Can AI review legal contracts? Everything you need to know

Legal contract review is a time-consuming task, but advances in AI are making it faster, more accurate, and efficient. But how does AI fit into legal workflows, and can it replace traditional methods? 

This guide takes you through AI-powered contract review, who it is useful for, and the best tools available in 2025.

Can AI review legal contracts?

Yes, AI can review legal contracts. It uses technologies like natural language processing (NLP) and machine learning to analyse legal texts, identify key clauses, and highlight compliance or business risks. While not a replacement for human oversight, AI speeds up the review process while improving accuracy.

What is AI contract review and how does it work?

AI contract review automates the analysis of legal documents. Using NLP, it identifies key terms, obligations, and risks within contracts. Machine learning enables the system to adapt to specific legal needs, improving over time. These tools process vast volumes of documents quickly, delivering precise summaries and actionable insights.

How AI reviews legal contracts

• Users upload a legal document, and the AI systematically analyses its structure and content.
• Once the parties in the contract are identified, the user selects which party they represent, so that the AI can review the terms in their favour.
• The AI detects key clauses, terms, and legal constructs, flagging high-risk or non-standard elements against predefined benchmarks or organization-specific playbooks that have been set up.
• Using natural language processing (NLP), the AI interprets legal language with precision, accounting for subtle nuances, context, and jurisdictional variations.
• It evaluates compliance, contractual obligations, and potential liabilities tailored to user-defined criteria or regulatory standards.
• The AI refines its accuracy through iterative processing, recognising patterns, frequent clauses, and irregularities to enhance efficiency over time.

The benefits of using AI for legal contract review

AI drastically reduces review time, processing documents in minutes while maintaining consistency, ensuring important clauses and risks aren’t missed. It flags non-standard terms and high-risk provisions, helping avoid disputes and meet compliance standards.

Beyond speed and accuracy, AI delivers cost savings, making it possible to handle large volumes of contracts without expanding your team. Customisable to industry or regulatory needs, AI can be adapted to flag specific clauses for enhanced risk management.

The limitations of AI in reviewing legal contracts

AI may struggle with complex legal nuances or ambiguous clauses that require deep contextual understanding. Handling intricate legal phrasing demands deep training, and even then, AI might misinterpret or overlook subtleties.

AI’s reliability depends heavily on high-quality data. Poorly trained models can produce inconsistent or inaccurate results, making human oversight essential.

Using AI for contract review requires trust that your data is handled securely. Without robust anonymisation measures, sensitive information may be exposed. Choosing a platform with proven security standards, such as anonymisation, is crucial to safeguarding confidential data during AI processing.

Who could use AI to review contracts?

AI-powered contract review tools are useful for anyone working in highly regulated industries or environments that manage large volumes of contracts. 

Law firms

Law firms can use AI to handle large volumes of contracts efficiently, ensuring faster turnarounds and greater accuracy. By automating repetitive tasks such as reviewing contracts for risk and compliance checks, lawyers can focus on providing strategic legal advice and enhancing client service.

In-house legal teams

For corporate legal departments, AI streamlines contract management, from reviewing vendor agreements to ensure regulatory compliance. In-house teams can create playbooks specific to their own legal workflows and policies, enabling them to address high workloads while reducing reliance on external counsel, saving both time and costs.

Enterprise

Large organisations with complex legal operations benefit from AI's scalability. AI tools can be tailored to speed up interactions with functional teams based on their requirements, improving overall operational efficiency. Global businesses can easily update agreements for different jurisdictions and translate into local language. Legal teams can save time by efficiently identifying risk in agreements and compiling documentation for regulatory compliance.

Finance 

Banks, investment firms, and other financial institutions use AI for tasks like reviewing loan agreements, ensuring compliance with financial regulations, and evaluating documents for due dilgence. AI reduces risk and enhances accuracy in an industry where precision is critical.

Insurers

Insurers can use AI for contract review to address regulatory requirements, such as DORA compliance, and to handle claims-related agreements. AI enables quicker reviews, ensures consistency, and helps insurers navigate complex legal and regulatory frameworks.

Can AI replace lawyers?

AI is a powerful tool, but it doesn’t replace legal professionals. Lawyers provide judgement, ethical considerations, and a nuanced grasp of context that AI cannot replicate. AI acts as an enhancer, automating routine tasks and empowering lawyers to focus on strategic and high-value work.

