licensing Agreement
• Master Purchase Agreement
• Purchase of Goods Agreement
• Manufacturing and Supply Agreement
• Office Lease Agreement
• Modified Gross Lease 
• Triple Net Lease
• Venue Rental Agreement
• Distribution Agreement
• Letter of Intent
• Business Associate Agreement
• Material Transfer Agreement
• Clinical Trial Agreement
• Construction Agreement
• Construction Subcontractor Agreement
• Master Construction Supply Agreement
• Master Design Build Contract
• Master Construction Contract

Integrating Your Standards and Preferences

‍Time to Value = 1-3 weeks

Legal teams often document their standards in spreadsheets, Word files, or rely on unwritten knowledge from experienced reviewers. While these resources capture valuable expertise, they're often siloed and difficult to apply consistently across a growing organization. Modern AI solutions can transform these existing standards into automated review rules that:

• Identify key issues according to your criteria and flag problematic terms
• Make precise redlines using your preferred language and fallback positions
• Apply consistent standards across all reviewers and departments
• Update easily as requirements evolve and business needs change
• Combine with pre-built playbooks to fill coverage gaps

‍Custom Playbooks

‍Time to Value = 1-3 months or more depending on software

The most mature legal organizations may have built out comprehensive playbooks for one or more of their highest volume contract types, such as NDAs, Sales Agreements, or Vendor Agreements. These playbooks are built in Word, Excel, or OneNote and provide clear and comprehensive direction for the reviewer, including preferred and fallback positions and language. 

Often, these manual playbooks can be difficult to use and update, leading to inconsistencies and delays. Legal teams see immense time savings and compliance improvements after building their company’s playbooks in AI contract review software. Some AI vendors offer services to custom develop AI playbooks, while others require legal teams to build and train the AI systems themselves

Learn more about automating your contract review standards with LegalOn's flexible playbook options that combine industry expertise with your organization's standards and requirements.

What to Look for in AI Contract Review Software

Given the recent proliferation of AI tools, buyers should be advised that not all AI contract review software solutions are equivalent. When assessing options, prioritize these key dimensions:  

1. Purpose-Built for Pre-Signature Contract Review 

Look for tools explicitly engineered for pre-signature reviews, rather than contract lifecycle management (CLM) platforms that lack review specialization. While CLM solutions may cover some basic review capabilities, dedicated software here brings superior focus. Ideally, seek AI software explicitly engineered to enhance pre-signature review speed, accuracy, and risk mitigation. 

When evaluating AI solutions for accelerating contract review, prioritize these core features:

• Off-The-Shelf Review: No legal team has a fully built out playbook for every possible contract type. And many only have a partial playbook even for their most common agreements. Your AI contract review software should work off-the-shelf so you and your team can start reviewing against industry standards right away, without training or other costly time involvement required.
• Precise, Context-Aware Redlining: Your platform should be able to make word by word redlines, not just copy and paste whole clauses, to avoid overwhelming the counterparty with changes. 
• Search and Comparison: The software should enable easy search across past contracts and compare legal language section-by-section to identify deviations from precedents, even for differently structured agreements.
• Custom Playbooks: The platform should allow the creation of customizable playbooks to standardize contract review processes across the legal team, based on your organization’s best practices.
• Ready-to-use templates: Drafting new contracts from scratch is hard and can cost you countless hours scouring the internet looking for the right templates to use. Find a platform that allows you to kickstart your drafting process with ready-made templates that adhere to best practices.
• Version control: Edits matter; therefore, your platform should be able to track changes and revisions made to your contracts to compare edits across multiple versions.
• Fast: Your contract review software should be fast, able to review an agreement in seconds. Some contract review software can take 5 minutes, 10 minutes, or even longer to review an agreement. You will find these types of wait times very disruptive to your workflow.
• Secure: Your platform must protect sensitive contract data through industry-standard security certifications like SOC 2 Type II and compliance with privacy regulations like GDPR and CCPA. Ensure your vendor has a clear policy against using customer data for AI training or sharing it with third parties. Additional enterprise features like SSO integration, role-based permissions, and folder-level access controls can further enhance security while enabling seamless collaboration across teams.

2. More than a Generative AI Wrapper: Infusion of Proprietary AI and Legal Expertise

In contract review software, there is a big, defining difference between software that only has AI (e.g. relies on GPT) and software that has AI and also genuine legal expertise included. The nuances of contracts and the implications of their clauses require a depth of understanding that AI alone can fail to navigate. It’s therefore critical to choose a platform built on foundational legal models and content validated by seasoned attorneys. 

