Discussions about manual contract processes often focus on their negative aspects, such as inefficiencies, human errors, and the risks associated with paper-based or spreadsheet-driven tracking. As contract volumes grow, the likelihood of mismanagement increases, making a Contract Lifecycle Management System (CLMS) a natural solution to streamline operations. However, there are critical areas where manual intervention isn’t just beneficial; it is essential. Human oversight enhances contract outcomes in these cases, giving organizations a strategic advantage. Let’s explore where the human touch makes all the difference.
Contract Negotiation
Once a contract is drafted, contract managers, often working alongside legal teams, navigate negotiations to align terms to benefit all parties. This process involves updating contract language and ensuring supporting materials reflect the agreed-upon terms. In small-scale agreements, particularly with vendors or partners where relationships are well-established, manual management can streamline negotiations, removing unnecessary steps and preserving goodwill without over complicating the process. Additionally, some contracts require a hands-on approach due to their complexity or unique customization needs, which may not fit neatly into the standardized templates used across an organization’s contract portfolio.
Today, AI-powered contract management systems leverage playbooks, past negotiation data, and predefined fallback positions to automate negotiations. These tools can efficiently analyze vast amounts of historical agreements, suggest optimal terms, and even propose alternative clauses based on prior deal structures. While this speeds up certain aspects of the negotiation process, AI operates within the confines of programmed logic and past data. It cannot assess context, apply strategic reasoning, and navigate the nuances of human interaction. On the other hand, a seasoned contract manager understands not just the contract’s legal and commercial implications but also the motivations, concerns, and priorities of the parties involved.
Effective contract negotiation is as much about relationship management as it is about deal-making. A skilled negotiator knows when to push, when to compromise, and how to structure an agreement that extends beyond just signing the deal, ensuring its success throughout the entire contract lifecycle. While AI can assist in negotiations, it should not be the final decision-maker. The best results come from a combination of technology and human expertise, where AI enhances efficiency, but experienced professionals apply judgment, logic, and strategic thinking that no machine can replicate.
Contract Approval
Once a contract is finalized, it must go through an approval process before becoming effective. Many organizations rely on automated workflows and e-signature platforms to streamline this step, routing contracts to designated approvers and recording approvals for compliance. While these systems reduce administrative effort and increase efficiency, they operate on predefined logic and cannot adapt to human concerns, last-minute changes, or nuanced approval policies that require discretion. Relying solely on automation assumes every approval process follows a predictable path, but in reality, roadblocks often arise. Key stakeholders may have reservations, require additional clarifications, or even hesitate due to business, financial, or strategic concerns. This is where human oversight becomes essential. Contract managers play a critical role in ensuring approvals move forward smoothly by addressing stakeholder concerns, managing last-minute adjustments, and ensuring everyone is aligned before a contract is released.
Additionally, contract managers with strong emotional intelligence can assess when parties need extra reassurance. Whether a stakeholder is hesitant about specific terms, navigating internal politics, or simply overwhelmed by the complexity of the contract, a personal touch can make a significant difference. By engaging directly, contract managers not only secure approvals but also build confidence in the agreement, fostering a stronger working relationship between all parties.
While automation helps execute approvals efficiently, assuming the system has flawlessly managed everything can introduce risk. Without human validation, contracts may be delayed, incorrectly approved, or released with unresolved concerns. In high-stakes agreements, never rely on assumptions. Human oversight ensures the contract is not just signed but successfully adopted and implemented.
Risk Assessment and Mitigation Strategy
While AI can flag risky contract clauses based on predefined parameters, true risk management requires human interpretation and strategic decision-making. Contract managers assess risks in context, considering economic fluctuations, regulatory changes, and operational vulnerabilities. A balanced approach is essential. Over-reliance on automation may lead to unnecessary red flags, while human oversight ensures that risks are properly mitigated rather than merely identified. Effective risk management involves cross-functional collaboration, scenario planning, and negotiating practical safeguards that align with business priorities.
Resolving Disputes and Managing Performance Issues
AI can track contract deviations and compliance metrics, but when issues arise, dispute resolution demands negotiation skills, diplomacy, and problem-solving, areas where human judgment is irreplaceable. Contract managers must work with stakeholders to find solutions that prevent litigation and maintain business relationships, whether it’s a missed deadline, a breach of terms, or an evolving business need. Automated alerts may notify teams of non-compliance, but only experienced professionals can assess the best course of action, balance enforcement with flexibility, and resolve conflicts to benefit all parties.
Contract Closeout and Exit Strategy Execution
Ending a contract is just as critical as starting one. AI can track expiration dates and trigger renewal reminders, but contract closeout often involves legal obligations, financial reconciliations, and transition planning that require human oversight. Contract managers ensure that final payments, asset transfers, warranties, and confidentiality clauses are properly handled, preventing future liabilities. Additionally, when relationships continue beyond the contract, a well-managed exit strategy, negotiated by experienced professionals, helps preserve goodwill and sets the stage for future engagements.
Ethical and Legal Judgment in Contract Decisions
AI operates based on programmed logic, but it cannot apply ethical reasoning or legal foresight in complex contract decisions. Sensitive agreements, such as government contracts, high-value vendor or client partnerships, or deals with regulatory implications, require human oversight to navigate compliance risks, ethical concerns, and long-term business impact. Experienced professionals weigh competing interests, escalate issues when necessary, and ensure that contract decisions align with corporate values, industry regulations, and legal/contractual best practices.
Cross-Cultural and Multi-Jurisdictional Considerations
Global contracts come with legal, linguistic, and cultural complexities that AI struggles to interpret. Automated tools may translate contract terms but often fail to capture regional nuances, business customs, or legal interpretations unique to each jurisdiction. Human contract managers bridge this gap by applying their understanding of international regulations, negotiation styles, and cultural sensitivities. In cross-border agreements, a skilled professional can adapt contract language, manage expectations, and navigate geopolitical considerations, ensuring agreements are enforceable and respectful of local business practices.
While AI and automation have revolutionized contract management, they are not a replacement for human expertise. The most effective approach balances technology-driven efficiency with human judgment, strategic thinking, and relationship management. AI can streamline processes, analyze data, and suggest optimized terms but cannot replicate the nuanced decision-making, ethical reasoning, and interpersonal skills essential to successful contract execution. As industries evolve, concerns about job displacement are valid, but even the most advanced AI requires human oversight to navigate complexities, protect business interests, and foster trust. Organizations that strategically integrate AI while preserving the irreplaceable value of human expertise will enhance contract outcomes and future-proof their operations in an increasingly automated world.
Navigating the balance between automation and human expertise in contract management requires the right strategy. That’s where we come in! At ABiz Corporation, we specialize in contract management services and consulting to help organizations optimize their processes while ensuring critical decisions remain in expert hands. Whether you need strategic guidance, risk assessment, contract negotiation support, or a customized approach to integrating AI into your workflow, our team is here to help ensure your business stays ahead in an evolving landscape.
Author: Nancy Nelson, President, ABiz Corporation, Contract Management Innovators