How to Review a Contract in Microsoft Word with AI: A Step-by-Step Guide for In-House Legal Teams

Most in-house contract review happens in Microsoft Word. A vendor sends a draft, the business wants it signed this week, and a lawyer opens the file, reads it against what the company usually accepts, marks it up with tracked changes, and writes a note to the business explaining what changed and why.

This guide shows how to run that same review with Gavel Exec, an AI contract review assistant that works inside Word. It follows one agreement from the moment it arrives to the moment it goes back to the counterparty, and it covers the setup that makes each later review faster.

It is written for corporate legal teams of one to ten lawyers who review a steady flow of vendor, customer, and partner agreements and cannot compare every draft line by line against a template.

The example used in this guide

To keep things concrete, the guide follows a single review. A procurement manager forwards a cloud software vendor's master services agreement (MSA) along with its data processing agreement (DPA). The company is the customer. The business owner wants the contract signed by Friday, and the legal team has two lawyers.

Before you start: set up once, reuse on every review

The first review with Gavel Exec takes a little setup. Every review after that benefits from it.

Install the Word add-in

Gavel Exec runs as an add-in for Word on desktop and in Word Online. Lawyers who prefer working in a browser can also use the Gavel Exec web app.

Set organization-wide instructions

Organization-wide instructions apply to every chat and every playbook run for everyone on your team. Use them for the facts and preferences that rarely change, for example:

• "We are the customer unless the document clearly says otherwise."
• "Our preferred governing law is Delaware."
• "Flag any data breach notification period longer than 72 hours."
• "Use a collaborative tone in any comment addressed to the counterparty."

Load a playbook for the contract type

A playbook is your team's written positions on a contract type, broken into rules. You can get one into Gavel Exec in three ways:

• Start from a Gavel playbook. Exec includes playbooks for common agreements such as vendor MSAs, DPAs, advisor agreements, and independent contractor agreements.
• Generate an AI Playbook from your own documents. Upload your template contracts and internal negotiation guidelines, and Exec drafts a rule set based on how your team already negotiates. A lawyer then reviews and edits the rules.
• Import or merge playbooks. Playbooks can be exported, imported, and merged, so you can combine a company-wide rule set with rules for a specific business unit.

Playbooks are shared across your Organization in Gavel Exec, so every reviewer on the team runs the same rules.

What a well-written playbook rule looks like

Good rules state a preferred position, a fallback, and when to escalate. Here is an example for the limitation of liability in a vendor MSA:

Limitation of liability. The vendor's aggregate liability cap must be at least the fees paid or payable in the 12 months before the claim. Fallback: accept a 12-month cap if breaches of the vendor's confidentiality and data protection obligations have a separate cap of at least two times annual fees. Escalate to the general counsel if the cap is below 12 months of fees or if data protection breaches fall under the general cap.

A rule written this way gives Exec a clear standard to test the draft against. It also gives a junior lawyer or contract manager enough guidance to resolve the issue without asking anyone.

Create a Project for reference documents

A Project holds documents and instructions that Exec considers before responding. For vendor contracts, a useful Project contains your customer-side MSA template, your standard DPA, and two or three recently signed vendor agreements you consider good outcomes.

Step 1: Open the draft and get oriented

Open the vendor's MSA in Word and open Gavel Exec from the ribbon. Attach the DPA to the chat so Exec can read both documents together.

Start with an orientation request:

"Summarize this agreement from the customer's perspective. Cover term and renewal, fees and price changes, liability and indemnities, data and security, and termination rights."

Exec reads the entire working document, including tables and any tracked changes already in it. When its answer refers to a section, the reference is a clickable link that takes you to that paragraph in the document.

A short orientation tells you whether you are looking at a balanced draft or a vendor's most aggressive paper, which helps you decide how much time the review deserves.

Step 2: Run the playbook

Run the vendor MSA playbook against the document. Exec checks every rule and marks each one as passed or failed:

• For a failed rule, Exec proposes redlines that bring the language back to your position.
• For a passed rule, Exec explains why the language complies.
• Every result links to the language it relies on, so you can check the finding against the clause itself.

In our example, the playbook flags six failures:

1. The liability cap equals fees paid in the three months before the claim.
2. The agreement auto-renews for successive one-year terms and can only be cancelled with 90 days' notice.
3. The vendor may change its service terms and acceptable use policy by posting an updated version online.
4. The vendor's indemnity covers third-party intellectual property claims but excludes claims arising from a data breach.
5. Price increases at renewal are uncapped.
6. Governing law is the vendor's home state.

Those six failures are the lawyer's issues list. The passing rules tell her which sections she can skim, and she can open any of them from its link if she wants to confirm.

