Legitimate teams are among the primary targets for AI disruption in multinational roles. According to a 2021 study by the international consulting firm KPMG, companies typically employ approximately six lawyers per $1 billion in revenue. Despite this, much of their work, such as drafting contracts and conducting reviews, still relies heavily on manual labor.
In June 2022, the legal team at the well-known fitness studio company Orangetheory faced a significant challenge in standardizing and streamlining the around 1,000 distinct user contracts across its 1,500 U.S. franchises.
Charlene Barone, the director of constitutional operations and strategy, was entrusted with the task of devising strategies to review, consolidate, automate, and ensure consistency in the language used across the various contracts.
Barone emphasized the importance of maintaining consistency across the businesses while acknowledging the need to adhere to specific speech requirements in certain states. Some states even dictate the fonts and formatting to be used in clauses such as termination and indemnification.
Previously, Orangetheory manually reviewed each lease annually, a process that consumed approximately 2.5 hours per lease for reading, revising, and language adjustments. With over 1,000 leases to review, inconsistencies were identified and reduced to a mere 200.
As the sole expert in constitutional functions at Orangetheory, Barone essentially functioned as a project manager for the five-person legal team. She estimated that reviewing and editing the 1,000+ contract templates would take six months, or three times as long if done continuously without attending to other responsibilities.
Encountering challenges in finding an effective strategy, Barone reached out to Ironclad, a provider of contract management software equipped with AI tools for lease creation and tagging.
Among the 1,700 consumers of Ironclad are notable entities like L’Oréal, OpenAI, and the Houston Texans, utilizing its AI capabilities.
By leveraging the AI program, Orangetheory managed to review each lease in just 30 minutes, achieving an 80% reduction in time. The human element complemented the AI by identifying redundant agreements, determining the necessary language for Orangetheory’s legal templates, and assessing the outcomes.
Despite the initial learning curve and adjustment required to utilize the new application and input data accurately, the task, initially estimated at six months, was completed in under three months. Barone highlighted that the team is progressing faster than expected in integrating the 200 consumer agreement contracts.
Barone underscored the significant time savings in legal processes, translating to hundreds of days of reduced workload for the constitutional team. This efficiency not only contributes to cost savings but also allows the team to focus more on customer needs, ultimately leading to increased profits.
Jason Boehmig, the CEO of Ironclad, emphasized the role of AI in assisting small legal teams with multiple tasks and limited resources, predicting a widespread adoption of AI in legal departments before other areas of businesses.
While AI streamlines processes and enhances efficiency, Boehmig cautioned against over-reliance on AI for all lease requirements or legal advice. He stressed the importance of human oversight and decision-making in conjunction with AI tools to maximize effectiveness.
In conclusion, the collaboration between AI technology and legal teams, as demonstrated by Orangetheory, aims to augment human efficiency rather than replace human involvement entirely. This strategic partnership is poised to revolutionize legal operations while emphasizing the indispensable role of human expertise in driving innovation and success.
