July 20, 2024

Maximising AI for Setting Up Legal Contracts: Why It Matters for SMEs

The adoption of artificial intelligence (AI) in businesses is in full swing. According to data and statistics published by Forbes, the AI market in the UK is valued at £16.8 billion and is expected to grow to a whopping £801.6 billion by 2035. Of this number, 33% of medium-sized and 15% of small businesses use at least one type of AI technology. AI tools can reduce the need for manual labour by streamlining processes like data management and even analysing legal documents. For small and medium-sized enterprises (SMEs) especially, maximising AI can play a crucial role in reducing unwanted costs brought about by legal issues.

Each year, 32% of SMEs experience legal challenges, which can include non-payment or late payment of taxes and poor contracts. According to a YouGov survey, SMEs in the UK lose more than £13.6 billion each year when they fail to take care of these legal issues. This makes AI tools that help set up contracts necessary to avoid the costs of settling a lawsuit or other contract-related issues. Below, we look at how AI improves business operations and why AI-powered legal services matter for SMEs.

Improving business operations through AI

Businesses can now enjoy enhanced efficiency by relying on AI to accomplish mundane, repetitive tasks that may be prone to human errors. For instance, small businesses can now maximise AI for accounting work like tax returns thanks to software such as Sage’s AI-powered tool Sage Copilot. The software aims to streamline accounting, finance, and people management processes by handling administrative tasks and suggesting ways to boost business growth. This can help with overseeing cash flow management, generating invoices, and spotting errors while you focus on other important tasks. The automation of these finance and accounting tasks can then allow SMEs to focus on other, more complex business operations, fuelling worker productivity and efficiency.

Meanwhile, AI-driven cybersecurity solutions also provide small businesses with enhanced protection from sophisticated cyber attacks that can compromise important company data. AI systems can analyse patterns of potential threats to prevent them from occurring, helping you secure your small business’ digital assets. AI-powered cybersecurity solutions offered by companies like Darktrace can also prevent the need for cybersecurity personnel, helping SMEs reduce costs while enjoying advanced security measures.

How AI services for legal contracts help SMEs

AI tools can also help SMEs set up legal contracts. These documents are an important foundation for agreements with other stakeholders, and creating and managing these contracts is essential for protecting a business’s reputation and cash flow. Poorly drafted contracts can lead to unintended breaches, especially when your business or other parties misunderstand obligations. For instance, in case of disputes, a judge can deem poorly written terms in a contract as unenforceable, which can lead to severe legal penalties. Settling these court disputes can be expensive, with each small business owner spending an average of £1,200 per year on legal services, according to a report by The Law Society of England and Wales.

Using AI services is, therefore, crucial in avoiding legal issues and unwanted costs caused by poor contracts. Definely’s AI-powered legal document services play a role in reducing these costs by helping create contracts that leverage language models from your organisation’s document repository. The software also enables easy drafting and editing of defined terms and cross-references to ensure a contract’s clarity and accuracy. Allowing AI to draft and proofread documents can cut down on time spent managing these issues. AI will also ensure that your contracts are clear and accurate to avoid legal disputes that can cost your business time and money.

 

Although AI tools can help reduce time spent on accurately drafting legal documents, companies should still exercise due diligence when reviewing these contracts. AI tools can improve the operations of SMEs, but company owners must take necessary steps in their organisations to ensure that everyone is well-equipped to manage associated risks, including AI bias or error in fraud detection. As mentioned in our previous article, AI risk management frameworks should be put in place. This includes investing in AI literacy and upskilling to be able to critically analyse AI outputs, actively engaging with IT and data science teams for risk management, and developing an AI governance framework. These steps ensure that SMEs can effectively leverage the benefits of AI by being properly equipped with knowledge on how to use and manage emerging technologies.

AI tools can help streamline repetitive tasks and improve cybersecurity. More importantly, AI can also help SMEs set up accurate and error-free contracts that prevent legal issues and potential profit losses. For more business articles, visit the North Wales Business News website.