Best AI tools for contract review in 2025

LEGALFLY

LEGALFLY is a leading AI-powered platform that, alongside drafting and discovery, automates the review process. It always anonymises sensitive data before processing to ensure privacy. 

Customers streamline contract reviews, reducing review times by 60%. The platform identifies non-standard terms, business risks, and compliance issues, all tailored to align with internal playbooks. LEGALFLY allows users to work directly in MS Word with tracked changes and redlines, retaining their formatting. It goes beyond basic reviews, enabling users to redraft compliant clauses in real time. This ensures terms are precise and aligned with client objectives, converting business requirements into clear legal language while reducing the risk of error.

For complex document sets, LEGALFLY offers multi-document review functionality. Users can analyse several contracts simultaneously, with key differences highlighted in an accessible table format. This feature reveals hidden links and risks, saving time during due diligence.

LEGALFLY’s anonymisation process ensures that all sensitive information is removed from documents before analysis, safeguarding client privacy. 

It replaces personal information with pseudonyms, so that roles and relationships can still be interpreted without compromising data security. Beyond text-based data, LEGALFLY anonymises images, signatures, and handwriting, ensuring comprehensive privacy protection. 

Data privacy is further supported by on-premise and single-tenant cloud options. Organisations maintain full control over their data while complying with industry standards like GDPR, ISO 27001, and SOC 2 Type II.

The platform allows users to securely share anonymised agreements with colleagues, even across borders. Its multi-language capabilities enable teams to work on contracts in various languages, and users can interact with the AI in their native language.

LEGALFLY's latest release integrates AI directly into Microsoft Word, allowing users to draft, review, and perform compliance checks within a familiar environment.

Spellbook

Spellbook is an AI tool that assists transactional lawyers with reviewing, and analysing contracts efficiently. 

It integrates directly into Microsoft Word, so lawyers have access to AI capabilities without leaving their document environment. 

Spellbook automates tasks such as comprehensive document review, identifying linguistic ambiguities, contextual errors, and legal issues, and offers straightforward redlining assistance to streamline the contract review process. 

ContractSafe

ContractSafe is a contract management platform designed to simplify the contract lifecycle, from creation to execution. 

It offers features like AI-driven data extraction to identify key information such as dates and terms, organisation and categorisation tools to sort contracts by type or custom criteria, workflow automation to streamline tasks like approvals and reminders, and collaboration tools that support commenting and redlining within the platform. 

Legartis

Legartis is an AI-driven contract analysis platform designed for legal professionals, focusing on deep clause analysis and extracting legal obligations. 

It uses natural language processing (NLP) to understand the meaning of clauses and their relationships within the contract, accurately identifying obligations, potential risks, and unusual language. 

The platform can be customised to specific contract language and terminology, tailoring its analysis to industry or individual company needs, and provides data visualisation through dashboards and reports.\

Summize

Summize combines AI with human expertise to simplify complex legal language and highlight key points for easy understanding. 

It provides plain English summaries of terms and clauses, making contracts more accessible to non-lawyers or those working quickly. 

The platform flags potential risk areas within contracts, prompting attention from legal professionals, and employs a human-in-the-loop approach where trained lawyers review and refine AI analysis, ensuring greater accuracy and a deeper level of understanding.

LegalOn Technologies

LegalOn Technologies is an enterprise-focused contract lifecycle management platform with AI-powered contract analysis and review. 

It offers a clause library and analysis to identify key clauses and offer insights into their implications, allowing users to compare contract terms against their standard templates. 

The platform highlights potential risk areas, such as unfavourable payment terms, indemnification clauses, or unusual wording, and streamlines the contract review process, including approvals, redlining, and execution.  

Should you use AI to review legal contracts?

By automating routine tasks like identifying risks, non-standard terms, and compliance issues, AI saves significant amounts of time for legal teams. This allows them to focus on strategic, high-value work, enhancing both productivity and client service.  

AI’s ability to analyse vast amounts of data provides a depth of insight that would be difficult to achieve manually. It ensures no detail is overlooked, whether in single contracts or across complex document sets. For firms and businesses, this helps maintain a competitive edge. Adopting AI tools can improve client satisfaction by delivering faster, more accurate outcomes.  

Modern AI platforms have become highly competent, capable of understanding legal nuances and tailoring their output to meet specific requirements. While AI will not replace legal professionals, it complements their expertise, ensuring thorough reviews and minimising risks.  

Using AI for contract review has become a strategic move to stay ahead, provide better service, and adapt to the evolving demands of the legal industry.

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