Visualization of contracts minimizes the risk of value loss
Heavy legal documents spanning hundreds of pages do not align well with a busy workday filled with operational tasks, a constantly filling email inbox, and numerous spontaneous assignments that often consume significant time.
As a result, critical contract management is often deprioritized in favor of other tasks. However, there is a solution aimed at optimizing contract management within organizations while ensuring full comprehension across all levels, without requiring a disruption of daily work.
Such a solution is offered by the Aarhus-based tech startup VIXCO, which utilizes AI software to visualize contracts for quick and easy decoding.
Visualization is indeed a highly effective method when it comes to contract management, as explained by René Franz Henschel, a law professor at Aarhus University and a member of VIXCO's Advisory Board.
"The latest research shows that visual communication of contracts helps users to understand what they need to do, when and how to do it, and why it's important to do so, faster and better. This is crucial for effective contract management."
Minimizing the risk of value loss and relationship damage
A tool that visualizes contracts is particularly beneficial for organizations where the users responsible for contract management are not legal professionals.
"When users gain a quicker and better understanding of their roles and responsibilities regarding contract management, the utilization and compliance with contracts increase. Users have busy schedules and are often not experts in legal terminology. Visualizations help to communicate with users in a language they understand, enabling them to take action," explains René Franz Henschel.
However, it's not just the reduced working hours associated with contract handling that benefits companies. According to René Franz Henschel, the ability to proactively address legal elements is perhaps even more critical. It allows for proactive management rather than firefighting.
"Traditionally, companies have struggled to make users understand and apply text-heavy and inaccessible contracts. This often results in contracts only being reviewed when something has 'gone wrong.' This creates unnecessary risks and the potential for value loss and damaged relationships. Visualization assists with proactive contract management, and it fosters engagement and ownership in contract management, which is crucial for value creation and better collaborative relationships," explains the law professor. He adds that successful contract management can positively impact the entire organization, even those not directly involved with the subject matter on a daily basis.
"If visualizations are used correctly in combination with traditional contracts, the entire organization's attitude toward and participation in contract management activities will improve. In short, the organization will work better as a team when navigating contract management securely."