The Rise of Legal Technology in Corporate Law – Contract Life Cycle Management and AI Driven Drafting in India

ABSTRACT 

The rise of Legal Technology has changed the way of Corporate Law works and operates, especially through Contract Life Cycle Management (CLM) systems and AI driven drafting tools. Have you ever heard of CLM? I chose this topic because corporate companies increasingly seek many professionals with expertise in these areas, hence, this article will make it essential for every legal professional and young lawyer to understand the scope and impact.

This subject is not just relevant for employability but also very important for appreciating how technology is being used, reshaping compliance, governance, and efficiency in legal sector. In India, the integration of CLM and AI is altering the all the traditional drafting practices, these modes offer accuracy, speed and added knowledge, but raises concerns of accountability and enforceability. Therefore, understanding this evolution will help many legal professionals adapt to changing era where human expertise and technology are coexisting to strengthen governance and the practice of law. 

INTRODUCTION

The legal industry is going through a major shift with the increasing use of technology, and corporate law has been the main centre of this transformation. Drafting contracts, which has always been an important part of Business law, is no longer executed by lawyers. Today, digital tools such as Contract Lifecycle Management (CLM) systems and artificial intelligence (AI) Software are becoming a vital and integral part of how contracts are created, drafted, reviwed and monitored. In the Indian Law context, this change is especially relevant because of the increasing number of corporate companies, the extensive compliance mandates under the Companies Act, 2013 and the rising demand for governance and accountability. 

Contract Lifecycle Management (CLM) refers to the end-to-end process of handling contracts, from drafting and negotiation to execution, monitoring, and renewal. It ensures that contractual obligations are met on time while reducing risks and non-compliance. Alongside CLM, corporate entities are using Management Information Systems (MIS) dashboards, compliance management platforms, and digital signature software tools to streamline legal and governance processes. These solutions have shifted contract drafting and compliance work from being entirely executed by humans to being partially automated, enabling businesses to reduce errors, save time. Recent studies note that Indian companies and law firms are steadily adopting such technologies to simplify compliance and reduce risks in contract management.

Although AI is rapidly helping lawyers and corporate offices in its own way, but it also raises important concerns. The preliminary question is whether AI can truly replace a lawyer in a task that requires not just legal expertise but also judgement, critical thinking, negotiation skills, and contextual understanding. The very ultimate matter is related to issues of Liability, who will be held responsible is an AI- generated draft carries a defective cluse that later creates need for litigation proceedings or penalties? Indian courts have already considered the role of technology in law, especially in recognising the enforceability of electronic contracts and communications. Adding on, regulatory bodies such as the Bar Council of India are still debating on this issue, how far technology can be relied upon by lawyers in practice without compromising professional accountability. 

This article will clearly examine the growth and shortcomings of legal technology in India with special attention towards CLM and AI based drafting. It will argue that while these tools are reshaping the corporate practice by increasing efficiency and use of upgraded technology, but they cannot completely replace lawyers. 

RESEARCH METHODOLOGY 

Approach: The article follows a doctrinal and analytical approach.
Primary Sources: Indian statutes such as the Indian Contract Act, 1872; Companies Act, 2013; and Information Technology Act, 2000, along with relevant case law (Trimex International FZE v. Vedanta Aluminium Ltd.).
Secondary Sources: Books on contract management, reports by PRS Legislative Research and NASSCOM, and academic writings on AI and legal technology.
Objective: To examine how CLM and AI tools influence contract drafting and compliance in corporate law, and to evaluate possible reforms for India.

UNDERSTANDING CONTRACT LIFECYCLE MANAGEMENT AND AI IN THE LEGAL WORLD

Contract Lifecycle Management (CLM) is a process that covers everything related to a contract, from its initial drafting and negotiation to execution, monitoring, and renewal or termination. In simple terms, it ensures that contracts are properly created, managed, and complied with throughout their validity. In corporate practice, CLM is important because almost every business activity whether it is a merger, acquisition, vendor supply, or employment arrangement relies on contracts. When companies deal with hundreds or even thousands of contracts, handling them manually can lead to delays, mistakes, and even legal disputes.

The main purpose of CLM is to bring efficiency and accuracy. For example, CLM software can automatically track renewal dates, give reminders about compliance obligations, and ensure that standard clauses are used consistently across agreements. for large organizations working across jurisdictions, CLM also provides uniformity in drafting and helps reduce risks. In India, listed companies often use such tools to meet compliance requirements under the Companies Act, 2013 and to follow disclosure norms under the Securities and Exchange Board of India (SEBI).

