There’s a trend to save money by using AI software to generate contracts. Yet how safe is it to use these agreements? And are you really saving money?
It depends upon what you’re doing.
First, let’s look at the dangers.
Many AI-generated contracts are in fact templates that the AI software simply inserts details like party names, pricing, dates of performance, etc. Seems simple enough. Not quite.
Here’s why.
Those templates typically contain provisions that favor one side. How do you know you’re the one being favored by those terms and conditions? And in some cases, the templates contain conflicting provisions, with some clauses favoring you, some favoring the other side, or even paragraphs that hurt both parties.
What about intellectual property?
Chances are the AI is using copyrighted materials without permission to create your contracts. As derivative works, those agreements infringe upon the copyright owner’s rights. There have been cases where attorneys have sued for copyright infringement when their contracts have been used in software to generate new agreements. It just takes one lawsuit for any savings gained by AI to be quickly wiped out by legal expenses defending yourself.
Of course, there’s also the issue of confidentiality. All of the information you enter into the AI software probably becomes part of the data set for future contracts generated by others (including your competitors). Will that create problems for you down the road?
Are there times when it makes sense to use AI for your business’ legal agreements?
Yes.
For example, if you have a qualified lawyer prepare an agreement for you to use that contains terms favorable to your business and you obtain a license from the attorney to use that agreement as a template in AI. Even then, you should be concerned about inputting confidential information into AI software that could come back to haunt you later.
