Introduction

Contracts are at the heart of every business—they lay out the rules, duties, and protections for everyone involved. But going through business contracts, like services agreement or NDAs, can be a slow and complicated process.

Traditionally, businesses have turned to legal professionals for manual contract review. But with new technology, AI-powered tools for reviewing contracts are becoming more popular, at least for the initial review before you decide to pass it on to a lawyer.

So, how do you choose between AI and manual contract review for your business? Let’s look at the pros and cons of each to help you make the right call.

Read: How to choose the best AI contract review tool for your business

What is manual contract review

Manual contract review means carefully examining every part of a contract by hand, often line by line. While this is usually done by legal professionals—whether they’re in house or hired externally—it involves looking for risks, unclear terms, and ensuring everything complies with the law and fits the business’s goals and policies.

This process requires a lot of reading, cross-checking, and analysis to spot any issues that might lead to problems later on, and can take anywhere from a few hours to a few days or weeks, depending on how long the contract is.

The pros of manual contract review

• Expertise and judgement: If lawyers are doing the initial review, lawyers bring deep legal knowledge and experience to the table. They can provide nuanced insights that go beyond the text and consider broader legal contexts.

• Customization: Lawyers can tailor their review to the specific needs of your business.

• Trust and confidence: There’s a level of trust in having a human expert review important legal documents, especially for high-stakes deals or complex contracts.

The cons of manual contract review

• Time-consuming: Reviewing contracts manually can be slow, especially for businesses dealing with a high volume of contracts.

• Costly: Hiring legal professionals to review contracts (at least for the initial review) can be expensive, particularly for startups and small businesses.

• Prone to human error: Even the best lawyers can miss details, especially when working under tight deadlines or reviewing lengthy documents.

Read: 10 questions to ask before buying an AI contract review tool

What is AI powered contract review?

AI-powered contract review uses artificial intelligence and machine learning to analyze contracts. These tools can quickly scan documents for key clauses, flag potential risks, and suggest changes based on pre-set criteria. AI can handle large volumes of contracts in a fraction of the time it takes for a manual review.

Pros of AI contract review

• Speed and efficiency: AI tools can review contracts in minutes, not hours, which is ideal for businesses that need to process a high volume of contracts quickly.

• Cost-effective: Once the AI system is set up, it can be more affordable than paying for ongoing manual reviews by legal professionals.

• Consistency: AI tools follow the same rules every time, reducing variability and ensuring a standardized review process.

• Data-driven insights: AI can analyze trends across multiple contracts, providing valuable data that can inform business decisions and negotiations.

Cons of AI contract review

• Not a standalone solution for complex cases: While AI excels at reviewing standard contracts and identifying common risks, it may not fully replace human expertise for highly complex or unusual agreements. However, it can handle 90% of the work and leave the niche issues to the experts.

• Initial setup and customisation: Setting up AI tools requires some upfront effort and customization to align with your business's specific needs. But once it’s up and running, it saves significant time and costs in the long run. However, AI contract review tools like Cobrief can be used instantly, with no prolonged setup; all you have to do is upload your contract, click review, and your contract review will be done in seconds.

• Continuous learning curve: AI tools need access to high-quality data to deliver the best results. While this might require regular updates and monitoring, the more they’re used, the smarter and more efficient they become, continuously improving contract review over time.

Overall, while AI may not replace human lawyers entirely, it significantly enhances contract review processes and offers immense value, especially for startups and businesses looking for speed, efficiency, and cost savings.

Many businesses have started to use AI contract review for the initial, first line review, giving them more power to decide whether a legal professional is really needed.

Read: How AI contract review tools can simplify business contracts for non-lawyers

Which is right for your business?

Deciding between AI and manual contract review depends on several things: the size of your business, how many contracts you manage, your budget, and how complex your legal needs are. Here’s a quick breakdown to help you choose:

High volume, low complexity

If your business handles a lot of standard contracts—like NDAs, sales agreements, or service contracts—AI-powered contract review is the way to go. AI tools are great at processing repetitive tasks, quickly flagging common risks, and keeping things consistent, saving you time and money.

Low volume, high complexity

For businesses with fewer but more complicated contracts—like mergers, acquisitions, or unique partnership agreements—a manual review by legal experts might be better. Human lawyers can dive deep into complex terms, negotiate specific clauses, and give tailored advice.

A hybrid approach

Many businesses are finding that combining AI with manual review works best. AI can handle the bulk of the initial review, catching potential issues and key points, while human lawyers step in for a deeper analysis of complex or high-risk contracts. This approach boosts efficiency while still getting the benefit of human expertise where it matters most.

How Cobrief can help with contract review

Reading your business contracts can feel overwhelming as an owner-manager of a small to medium-sized business. That’s where Cobrief comes in. Cobrief helps business owners and operators review their business-to-business contracts for legal risks.

Upload your contract to Cobrief's AI contract review software, click review and you’ll get a list of all the risks, in plain English. This helps you decide whether to sign, negotiate or reject the terms of your contract, or hire a lawyer. Think of it as a heat map for your contracts.

Get started here.

Conclusion

AI and manual contract review each have their benefits. AI brings speed, cost-effectiveness, and consistency, making it ideal for businesses dealing with a high volume of simple contracts. Manual review, meanwhile, offers deep expertise and a personalized approach that’s valuable for more complex agreements. For most businesses, the best strategy is a hybrid approach—using AI to cover most of the work and bringing in human experts for the trickier parts. By knowing the strengths of both AI and manual review, you can choose the method that best fits your business's needs and budget.