Technology has pushed CLM further by combining it with Artificial Intelligence (AI). Unlike traditional software, AI-based systems can read and analyse the language of contracts. They can suggest draft clauses, detect unusual provisions, highlight potential risks, and even predict outcomes in case of disputes. This saves time for corporate legal teams, especially during large transactions like mergers or due diligence, where hundreds of contracts need to be reviewed quickly. AI tools are also being used for regulatory filings, compliance monitoring, and creating MIS dashboards for boards of directors.

Corporate employers now prefer lawyers who are not only skilled in drafting but also familiar with technology. A recent NASSCOM report highlights that India’s legal-tech ecosystem is steadily growing, and CLM solutions are being integrated into business operations to strengthen governance and reduce risks. 

Stepwise Execution of CLM and AI in a Vendor Contract

Initiation: The business team raises a contract request in the CLM system with details such as type, counterparty, and value.
Draft creation: The platform pulls a standard template and generates the first draft automatically.
AI review: AI tools read the draft, mark risky terms (like broad indemnity or data-sharing clauses), and flag gaps in compliance.
Policy alignment: The system suggests safer clauses and alternatives already approved by the company.
Negotiation: Parties exchange revisions within the CLM workspace, with version control handled automatically.
Internal approval: The draft moves through the company’s approval chain, legal, compliance, and business while the system shows risk scores and MIS status.
Execution: The contract is finalized and signed electronically using e-signatures recognized under Indian law.
Monitoring: Key dates like audits, renewals, and filings are tracked by the CLM, which sends automatic reminders.
Audit trail: The platform maintains a record of all changes, while AI dashboards analyse risks and suggest updates for future contracts.
Closure: Before expiry, the system alerts for renewal, renegotiation, or termination, based on performance and risk insights.

LEGAL FRAMEWORK GOVERNING CONTRACTS AND TECHNOLOGY IN INDIA

Indian Contract Act, 1872

The Indian Contract Act, 1872 forms the basic framework for contracts in India. It defines what constitutes a valid contract, including essential elements such as free consent, lawful consideration, and lawful object. The Act does not explicitly address technology-driven contracts, but its principles apply equally to agreements created and executed through CLM systems or AI-assisted drafting. Courts have interpreted the Act flexibly to accommodate new forms of contracting, including electronic contracts.

Companies Act, 2013

For corporate entities, the Companies Act, 2013 is the primary legislation regulating governance and compliance. Companies are required to maintain statutory records, file resolutions, and disclose material contracts to regulators. CLM platforms are increasingly used by listed companies to manage these compliance obligations. Provisions related to disclosure, related party transactions, and board approvals make CLM and MIS dashboards particularly useful in ensuring that corporate officers remain accountable under the Act.

Information Technology Act, 2000

The Information Technology Act, 2000 provides statutory recognition to electronic contracts and electronic signatures. Section 10A of the Act explicitly states that contracts formed through electronic means shall not be deemed unenforceable solely on the ground that they are in electronic form. This provision is crucial for AI-enabled CLM platforms, where agreements are often executed digitally. Indian courts have upheld such recognition, as seen in Trimex International FZE v. Vedanta Aluminium Ltd., where the Supreme Court enforced a contract concluded through email exchanges.

Securities and Exchange Board of India (SEBI) Regulations

Listed entities are also bound by SEBI regulations, which mandate strict disclosure requirements and compliance frameworks. SEBI’s Listing Obligations and Disclosure Requirements (LODR) require companies to disclose material agreements, related party transactions, and other governance-related matters. CLM systems help companies ensure timely and accurate reporting, thereby reducing the risk of regulatory penalties.

Data Protection and Privacy Laws

The enactment of the Digital Personal Data Protection (DPDP) Act, 2023 further impacts CLM and AI use in corporate law. Since contract drafting and management often involve sensitive personal and business data, companies must ensure that AI-driven tools comply with data protection requirements. Failure to safeguard such data can attract liability under the DPDP Act, in addition to reputational harm.

JUDICIAL INTERPRETATION

Trimex International FZE v. Vedanta Aluminium Ltd. (2010) 3 SCC 1

Issue: Whether such email exchanges could constitute a binding contract under the Indian Contract Act, 1872.
Judgment: The Supreme Court held that the absence of a signed physical contract did not invalidate the agreement. If the essential elements of a contract (offer, acceptance, consideration, and intention to create legal relations) were present, electronic communication was sufficient.
Relevance: This case is central to CLM and AI-driven drafting because most of these systems generate and execute contracts electronically. The ruling confirms that digital contracts are enforceable in India, laying the foundation for CLM use in corporate law.

