8 Days to 5 Minutes: How Flex Legal Reshaped Contract Review
Contract management is a common organizational challenge. The legal team at Flex supporting Global Procurement and Supply Chain (GPSC Legal), reviews thousands of complex global supplier contracts every year. The time required to review and negotiate them was significant, prompting Flex to overhaul its review processes. After partnering with DocJuris, the teams developed an artificial intelligence (AI)-driven contract review tool which has done the seemingly impossible — transforming days-long turnaround times into mere minutes.
“Flex Legal teamed up with us to develop a unique, AI-driven contract review tool that reduced their review turnaround from eight days to five minutes,” says DocJuris CEO Henal Patel. “That’s a pretty dramatic reduction time, and they were able to do it because they leveraged our technology’s ability to analyze and understand the changes and markups coming in from their suppliers.”
Flex, one of the largest diversified manufacturers in the world, must be in “lockstep” with those suppliers as a core matter of its business. “Whether it’s contracts, the terms of those contracts, or the potential contractual risks, in a world where efficiency and seamless execution in supply chain are critical, Flex obviously had a big quest to optimize this process,” explains Patel.
In the beginning, DocJuris was working with Flex to streamline their NDAs, using AI to speed up regular NDA reviews. The lead attorney for Flex Global Procurement and Supply Chain, Iringo Csifo-Nagy, then began discussions with Patel around how to make a wider impact to the supply chain, contracting, and embedding additional efficiencies in the contract review process. Using complex data regarding contract volumes and measured contract turnaround times, GPSC Legal was focused on a solution that adds more productivity, while also identifying the best outcome for the business, focusing the solution on those specific contract types.
“Our vision was to focus contract negotiations on the key issues and close gaps early to improve cycle times for high volume contracting,” says Csifo-Nagy. “We knew exactly what the most time-consuming steps in our process were. The average turnaround time for redlining a complex supply chain agreement was eight days, and our contract volumes were increasing. It was time for a change. We wanted to replace manual work by using AI driven contract reviews, and we needed a turnkey solution that we later developed together with the DocJuris team.”
“They saw the proof of concept around NDAs,” continues Patel; “they then extrapolated that and said, ‘if you could do this with NDAs, why can’t you do this with more complex supply chain agreements?’ It was really Iringo's leadership that took it to the next level. Looking at the data was key — where are the pain points? Where’s the volume? Where’s the time being spent? That was critical.”
Solutions involving AI can often include functions like redlining or altering workflows, but GPSC Legal wanted to take things a step further by implementing AI into its overall process improvement, hence the decision to focus on re-imagining the nature of contract negotiations at the manufacturer, which included a shift in thinking for the business.
The suppliers who work with Flex regularly return markups, resulting in a back and forth of redlines — a familiar business scenario. However, the complexity of the agreements working their way through GPSC Legal makes the typical approach to reviewing them long and labor intensive. “What makes Flex’s approach unique, is the thoughtful way they addressed the issue,” says Patel. “The team challenged us and said, ‘we prefer a turnkey solution that uses AI to change behavior and add value,’ and thought through the stages that could be established to change the behavior of the business and improve outcomes.”
Patel explains that the approach of many contract lifecycle management systems involves creating a workflow for supply contracts, but the primary actions occur outside the core document. “You put the contract in, and it goes to the legal department. They review it, and it goes back; a workflow is created for that, which sounds great. But that’s not actually solving the problem or bringing efficiency — it’s just creating a database for the workstream.” DocJuris looked deeper into the actual behavior within the document itself. “We engineered that process; then re-engineered not just the process and the technology, but the behavior in terms of how we react to these agreements that come back from the suppliers.”
“We sought to empower our business stakeholders with a new tool to negotiate and close contractual gaps early by using AI inputs. We thought AI could be used to identify and extract the contractual issues for our business teams. At the time, it was a bold idea. It took time to develop customized playbooks that ‘taught’ AI how to identify those gaps. Today, we see the benefits and know it was well worth to try a new approach,” comments Csifo-Nagy.
Instead of waiting for a lawyer to go through a contract line by line and provide feedback and comments, the AI-driven tool screens contracts against various risks and problematic clauses, for example, and provides a summary of issues for the lawyer and business team to use in contract negotiations. “That’s how you go from eight days to five minutes,” Patel emphasizes. “You eliminate a bunch of manual work that otherwise takes a long time. When you’re working in manufacturing in a complex process, like what Flex does, saving that time is huge. Getting those contracts to the finish line is happening much faster, which means their supply chains ultimately benefit, and their business runs more efficiently.”
In fact, since implementing this tool, GPSC Legal has transformed its contract management process. Execution required significant effort from the GPSC Legal team, with Senior Manager Piyush Maheshwary leading the implementation workstream. It took time and patience to overcome the original glitches and develop a playbook for the complex contractual template that was used for original testing. That said, efforts paid off and after a couple weeks, Maheshwary and the GPSC Legal team successfully completed the first test. Outside of that significant decrease in review turnaround time, the team has reduced overall contracting cycle time, improved contract terms, and leveraged the data provided by the tool to anticipate risks in supply chain agreements.
“The AI-driven contract review tool developed by our legal team and DocJuris has not only streamlined our contract review and negotiation process, but it has also improved facilitating knowledge sharing and enhanced collaboration among team members. Our internal stakeholders submitting contract requests on our internal platform receive a screening report generated by AI in less than five minutes instead of waiting for the lawyer to return a complex redlined draft. They can start contractual discussions immediately,” says Csifo-Nagy.
“Flex, in combination with our technology, has re-engineered the behavior, the process, and the approach to their contract reviews,” agrees Patel. This is an example of fantastic teamwork and a ‘can do’ approach. We’re proud of how our ideas were brought to life relentlessly despite all the challenge of such an innovative project.”