What Is AI Contract Review? A Complete Guide

AI contract review is the application of artificial intelligence to automate and streamline the analysis of legal documents, such as contracts and agreements. Using machine learning and natural language processing (NLP), AI tools can extract key data, flag risks, and check compliance far faster and more consistently than manual review.

Some analysts have noted that AI contract review is one of the most capable use cases for AI today. For example, LegalDive said, "AI’s first serious foray into legal may be contract review". And Anu Madgavkar, a partner at the McKinsey Global Institute, told Business Insider, [legal] data is actually quite structured, very language-oriented, and therefore quite amenable to generative AI."

How AI Contract Review Works

AI contract review software automates what has traditionally been a painstaking manual process. It leverages advanced technologies to read, understand, and interact with legal text:

• Document ingestion and extraction: You upload a document—Word, PDF, or similar—and the AI uses optical character recognition (OCR) and NLP to transform it into searchable, structured data.
• Analysis and risk assessment: The software identifies key clauses, such as payment terms or termination rights, and measures them against predefined playbooks or company standards. It then flags risks, inconsistencies, or non-compliant terms.
• Redlining and collaboration: Suggested edits and redlines are generated automatically. Many tools double as collaboration hubs, allowing legal, procurement, and business teams to track revisions and manage the contract’s lifecycle.
• Human oversight: AI delivers insights and suggested changes, but human lawyers still review, edit, and approve—ensuring accuracy and applying nuanced legal judgment.

Key Benefits of AI Contract Review

Adopting AI for contract review provides benefits across legal, sales, procurement, and operations teams:

• Improved speed and efficiency: Contracts that once took hours or days to review can now be analyzed in minutes, accelerating deal cycles.
• Increased accuracy and consistency: AI doesn’t get tired or distracted, reducing the chance of missed clauses or overlooked risks.
• Better risk management and compliance: Built-in checks help spot risky language and ensure alignment with both internal policies and external regulations.
• Cost savings: By cutting manual labor, companies lower legal costs and reduce exposure to costly disputes.
• Enhanced collaboration: Centralized platforms streamline approvals and communication between departments, removing bottlenecks.

Important Considerations and Limitations

While powerful, AI contract review has clear limits. It should always be seen as a “first pass” tool — valuable for handling the heavy lifting of initial review, such as spotting red flags, summarizing key terms, and comparing clauses. This allows lawyers to spend more time on judgment calls and strategy, but AI should never be the final decision-maker.

Before rolling out an AI contract review solution, companies should weigh the following factors:

• Human expertise is non-negotiable: AI is an assistant, not a replacement. Complex negotiations still require legal professionals.
• Security and confidentiality: Choose platforms with enterprise-grade protections and transparent data policies.
• Accuracy varies by tool: General-purpose AI may hallucinate. Specialized legal AI trained on legal data offers more reliability.
• Cost and integration: High-quality tools can carry upfront costs. Assess ROI and ensure smooth integration into workflows.
• Nuance and bias: AI may struggle with industry-specific language or inherit biases from its training data.

Top AI Contract Review Tools

goHeather
Built for lawyers and businesses reviewing contracts in Microsoft Word, goHeather combines first-pass contract analysis within Word, an AI-driven repository for granular insights, and an AI chatbot for Q&A and automated redrafting. It also includes automated contract drafting and process automation tools, making it a complete solution for contract review and management.

Ironclad
Focused on enterprise needs, Ironclad offers full contract lifecycle management. It covers everything from drafting and negotiation to approvals and post-signature analytics.

DocuSign AI-Assisted Review
For teams already using DocuSign, this tool brings AI-powered review and revision suggestions directly into Word and integrates with the broader DocuSign ecosystem.

Harvey AI
A powerful legal AI assistant designed for large law firms, Harvey supports complex tasks such as legal research, drafting, and contract analysis at scale.