When evaluating AI solutions, look for those which are: 

• Grounded in legal expertise: What does a good contract review look like? At its core, contract review hinges on seasoned legal experience to identify precisely what to be on the lookout for
• Paired with attorney-drafted language: Upon spotting a concern, your AI contract review software should not just flag it, but also provide appropriate legal language to enact an appropriate modification. These suggestions should be based on language drafted by attorneys, not by AI, since even one word can entirely change the meaning of a clause. Additionally, having concise notes explaining legal reasoning can be invaluable when presenting the rationale to the other party. Again, you want these practice notes to be written by attorneys, not AI, since AI often hallucinates credible sounding but inaccurate information. A paper by Stanford researchers found that AI legal hallucinations are alarmingly prevalent, occurring 69% of the time or more, depending on the AI model.
• Able to provide practical guidance to weigh the risks: Not all flagged concerns hold equal weight. Determining whether to amend a clause requires practical guidance on the implications of said risk and its relevance to your unique situation.
• Informed by market norms: Awareness of broader market norms plays a crucial role in contract negotiations. You’ll want insights into which risks are most pivotal and the prevailing market standards for various contract terms.

Always inquire about the origins of the solution’s legal content, and if possible, speak to some of the experts. Understanding the knowledge behind the digital curtain can provide a clearer picture of the platform’s reliability and depth.

3. Security and Compliance

When selecting an AI contract review tool, it's important to ask vendors about security and compliance. This helps ensure the software meets your organization's needs for protecting sensitive data and adhering to legal and regulatory requirements.  

Key questions to consider include:

• Has the tool been audited to confirm it meets security best practices? Look for evidence of independent audits.
• What compliance certifications has it achieved? Common relevant certifications include SOC 2, ISO 27001, and GDPR compliance.  
• Where is client data stored? It should be hosted in secure data centers or cloud infrastructure.
• What access controls govern data access? Strict role-based access and monitoring helps prevent breaches.
• How is client data isolated? Data should be logically separated and encrypted via best practices.
• Does the provider integrate with your existing security measures, such as Single Sign-On (SSO) integration?
• Is your content used for AI and machine learning training? If so, are you comfortable with the security and privacy practices in place? 
• Does the provider have a track record you can count on and trust?

Vetting cybersecurity and compliance posture safeguards your contracts and lessens organizational risk. Documenting vendor security measures also shows due diligence if ever questioned.

4. Day 1 Functionality

For many companies, it’s important to understand how long it will take to see a return on investment. Some AI contract review solutions, like LegalOn, boast Day 1 functionality. They do this by investing in their own team of lawyers to create contract review playbooks, clause libraries, and practice notes. These lawyers work alongside the company’s technical team and their knowledge and content is trained into LegalOn’s AI. This training means that new customers get to skip doing their own training and setup and move to getting results and realizing returns faster. While allowing further customization over time, pre-tuned legal agreements fuel rapid initial productivity gains, saving teams months of training effort trying to build from scratch.

LegalOn for AI Contract Review Software

With thousands of clients worldwide, LegalOn stands out as  a global leader in AI contract review software grounded in both technology and legal expertise. 

Origins: LegalOn was founded in 2017 by two corporate lawyers seeking to modernize contract review by combining AI with attorney experience. Today, LegalOn operates globally with businesses headquartered in the US and Japan. The global team spans legal veterans and AI engineers, using the latest advances in this rapidly evolving field.  

Purpose-Built AI: Unlike tools relying on generalized language models, LegalOn develops contract-specific AI trained on legal documents to spot issues that other software miss. 

Practical Guidance: The software seamlessly blends AI with practical recommendations crafted by experienced lawyers, so users understand contractual risks and constructive alternatives to negotiate confidently.

Secure and Compliant: LegalOn prioritizes the security of your sensitive contract data with SOC 2 Type II certification and compliance with global privacy regulations including GDPR and CCPA. We maintain strict data isolation, never using customer contracts for AI training or sharing them with third parties. Our platform runs on Microsoft Azure's enterprise-grade infrastructure and offers advanced security features including SSO integration and granular access controls. Through rigorous in-house development and legal oversight of our AI models, we ensure consistent, accurate outputs that legal teams can trust.

Continuous Evolution: By constantly integrating customer feedback and the latest AI innovations, LegalOn produces the most cutting-edge contract review software.

LegalOn is one of the fastest growing legal technology companies in the world, transforming how legal teams worldwide tap AI to conquer contract review challenges. The balanced mix of AI and attorney elevates both speed and accuracy in the race to keep business-critical agreements moving.

Book a demo today to see it for yourself on real contracts you review daily.