Can AI Handle Contract Review? Yes, but...
During a recent meeting, the question "Can't we just have AI review this?" was raised while looking at a simple confidentiality agreement. It certainly seemed plausible that an AI solution could review the agreement, suggest edits, and even engage in iterative drafting with another AI system. So, what’s the difficulty in reviewing a confidentiality agreement, one of the most common (over-used!) and seemingly “simple” contract requests out there, especially in the investment management business? The answer is most definitely that this review is not difficult for a seasoned business lawyer familiar with these agreements. So, can’t this “easy” review be replicated by an AI solution put together by an army of seasoned lawyers and seasoned businesspersons, and tested and re-tested against an army of seasoned users of these agreements?
The answer, which may shock some of you, is “YES, but….”
Eventually, and probably sooner than most people think, there will be a number of solutions specific to every niche contract review situation that can input a contract request, assimilate characteristics and preferences of the parties, and produce a redline representing a middle ground or aggressive response based on any number of custom preferences. Of course this will happen, and to some extent, there are solutions that profess to do this today (just do a quick Google search to confirm). So, what’s the “but” about?
As a businessperson, wouldn't you still want a human lawyer with years of experience to review the final agreement, even if it were fully negotiated by AI agents of the future? The answer is an emphatic YES (with no accompanying but!). It's essential to have a human lawyer provide oversight and advice, especially considering the potential repercussions of solely relying on AI in a contract negotiation. Can you imagine a contract going sideways and answering to the board, key customers or other stakeholders, “Well, we just let the AI handle that negotiation and executed the Docusign.” That is not a good process or response!
The limitations of AI in contract review and negotiation are well-documented, just ask ChatGPT if you’d like an in-depth and very self-aware (😊) list. Here is a summary of the summary I asked ChatGPT to prepare: AI struggles with the complexity, context, ambiguity, and ethical considerations inherent in legal language and negotiations. While AI can offer speed, efficiency, and consistency, human oversight and judgment are necessary to ensure the final contract meets the parties' needs and intentions.
So, what is one to do? Well, reach out to Moeller Law of course! Truly, Moeller Law believes the answer for many businesses is to engage (on a fixed monthly fee basis) with an experienced Fractional General Counsel that embraces new technologies but also can provide the efficient risk overlay made possible by decades of real-world experience. The truth is, even a “simple” confidentiality agreement can entail significant nuance, with potential accommodations or hard “lines in the sand” on specific provisions varying greatly based on the specific facts and circumstances. AI solutions are already wonderful at harnessing efficiencies in preparation and comparison of various agreements. This is great! However, it is essential to realize there is still (and very well may always be) an essential human element to the negotiation process, both from an informed/expert businessperson, alongside an experienced legal practitioner.
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