Kerala High Court Guidelines on AI in Judicial Decision-Making (2025)

Issue: Whether AI could be freely used in judicial reasoning and decision-making.
Judgment: The High Court permitted the use of AI for limited research or drafting assistance but prohibited its use for final decision-making. It emphasized that human judges must remain accountable for judicial reasoning.
Relevance: While not about contracts directly, this guideline reflects the judiciary’s cautious stance on AI. It signals that while AI can support lawyers and companies in drafting, final accountability lies with human professionals.

RECENT DELVELOPMENTS 

Data Protection Framework

The Digital Personal Data Protection Act, 2023 now governs how companies collect, store, and process personal information. Since CLM systems handle sensitive data in contracts, businesses must ensure these platforms comply with data protection standards. This is a critical step for companies relying on AI-based solutions.

SEBI’s Push for Digital Compliance

The Securities and Exchange Board of India (SEBI) has tightened disclosure requirements under its Listing Obligations and Disclosure Requirements (LODR). CLM and MIS dashboards are increasingly used to track board resolutions, related-party transactions, and compliance deadlines. This shows regulators indirectly encouraging the use of structured legal technology.

Judicial Guidelines on AI

In 2025, the Kerala High Court issued guidelines restricting the use of AI in judicial decision-making. While directed at courts, the reasoning reflects a broader principle: AI can assist but not replace human judgment. This reinforces the hybrid approach for corporate law as well.

Professional Debates

The Bar Council of India has acknowledged discussions on regulating technology use in the legal profession, though no formal rules exist yet. In contrast, bar associations in the US and UK have already framed ethical rules for AI use, placing India behind in this debate.

SUGGESTIONS 

Clear Legal Recognition- The IT Act, 2000 recognizes electronic contracts but does not mention AI-assisted drafting. Updating the Act or issuing clarifying rules would reduce uncertainty for companies adopting CLM systems.

Accountability Guidelines- The Bar Council of India should issue professional guidelines similar to those of the ABA in the US and the SRA in the UK. These should clarify that lawyers remain responsible for supervising AI outputs, ensuring accountability is not diluted.

Data Protection Safeguards- As the DPDP Act, 2023 is enforced,  companies must integrate strict data protection measures into CLM platforms. Regulators should release model standards for AI vendors to secure sensitive business and personal data.

Hybrid Model for Practice- AI and CLM should be positioned as tools, not replacements. Lawyers must oversee negotiation strategies and interpretation, while AI manages automation and analytics. This balance ensures efficiency without sacrificing judgment.

CONCLUSION

The entry of Contract Lifecycle Management (CLM) systems and Artificial Intelligence (AI) into corporate law marks a major shift in how contracts are created, executed, and monitored. These tools have already proven useful in reducing delays, ensuring compliance, and offering transparency in corporate governance. Indian law, through the Contract Act, the Companies Act, the IT Act, and the DPDP Act, has laid a broad foundation for digital contracts and data protection, but it still does not directly address AI-assisted drafting or automated compliance tools.

Judicial decisions such as Trimex International have confirmed the enforceability of electronic contracts, while the Kerala High Court’s 2025 guidelines on AI use highlight the limits of relying entirely on machines. Together, these developments point to a hybrid future: one where AI enhances efficiency, but human lawyers remain the decision-makers.

For India, the way forward lies in updating statutes, issuing professional ethics guidelines, and training the next generation of lawyers in legal technology. At the same time, robust data security and accountability standards must be ensured to prevent risks.

Ultimately, AI and CLM will not replace lawyers, but lawyers who adapt to these tools will replace those who resist them. Corporate law in India is moving towards this balance, and embracing it will decide the profession’s future.

Reference(S):

[1] PRS Legislative Research, Overview of the Companies Act, 2013 (Apr. 2023), https://prsindia.org/billtrack/the-companies-act-2013.

[2] Trimex Int’l FZE v. Vedanta Aluminium Ltd., (2010) 3 SCC 1.

[3] TIM CUMMINS, CONTRACT AND COMMERCIAL MANAGEMENT: THE OPERATIONAL GUIDE 11–12 (International Association for Contract & Commercial Management ed., 2011).

[4] Id. at 13–15.

[5] Id. at 21–23.

