Automated contract review: the future is now

Design firms provide professional services to their clients, and the agreement to provide these services should be well documented in their contracts. To protect both the design firm and its clients, it is essential to have well-drafted professional services agreements that manage contractual risks. These agreements outline the terms and conditions of the project, including payment schedules, liability limitations, intellectual property ownership, and dispute resolution mechanisms. By managing these risks contractually, design firms can help protect themselves against potential litigation and financial losses while providing quality services that meet the expectations of their clients.

One critical aspect of managing contractual risks is to clearly define the scope of the project and the services to be provided. Such definitions help to avoid misunderstandings and disputes regarding the scope of services and reasonable expectations around the standard of care, timelines, and budgets. Additionally, design firms should insist that the agreement contains provisions that limit the design firm’s liability for damages or losses caused by events outside of their control, such as natural disasters or unforeseeable circumstances that may rest with construction professionals. Furthermore, the agreement should address intellectual property ownership, confidentiality, and non-disclosure obligations to protect the design firm’s proprietary information and the client’s confidential information. Overall, a well-managed professional services agreement can help design firms to mitigate risk, protect their interests, and deliver quality services to their clients.

A successful way to manage risk is to make sure contracts are reviewed carefully and thoroughly. It’s also important to pursue reasonable terms and conditions so that the risks assumed by contract are realistic and lie properly with the party best positioned to manage and control those risks. Many client-drafted contracts, for example, may contain provisions that may not always be clear, or worse, may contain problematic clauses that are overly broad and not within the scope of professional liability insurance coverage. Catching these clauses can be tricky, which is why automated contract review tools can help. The more eyes on a contract, the better.

AI technology is making it easier for design professionals to review contracts. In fact, automated contract review tools can spot common insurability and practice management issues in a matter of minutes and allow design professionals to respond effectively to those issues as contracts are negotiated, freeing time for design professionals to devote to other projects and clients. AI review tools can also reduce risk and increase standardization of contract terms while also being an excellent teaching tool for junior contract reviewers who can learn from repetition and become familiar with professional liability issues in the design and construction industry.

Here at Victor, our Contract Sifter tool offers a fast and easy way to spot potential coverage issues and receive actionable guidance (built-in suggestions) on common issues that relate to insurability in professional services agreements. The software uses AI, in the form of “Sifters,” which are trained to read text and identify important and relevant insurability concepts in contracts. While Contract Sifter is not a substitute for human review of a contract, it provides users with an automated do-it-yourself review and provides actionable guidance on those issues in the context of the contract so that users can understand better the associated risks and make informed changes.

Contract Sifter is a collaborative ecosystem that enables users to redline the document with the built-in Victor guidance or with the users’ own guidance and to track commentary and edits between the various reviewers of the contract, making it easier to see who authored certain changes and track more efficiently those suggested edits. There are several advantages to using Contract Sifter, including:

  • Issue spotting and built-in guidance
  • Efficiency and standardization
  • Training tool for new contract reviewers
  • Optimized functionality

The bottom line is that this tool is another set of eyes to help design firms with contract reviews, either by (a) reinforcing what users already know, but helping them do it faster and more comprehensively, or (b) helping users spot issues and learn from the built-in guidance through the process of repetition. Victor Sifter can help firms embed a risk management culture of “sift before you sign.” If you would like to learn more about Victor Contract Sifter, please visit our Victor website for more details.

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