Would you jump off a cliff or bridge into the ocean if a computer tells you is safe? Of course not! But bear in mind that the computer has the most advanced and tested software. It doesn’t matter; you will certainly want to verify the risk with your own eyes. Even if you know that the amount of data processed by the computer is higher and the outcome more precise than the one you can analyze on your own? I am guessing, but you will probably look down. Final decision whether to jump or not will be based on your own criteria.
How does this analogy relate to the contractual world? It can be applied in a similar way to how AI tools are used to draft, review and negotiate contracts. To make the most of these developments, it is critically important to keep professionals in the loop that have the appropriate knowledge and expertise.
Does this mean that in the contracting world we should continue to rely only on a pencil and a pad? Not really. Using AI tools is already trending in probably all businesses and professional activities, and this applies to the contracting world too. AI is not the future anymore. It’s here to stay. Did you know that your counterparty might be using AI to review terms of the agreement and to find the best arguments to challenge your position?
A lot has been written about all the benefits and risks of AI’s technological breakthroughs. Are they useful? Are they accurate? Should we trust AI answers? I will not dive into this. You can navigate the web which is already overflooded with more qualified opinions on these topics.
Instead, the real issue is this: contracts shape the world we live in and this is true not only from a business perspective. Contracts impact the performance of companies and the lives of consumers. The way agreements are designed and drafted is key to foreseeing the effects that they will have on businesses.
That’s why organizations are already integrating AI tools to enhance the results of contract creation and analysis. I just want to share some practical insights on the use of AI for contract drafting and review. Contracts professionals should be aware of the current limitations of these tools. Keeping experts in the loop to validate and finetune outputs provided by AI will continue to be essential.
So, what is the best way to embrace this evolution?
Technology should be used with the aim of improving the results and making the process of contract creation and execution more efficient. For those professionals dealing with agreements the goal remains the same with or without AI; and the purpose is to secure the business while minimizing the risks.
Without a doubt, AI (if used wisely) can enhance the tasks to be performed by a contract professional. AI can help us do some of the tasks faster, better and in a much greater quantity. AI can help us to find and sort information and provide initial wording ideas. It is usually easier to improve the words that are already written than create complex clauses from scratch.
The underlying complex algorithms of the AI tools generate output based on data. If the data sources feeding these systems are somehow inaccurate, narrow or out of date the tool will probably produce imprecise findings. Here lies one key factor: the correct identification (and corresponding verification) of the sources from which the tool produces its results.
The speed at which these tools perform certain tasks is impressive. We all seek to make searching and retrieval through contracts with very long terms and conditions (dozens of pages of very small font) more bearable (and faster). We all want to improve our drafting skills and timing.
But don’t forget. Experts in contracting still need to be in the loop. It is common knowledge that, at this moment, these tools may not be as reliable as we would like them to be. The results may contain errors or be out of date. That’s one key reason why keeping experts involved is highly advisable.
Contracting professionals must consider much more than the way a sentence is written. They need to know how the business works, what is cheap and what is expensive, what the risks are, which risks are worth taking and how to minimize them. In addition, your contract team knows your specific business goals, what market you seek to conquer, how you plan to do that, what risks your fear the most and how to address your concerns.
This is not a statement against the use of AI. It is just a heads up: to really benefit from its use you need to apply it correctly.
- Do not use technology just because it is trendy.
- Consider the risks and benefits of using AI.
- Study which AI tools best suit your needs.
- Learn to interact with AI, learn how to interpret the results, learn to prompt.
- Protect the information you share with AI systems.
In all the above, keep moving, stay up to date, AI is evolving rapidly.
Using AI in a smart and efficient way can help you refine your deliverables and grow in volume. Verify, always verify. The eye of the expert and his/her knowledge are still necessary.
And all this verifying will always make sense, because this kind of decision causes effects: commercial effects, financial effects, legal effects and so on. Even as AI keeps improving, even as the input keeps getting better, we must always consider the human factor. This applies to contractual decisions as well.
ABOUT THE AUTHOR
Born in Uruguay, Maximiliano lived many years and studied law in Argentina. He is currently living in Spain, where he mastered in intellectual property and technology law. Working in well-known law firms in Argentina and international companies in Spain, he developed significant experience in legal advising, negotiation and drafting of agreements and regulatory analysis.