Artificial Intelligence for Legal Work? Not Yet.
Nowhere is the phrase, “It’s the thought that counts,” more applicable than when it comes to holiday gifts. That’s because most of us have given and received things that, while well-intentioned, were not quite what the other person was hoping for.
But on target or not, and as my wife and I have stressed to our children, a thank you note, especially to a well-meaning relative, is always in order.
Fortunately, we now have ChatGPT and other AI chatbots to do the job for us. Sort of.
Because you can’t simply ask the bot to, “Write a thank you note.” Rather, you need to provide more detail, such as: “Write a note thanking my 85-year-old grandmother for the beautiful, Christmas-tree covered, red and green cardigan sweater she gave to me.”
Depending on the specifics and context you provide, the bot will write a certain kind of note.
The same is true when asking an AI bot to review all or part of a business contract — something I don’t recommend, but that apparently is now a common practice for reviewing “routine” or standard agreements. Here as well, you will need to provide as much context and detail as possible; simply asking it to “review the following terms” will lead to a generic response.
The problem, however, is that even with the extra information, while the AI bot will offer some feedback (after covering its robotic backside with something to the effect of, “For a thorough review of a legal document, it’s always recommended to seek the advice of a qualified attorney”), it won’t take into account various contexts, perspectives, and unique issues that may have an important impact on the evaluation of certain terms and conditions.
Consider the example of a nondisclosure agreement (NDA). Even something as “boilerplate” and common as this type of agreement contains a lot of variation depending on the particulars of the business situation at hand.
What is the Relationship Between the Two Parties?
Is this a prospect to whom you may be selling your products or services? Is this a collaboration partner that could work with a potential competitor if things don’t work out? Could the other party be a potential competitor itself? Each of these scenarios dictates different terms and conditions.
For example, if negotiating with a party that could work with a competitor or could actually become a competitor, you’ll want to be cautious about disclosing important technical information AND receiving technical information from the other party. You may want to limit protections to written disclosures and oral disclosures that are followed up by a written description.
Will One or Both Parties Be Disclosing Information?
If your business will be the primary discloser of confidential information, you may want to propose a one-way NDA that protects your disclosures only and allows you to implement additional protections regarding the disclosure of confidential information.
Recently, I had a client that was considering the sale of a portion of its business. At the outset of the process, when the business was figuring out the extent of interest from other parties, it not only wanted to put strict protections on its disclosures, but because it was not receiving information from potential buyers, it required interested parties to sign a one-way NDA.
Is There a Need to Retain Confidential Information?
In some cases, one or both parties needs to retain confidential information of the other party. Other times, as is common with service providers or consultants, the information needs to be destroyed as soon as the contractual relationship ends (or if it never starts to begin with).
Similarly, a company may share trade secrets or other intellectual property during collaborations and negotiations, but wants to ensure the information and documents are destroyed shortly thereafter to protect its competitive advantage.
Should the Agreement be Assignable?
In some circumstances, it may be apparent your business and the other business could ultimately be competitive with each other. Here, you may want to limit the other party’s ability to assign the agreement to an acquiror that is, or potentially could become, a competitor.
Are Both Businesses Delaware Entities?
When considering the state law that will govern an agreement between businesses, it’s frequently the case that both businesses are Delaware entities. If so, the parties can quickly agree that Delaware law will govern the interpretation of the agreement. It’s unlikely, however, that AI would ascertain this fact and make such a recommendation.
AI Still Has a Long Way to Go
Will there come a time when AI takes the place of experienced, competent legal counsel? I have no idea.
For now, however, keep in mind that legal documents deliberately contain a great deal of specificity and nuance. Regardless of who — or what — drafts yours, once you sign on, they are legally binding.
Relying on review by an AI bot may not properly assess the terms based upon your context and circumstances. As those same bots advise: “For a thorough review of a legal document, it’s always recommended to seek the advice of a qualified attorney.”