# Redlining Contracts with AI: Guide and Best Practices How to redline contracts faster and more accurately using AI. This guide walks through step-by-step redlining workflows, the best tools, best practices for lawyers, and real-world prompts tailored to M&A, corporate, and real estate law. See how legal tools like Gavel Exec help reduce errors, enforce playbooks, and integrate seamlessly into Microsoft Word. By the team at Gavel Published: July 16, 2025 \| Last updated: May 22, 2026 --- **A note from the author, CEO/Founder of Gavel:** Before I became a tech founder, I was a practicing lawyer, one who spent more hours than I care to admit redlining contracts deep into the night, fueled mostly by caffeine and a healthy dose of stubbornness. If you're reading this, you're probably familiar with the pain: chasing down inconsistent definitions, fixing typos, and wondering how the clause you deleted twice somehow reappeared. This article is for you. Redlining is a critical part of contract analysis and negotiation. But lawyers spend hours flagging issues and reworking the same provisions across deals. Important changes can slip through, and the manual work adds up fast. AI-assisted redlining helps streamline that process. It flags issues, suggests edits based on precedent, and automates routine markups, so you can focus on the parts that matter. Tools like AI legal assistant [Gavel Exec](/content/exec?src=lawyerist-email&mktcmpid=lawyerist-email-july-2025/index.html) bring AI directly into Microsoft Word, letting you draft and redline faster while staying in control. In this guide, we'll walk through how to redline and draft contracts with AI, share best practices, and offer sample prompts for M&A, corporate, and real estate deals, with a few real-world tips from someone who's been in the trenches. ## How to Redline Contracts Using AI: A Step By Step Guide No matter the AI-powered legal contract drafting and markup software you choose, here's how to start using AI to redline contracts effectively, from setup to review: ### **Step 1: Prepare the contract and AI environment.** Begin by opening your contract in a platform that supports AI-assisted editing. Ideally, use an AI tool integrated with your word processor (for example, [**Gavel Exec**](/content/exec?src=lawyerist-email&mktcmpid=lawyerist-email-july-2025/index.html) is a Microsoft Word add-in) so you can work in a familiar environment. Open the document in Microsoft Word and launch the AI add-in or plugin. You should see a sidebar or panel where you can interact with the AI. (If your tool isn't an add-in, you may need to upload the contract to a web platform instead, but integration with Word is more seamless.) By having the AI _side-by-side_ with your document, you can give commands and view suggestions without switching apps. *Gavel Exec is your legal AI assistant directly in Microsoft Word.* ### **Step 2: Provide context and reference materials, for example with Gavel Exec's customizable "Projects"** For the AI to give accurate redlines, context is key. If you have any reference documents, like a signed Letter of Intent (LOI), term sheet, or prior contract draft, upload or attach them now. This extra information helps the AI understand the deal's background instead of operating in a vacuum. As we say at Gavel, treasure in, treasure out: AI is only as good as the instructions you give it. For example, if you're reviewing a lease against an LOI, attaching the LOI allows the AI to cross-check terms and spot discrepancies automatically. Many AI tools (including [Gavel Exec](/content/exec?src=lawyerist-email&mktcmpid=lawyerist-email-july-2025/index.html)) let you completely customize the AI with precedent files so the AI is specifically in tune with what you prefer in your agreements. Otherwise, it will follow what it deems as market standard. Also, set any available AI parameters to tailor the review. Some tools let you specify which party or perspective you represent – e.g. buyer vs. seller – to calibrate the AI's suggestions to your client's interests. ### **Step 3: Input a clear prompt to initiate AI redlining.** Now it's time to put the AI to work. Use a **clear, specific prompt** to tell the AI what you want. Vague commands like "Fix this contract" won't give you great results – you'll get better output with precise instructions. For example, you might start with a prompt like: > _"Review and redline this contract to flag any provisions that deviate from our standard terms and suggest improvements."_ If you provided a reference document in the previous step, reference it in your prompt. A real-world example: a lawyer could prompt: > "Compare the following lease to the attached LOI. Highlight any terms in the lease that deviate from the LOI and suggest appropriate redlines." ### **Step 4: Review the AI's redlines and apply changes.** Once the AI has produced an initial set of redlines, **carefully review each suggestion**. The AI's output is a draft, and you remain the human in charge. Go through the changes it marked: they might appear as tracked edits and comments in your Word document (if your tool auto-applied them) or as a summary you need to implement. Accepting and rejecting these changes will help **train the model on how to give you better suggestions next time.** ### **Step 5: Set up Playbooks for repeatable areas of law.** AI assistants like [Gavel Exec](/content/exec?src=lawyerist-email&mktcmpid=lawyerist-email-july-2025/index.html) allow you to set up playbooks of rules that you will run against a certain document. These playbooks can include specific deal terms, compliance checks, and drafting preferences tailored to your firm or client. ### **Step 6: Draft, refine and iterate as needed.** Complex contracts may need multiple rounds of prompting and review. After addressing the major issues from the first pass, you can use the AI to tackle more nuanced or secondary tasks. You can also get it to help draft additional sections of your document. ## Best Practices for AI-Assisted Redlining Using AI for contract review is powerful, but getting the best results requires some strategy. Here are best practices to maximize accuracy and efficiency: - **Start with a high-level summary.** Before diving into detailed edits, have the AI summarize the contract or identify key risk areas. - **Use the AI on the whole document or specific sections.** Tailor the scope of the AI's review to your needs – it can zoom in or out. - **Craft clear, detailed prompts.** A little extra time spent writing a specific request can pay off in a big way. - **Leverage your templates and prior deals.** Always feed the AI your relevant precedent documents – such as favorite templates, policy checklists, style guides. - **Have the AI check definitions and cross-references.** Misdefined or unreferenced terms are a common source of errors. - **Adjust the AI's redlining aggressiveness to the deal.** Not every deal calls for the same level of pushback. - **Teach the AI your preferences with feedback.** Give feedback on suggestions so it becomes smarter and more attuned to your style of lawyering. - **Use Playbooks for repeatable reviews.** Build custom playbooks to automate the review routine. ## Sample AI Redlining Prompts by Practice Area **Mergers & Acquisitions (M&A)** "Review this purchase agreement and let me know which provisions are unusual compared to market standards for similar deals." **Corporate (General Contracts)** "Review this contract based on our company's playbook and mark any non-compliant clauses or missing provisions." **Real Estate** "Compare this lease to the attached Letter of Intent. Highlight any terms in the lease that differ from the LOI and suggest edits to align them." ## Manual vs. AI-Assisted Redlining: A Comparison - **Speed and efficiency**: AI drastically accelerates this, cutting review times significantly. - **Error reduction**: AI provides a safety net that minimizes human oversight errors. - **Comprehensiveness of review**: AI scans every clause and highlights boilerplate that might be missing. - **Consistency and neutrality**: Ensures every contract is reviewed against the same checklist. - **Lawyer's role and focus**: Frees up time to focus on strategic issues rather than clerical tasks. Adopting AI in your redlining workflow doesn't mean changing your standards – it means enforcing them more reliably.