Did you know that on average, lawyers spend 90 minutes on routine contract reviews, while the average hourly rate of lawyers in the US is between $150 and $500.
For small businesses that outsource just 5 contract reviews per month, this means a legal cost of $1 125 to $3 750 per month!
Here’s a cast study of one company founder, who used to spend thousands of dollars and hours of their time every month, until they automated business contract review with an AI powered tool, called ContractCrab.
The person we interviewed opted to remain anonymous, so for sake of simplicity we’ll just call them C.T.
C.T. Used to Review Contracts Manually
When C.T. needed to sign a contract, they’d do one of two things:
- As one option, they’d block out time to read through the contract themselves, which for a 15-20 page contract typically took 4-6 hours.
- The other option, which C.T. preferred for complicated contracts or contracts that they weren’t sure about after reading, was to send the document to their lawyer for professional review.
Their lawyer worked at a law firm that charged from $750 to $1 500 per review based on the contract complexity, but on average, these costs amounted to about $2 000 per month for C.T.
At the end of the day, C.T. was spending 30-40 hours every month personally reviewing contracts, and spending $2 000 on legal fees.
Not only was this expensive, but, given that it wasn’t realistic to send every contract to a law firm, C.T. also ran the risk of missing a dangerous clause in one of the contracts they’d opted to review personally.
Understandably, C.T wanted to streamline this, so they started looking for a solution.
Every Time C.T Reviewed a Contract By Themselves, They Exposed Their Company To Risks
Reviewing contracts without legal expertise increased the odds of overlooking dangerous legal language, as even routine contracts can contain:
- Restrictive clauses
- Automatic renewals
- Liability traps
- Intellectual-property limitations
In fact, several of C.T.’s agreements contained terms that could have created financial exposure down the line, or made the contract difficult to exit.
Without a structured review process, each contract carries a higher chance of costly mistakes, so C.T tried to fix it the best way they knew how.
C.T Tried To Use a Contract Review Checklist, But This Wasn’t the Right Fit
The first thing C.T. tried to do was to add some structure to the process by using a contract review checklist. They thought that this would at least mean that they’d need to send less contracts to their lawyer.
A contract review checklist is a document that contains a list of structured steps and checks that need to be performed during a review. This is something that most law firms apply in their own review processes.
Unfortunately, while C.T. felt more reassured that the contracts he read personally were good to sign, this created its own problem — reviews now sometimes took up to 6 hours, which wasn’t realistic for C.T., who also needed to run their business at the same time.
Essentially, the big issue was that:
- CT couldn’t stop reviewing contracts.
- CT wasn’t a lawyer, so they needed a lawyer’s input.
- They couldn’t send every contract to a lawyer because of costs.
Automating Contract Review with Specialized Software
Contract Review software refers to a subset of AI-powered tools designed to automate the contract review process. These programs can:
- Automatically read through contracts
- Extract key details from them
- Flag anything that looks unusual or potentially risky
One example of a contract review tool is ContractCrab — an AI-powered online tool that uses a specially trained AI to compare every agreement against a database of legal documents, looks for inconsistencies and risky language, and flags anything that looks out of the ordinary or potentially risky — this entire process takes under 5 minutes and costs as low as $0.15 per contract.
C.T’s New Contract Review Process
CT was initially skeptical as they’d tried using ChatGPT for contract review, but they found it to be unreliable.
Moreover, they felt uneasy about uploading confidential agreements to a public platform. OpenAI claims that you can opt out of using your data for model-training, but who knows — they’re not exactly known for stellar reputation when it comes to handling user data.
After a bit of research, C.T decided to try ContractCrab — a purpose-built for contract analysis. This tool features end-to-end encryption, has built-in legal standards and compliance checks, and provides a specialized interface that makes it easy to review one or multiple contracts at the same time.
While some contract review tools require you to attend a sales call and sign their own contract before you can use them, ContractCrab doesn’t, so C.T could get started right away.
Their new workflow in ContracCrab looks like this:
- C.T uploads their contract into ContractCrab in PDF, DOCX, or TXT. They can also review contracts in bulk if they have multiple agreements to review.
- ContractCrab uses a fine-tuned AI algorithm to analyze the contract. This happens in the background and only takes a couple of minutes.
- After a short wait, C.T receives a detailed breakdown of contract risks directly in ContractCrab.
This entire review takes just a few minutes from upload to results.
Does this mean that C.T. can eliminate the need for a lawyer? Not exactly. In rare instances, they still prefer to show an agreement to the lawyer before signing it. However, instead of sending two or more contracts for review every month, they now use ContractCrab to handle most of their agreements and only consult their lawyer for the most complicated contracts, which happens once every three to four months.
How much Time and Money Does C.T Save By Automating Contract Review?
Let’s break down the impact that contract review automation had on C.T’s company, in terms of time, quality, and, most importantly, in terms of money.
How Much Time Does C.T Save?
C.T. used to spend four to six hours reviewing an average of eight documents per month. This meant that they used to spend an average of 40 hours every month just reading contracts. Now, with ContractCrab, they spend only 15 minutes on each contract, translating to just two hours per month.
Time saved: 38 hours/month.
How Much Money Does C.T Save?
C.T.’s lawyer charges between $750 and $1,500 per review, depending on the complexity of the contract. On average, C.T. spends $2,000 per month on 2–3 professional reviews.
Given the relatively low volume of contracts C.T. needs to process monthly, C.T. chose the ContractCrab Light Plan, which includes 120 reviews per month at a cost of just $30.
Consequently, C.T.’s legal fees dropped from an average of $2,000 to $30 per month.
Money saved: $1970/month
On Balance, C.T’s Contract Reviews Become More Accurate
AI contract reviews can catch up to 99.6% of common mistakes in standard agreements. While this is .4% less than a professional lawyer’s 100% accuracy, it is certainly more reliable than C.T.’s personal reviews as a non-legal professional.
While it’s difficult to quantify this type of improvement, it’s safe to say that C.T. is now much more likely to catch potential issues early, despite spending 38 hours less per month on contract reviews.
C.T is Feels More Reassured Thanks to The New Contract Review Process
There’s another benefit of contract review automation that is hard to put a price on — the feeling that, when you sign an agreement, you know for certain that you’re not putting your business in any sort of potential danger:
“I used to feel very uneasy every time I signed a document. I felt like I was winging it and just had to pray that I didn’t overlook anything bad, especially with all those stories about companies losing $25,000 or $50,000 in litigation fees,” CT said. CT said. “I don’t have that feeling anymore when I sign a new contract.”
Bottom Line
The average cost of a business contract review in the U.S. is about $470, and it can climb much higher when handled by a law firm—as it did for C.T. Their price for reviewing a single contract started at $750, while an AI-based contract review service cost $30.
Put differently, C.T. paid 25× more to have one contract reviewed by a lawyer than it would have cost to review 120 contracts using a specialized AI tool.
