Written by Andy Stark
As artificial intelligence becomes more prevalent in contract management, businesses are weighing the benefits of automation against the necessity of human oversight. World Commerce & Contracting (WorldCC)’s latest report, “AI Adoption in Contracting,” reveals that companies remain cautious about relying entirely on automated systems while AI adoption is rising.
Based on a survey of 374 organizations across 17 industries, the report, published in partnership with Icertis, found that 42 percent of businesses now use AI in some aspect of contract management, a significant increase from previous years. However, nearly 70 percent of respondents still require human review for AI-generated agreements, underscoring the need for careful oversight.
Sally Guyer, CEO of WorldCC, emphasizes this point. “AI-generated contracts must undergo human scrutiny to avoid unintended biases or gaps in legal protection. Automation should assist professionals, not replace them.”
AI’s Expanding Role in Contracting
According to WorldCC’s research, artificial intelligence has become a transformative force in contract management, revolutionizing processes across the entire lifecycle of agreements. The findings reveal that nearly half of organizations (48 percent) have implemented AI systems to generate standard contracts, streamlining the drafting process. Additionally, 37 percent of companies harness AI technology for real-time contract monitoring, enabling them to track compliance and performance metrics effectively.
The impact of AI adoption is particularly evident in financial outcomes, with organizations that integrate AI into their contract review processes reporting a substantial 24 percent reduction in contract value leakage. This significant improvement in value retention demonstrates the tangible benefits of incorporating AI technology into contract management workflows.
Contract value leakage, defined in the report as the difference between projected and actual contract outcomes, currently averages 8.6 percent across surveyed organizations. Businesses that integrate AI-driven contract review and monitoring tools are seeing improvements in compliance and accuracy, reducing financial losses.
Despite these benefits, 46 percent of businesses expressed concerns about AI’s ability to interpret complex legal frameworks, particularly in contracts that span multiple jurisdictions. Tim Cummins, President of WorldCC, cautions against over-reliance on automation. “AI can process vast amounts of contractual data in seconds, but it does not replace human reasoning, particularly when managing high-value or sensitive agreements.”
Data Security and Compliance Challenges
While AI improves contract efficiency, security and compliance remain significant concerns. WorldCC’s report identifies data security as the top barrier to AI adoption, with 63 percent of respondents citing concerns over how sensitive contract information is stored and processed.
AI-powered contract management systems require access to large datasets, increasing exposure to cyber risks. Additionally, as regulatory frameworks such as GDPR in Europe and the CCPA in California evolve, companies worry that AI-driven contract processing tools may fail to comply with shifting legal standards.
Sally Guyer notes that compliance remains a shared responsibility. “AI can enhance contract monitoring, but legal and procurement teams must remain accountable for ensuring agreements align with industry regulations and ethical standards.”
AI Bias in Contract Drafting
The WorldCC report raises concerns about AI bias in contract generation, highlighting the risk of perpetuating unfair practices due to machine learning systems. Since these AI models learn from historical data, they may amplify existing inequities in contracts. Alarmingly, only 31 percent of organizations have implemented governance frameworks to prevent bias in contract generation. The report also notes that without proper oversight, AI-generated contracts often favor larger corporations over smaller vendors, reflecting the historical patterns in training data where larger firms typically had stronger negotiating power.
Legal professionals have expressed concerns that AI-generated contracts may not always reflect modern regulatory or ethical standards, particularly in procurement agreements. Tim Cummins warns that “AI reflects the data it is trained on. If past contracts favored one party over another, AI may continue that pattern unless human oversight intervenes to correct it.”
The Future of AI in Contracting
WorldCC’s report forecasts widespread adoption of AI in contract management, with AI-driven tools becoming standard for routine agreements in large enterprises by 2027. Despite this automation trend, 70 percent of organizations plan to maintain human oversight for high-stakes contract negotiations. Companies are simultaneously investing in AI literacy programs to help their legal and commercial teams effectively integrate automated systems into their workflows.
As AI tools become more sophisticated, businesses must establish stronger AI governance frameworks to mitigate risk while maximizing efficiency. The report recommends that organizations develop guidelines for AI use in contracting, focusing on bias detection, security protocols, and legal compliance.
Maintaining a Balanced Strategy
The findings of WorldCC’s report emphasize the importance of balancing AI automation with human judgment. While AI is improving efficiency, reducing financial losses, and streamlining contract management, concerns over data security, legal complexity, and bias highlight the need for continued human oversight.
WorldCC’s research suggests that organizations adopting AI must take proactive steps to strengthen compliance frameworks, invest in AI literacy, and maintain human involvement in high-value contract decisions. As businesses navigate AI’s expanding role, the challenge will be ensuring automation supports, rather than replaces, strategic decision-making in contract management.
Find out more by downloading the report or signing up to WorldCC’s AI Contracting Week.