[6] PRS Legislative Research, Overview of the Companies Act, 2013 (Apr. 2023), https://prsindia.org/billtrack/the-companies-act-2013.

[7] RICHARD SUSSKIND, TOMORROW’S LAWYERS: AN INTRODUCTION TO YOUR FUTURE 97–101 (2d ed. 2017).

[8] Id. at 110–12.

[9] NASSCOM, Artificial Intelligence in India – A Strategic Overview (Jan. 2023), https://nasscom.in/knowledge-center/publications/artificial-intelligence-india-strategic-overview.

[10] Ironclad, Contract Lifecycle Management (2024), https://ironcladapp.com.

[11] Kira Systems, Contract Analysis Software (2024), https://kirasystems.com ; Luminance, AI-Powered Contract Review (2024), https://www.luminance.com .

[12] TIM CUMMINS, CONTRACT AND COMMERCIAL MANAGEMENT: THE OPERATIONAL GUIDE 11–15 (Int’l Ass’n for Contract & Commercial Mgmt. ed., 2011).

[13] DocuSign, DocuSign CLM (2024), https://www.docusign.com.

[14] NASSCOM, Artificial Intelligence in India – A Strategic Overview (Jan. 2023), https://nasscom.in/knowledge-center/publications/artificial-intelligence-india-strategic-overview.

[15] Information Technology Act, No. 21 of 2000, INDIA CODE (2000).

[16] TIM CUMMINS, supra note 3, at 21–23.

[17] Luminance, supra note 2; Kira Systems, supra note 2.

[18] NASSCOM, supra note 5.

[19] The Indian Contract Act, No. 9 of 1872, INDIA CODE (1872).

[20] Id. §§ 10–12.

[21] The Companies Act, No. 18 of 2013, INDIA CODE (2013).

[22] Information Technology Act, No. 21 of 2000, INDIA CODE (2000).

[23] Information Technology Act, No. 21 of 2000, § 10A, INDIA CODE (2000).

[24] Trimex Int’l FZE v. Vedanta Aluminium Ltd., (2010) 3 SCC 1.

[25] Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015.

[26] The Digital Personal Data Protection Act, No. 22 of 2023, INDIA CODE (2023).

[27] Trimex Int’l FZE v. Vedanta Aluminium Ltd., (2010) 3 SCC 1.

[28] Kerala High Court, Guidelines on the Use of AI Tools in Judicial Decision-Making (Feb. 2025), reported in The Times of India, Feb. 10, 2025, at A5.

[29] The Indian Contract Act, No. 9 of 1872, INDIA CODE (1872); Information Technology Act, No. 21 of 2000, § 10A, INDIA CODE (2000).

[30] RICHARD SUSSKIND, TOMORROW’S LAWYERS: AN INTRODUCTION TO YOUR FUTURE 97–101 (2d ed. 2017).

[31] TIM CUMMINS, CONTRACT AND COMMERCIAL MANAGEMENT: THE OPERATIONAL GUIDE 21–23 (Int’l Ass’n for Contract & Commercial Mgmt. ed., 2011).

[32] The Digital Personal Data Protection Act, No. 22 of 2023, INDIA CODE (2023).

[33] ABA Standing Comm. on Ethics and Prof’l Responsibility, Formal Op. 498 (2021); Solicitors Regulation Authority, Guidance on the Use of AI by Solicitors (2023).

[34] Regulation of the European Parliament and of the Council Laying Down Harmonised Rules on Artificial Intelligence (Artificial Intelligence Act), 2024 O.J. (L 202).

[35] The Digital Personal Data Protection Act, No. 22 of 2023, INDIA CODE (2023).

[36] Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015.

[37] Kerala High Court, Guidelines on the Use of AI Tools in Judicial Decision-Making (Feb. 2025), reported in The Times of India, Feb. 10, 2025, at A5.

[38] Niharika Mandhana, India’s Legal Profession Grapples with AI Tools, WALL ST. J., June 12, 2024, at A3.

[39] Information Technology Act, No. 21 of 2000, INDIA CODE (2000).

[40] ABA Standing Comm. on Ethics and Prof’l Responsibility, Formal Op. 498 (2021); Solicitors Regulation Authority, Guidance on the Use of AI by Solicitors (2023).

[41] The Digital Personal Data Protection Act, No. 22 of 2023, INDIA CODE (2023).

[42] Kerala High Court, Guidelines on the Use of AI Tools in Judicial Decision-Making (Feb. 2025), reported in The Times of India, Feb. 10, 2025, at A5.