If you want comments alongside the redlines, turn on Run with comments and choose the comment categories. A counterparty-facing comment explains to the vendor why each change is requested. An internal comment can note the business context for a colleague.

Step 3: Investigate what the playbook does not cover

A playbook covers the issues your team has already decided. Every contract also raises questions specific to the deal, and that is where chat is useful. In our example, the lawyer asks:

• "Does the DPA let the vendor add subprocessors without notice to us? Does that conflict with the confidentiality section of the MSA?"
• "If the vendor has a data breach, what can we actually recover, given the liability cap and the indemnity?"
• "Can the vendor suspend service while we are disputing an invoice in good faith?"
• "Does anything in either document let the vendor use our data to train AI models?"

Because the Project includes the company's template, she can also ask Exec to compare clauses directly: "Compare the termination section in this draft with the termination section in our template and list the differences that matter for us."

When an answer depends on a particular jurisdiction's law, use the jurisdiction picker in Quick Actions to scope the request. Questions the team asks on every deal can be saved to the prompt library and reused.

Step 4: Review, edit, and apply the redlines

Exec presents proposed redlines in groups. Each change shows a priority level and the reasoning behind it, so the lawyer can handle the high-priority items first and move quickly through minor ones.

Before applying a redline, you can edit the suggested language. In our example, the business has already approved a 12-month liability cap with a separate data breach cap, so the lawyer edits the proposed redline to the fallback position instead of the preferred one. She applies the other redlines individually and uses Apply All for a group of minor cleanup changes.

The changes land in Word as ordinary tracked changes under the lawyer's name. Redlines apply cleanly over a counterparty's existing tracked changes, keep the authorship of each insertion and deletion intact, and work inside tables. The lawyer then accepts or rejects them in Word as she normally would.

For agreements without a playbook, the redlining Quick Action reviews the whole document based on the party you represent, your negotiation style, and your risk tolerance. Over time, Exec also adapts its suggestions to each user's own redlining style.

Step 5: Send the business a clear summary

Most reviews end with a message to the business owner. Ask Exec to summarize the redlines, and it produces a plain-language list of each change and the reason for it. The lawyer then adds her judgment about what is likely to be contested. In our example, the note to procurement reads:

• Liability cap: raised from three months of fees to twelve, with a separate higher cap for data breaches. The vendor may push back, and we can accept the twelve-month cap alone if necessary.
• Auto-renewal: notice window shortened from 90 to 30 days. Please add the renewal date to the vendor calendar either way.
• Changes to terms: the vendor can no longer change the service terms by posting updates online. Material changes now require a signed amendment.
• Data breach indemnity: added coverage for third-party claims arising from a breach of the vendor's security obligations.
• Open question for you: we proposed capping renewal price increases at 5% per year. Please confirm that works for your budget.

Step 6: Feed what you learned back into the playbook

After a few weeks of reviews, patterns show up. If the team keeps accepting the same fallback, the fallback may be the real position. If a rule fails on nearly every vendor draft and the team always concedes it, the rule may be unrealistic. Update the rule once in the shared playbook, and every reviewer on the team uses the new version from the next review onward.

What AI handles and what the lawyer decides

In this workflow, Gavel Exec does the first read, checks every clause against your positions, drafts the standard redlines and comments, and writes the first version of the summary. The lawyer decides what to concede, applies business context the documents do not contain, handles the issues the playbook does not cover, and signs off on the final draft.

Security and data handling

Gavel Exec is SOC 2 Type II certified. Gavel has zero data retention agreements with its large language model (LLM) providers, and customer documents are not used to train models.

Frequently asked questions

Can AI review contracts directly in Microsoft Word?

Yes. Gavel Exec runs as a Word add-in. It reads the open document, checks it against your playbook, answers questions about specific clauses, and inserts proposed changes as tracked-change redlines that you accept or reject in Word.

What is playbook-based contract review?

Playbook-based review checks a contract against a written list of your organization's positions on each key issue. Each rule is marked as passed or failed, and failed rules come with proposed redlines that bring the language back to your position.

Can Gavel Exec review two related documents together, such as an MSA and a DPA?

Yes. Attach the related document to the chat or add it to a Project, and Exec considers it when answering questions and suggesting changes to the working document.

Can we use our own templates and negotiation positions?

Yes. Gavel Exec generates AI Playbooks from template contracts and internal guidelines that you upload, and Projects let you give Exec your templates and prior agreements as context for every review.

Is Gavel Exec for in-house teams or law firms?

Both. In-house teams use it for vendor, customer, partnership, and data protection agreements. Law firms use it for transactional drafting and redlining.

Do lawyers still need to review the output?

Yes. Exec proposes redlines and explains the reasoning for each one, and a lawyer decides which changes to apply. Every playbook result links back to the clause it is based on so the lawyer can verify it.