AI Generated Contracts - Why millions of wrongs do not make a right ...
The advent of Artificial Intelligence and large language models is changing the way businesses work in immeasurable ways. The ability to automate the process of collection, analysis, and summarization of data is certain to streamline practices and reduce time and costs. It is undoubtedly one of the greatest breakthroughs in modern times and the ripple effects of its creation will be felt by us all moving forward.
However, it is important to remember that these tools are just that: tools! They require oversight and confirmation and should not be used to replace professional judgement.
Instantaneous Drafting
The process of instructing a legal professional to draft contracts takes time for any business. Likely, anyone who has been through this process will know that once you make a request, you will be asked a series of questions to clarify the agreement that you need. When creating an AI Generated Contract, there is no such stage; the draft begins instantaneously and will punch out clauses to your hearts content. Whilst incredibly convenient, this removes any clarification, detail consideration or examination of your needs in the contract.
Ultimately, it should be understood that if you are creating an AI Generated Contract, the prompt that you type in will be taken as everything that you need, with all facts being considered and correct. In my example prompt, I stated that I will be providing ‘Services’, I did not specify whether I would be milking cows, providing software maintenance or designing the next generation of spaceships and the system didn’t care. It drafted the contract to fit the provision of generic services.
Lack of Detail Within the Clauses
One of the key indicators that we currently have of AI Generated Contracts is the limited amount of detail in the clauses. My AI Generated Contract is no exception, each of the points that I mentioned within the prompt were present and read as though in line with the prompt. However, when scratching the surface, the lack of details begins to harm the strength of these core terms.
As an example, my AI Generated Contract states that my customer will ‘pay the Company the monthly charges as specified in the proposal or invoice’. The proposal and invoice are not defined, I mentioned neither in my prompt and there is no consideration of what will happen if these two documents (should they exist) conflict with one another.
Uncertainty of Risk
My AI Generated Contract provides me with a bare bones contract to provide my services. As already established above, it has asked no additional questions to consider what shape the agreement should take, and what is there is fairly minimal, but there is a shape of a contract. I (as a businessperson) need a contract to cover off my risk and I now have what looks and reads as though it covers off the usual points that I would see covered in a contract.
The problem with this approach is that there is no way to confirm your level of risk. In my prompt I stated that I want my liability level to be as low as possible and the clause that was generated is a minimal clause that seeks to cap my liability at the ‘total charges paid by the Customer in the 3 months immediately preceding the event giving rise to the liability’.
Can I Make it Work Better?
There is always the possibility of improving AI Generated Contracts by including more detailed prompts, following up with questions and adding additional details after the fact. However, no matter the detail that is added, the limitations of these systems will (at least in the short term) still be an issue.
The first limitation is the training data. Ultimately, these programmes are built on huge data sets of training data, and this training data consists, at least in part, of existing agreements that have been published on the internet.
The final and most important limitation of these models is that they are not designed to provide legal advice, they are designed to generate text. They are incredible, sophisticated pieces of technology that can provide time and cost saving solutions, those that use them appropriately will reap the benefits. But they remain tools, to assist with text generation and are no replacement for professional expertise.
At Ellisons, our Commercial Contract Team is increasingly using AI, but solely as a tool for assisting us to create and review contracts for our clients.
