Sunday, November 1

Can AI Draft a Contract? What Law Firms Are Actually Testing

AI legal work: A wooden gavel resting on a stack of law books
Photo: TimeBusinessNews / Wikimedia Commons (CC BY-SA 4.0)

Ask a lawyer whether AI will replace them and you will usually get a polite sigh. Ask what they are testing and the answer gets more interesting. Inside many firms and legal departments, AI legal work is being tried on narrow, tedious tasks, with humans checking every result. The experiments say a lot about where the technology helps and where it can embarrass you.

Where AI fits comfortably

Legal work involves huge volumes of text. Contracts, emails, filings and records all need to be read, compared and summarized. That is a natural match for language models, which are good at pulling out key points and drafting a first pass.

Typical pilots include summarizing long documents, extracting dates, parties and obligations from contracts, comparing a draft against a standard template, and producing first drafts of routine letters. In disputes, teams test tools that help sort through large piles of documents to find the relevant ones.

None of this is brand new. Document review software has used machine learning for years. What has changed is how easy it is to ask for something in plain language and get a readable answer.

The famous failure is fabrication. Language models can produce confident, well-formatted text that includes legal citations which do not exist. Courts have encountered filings containing invented cases, and lawyers have faced consequences for submitting them without checking. That is a failure of verification, not just of technology.

Subtler problems are more common. A model can miss an unusual clause, misread context or apply the rules of one jurisdiction where another governs. Legal language often depends on tiny wording differences, and a summary that smooths them over can mislead.

Because the output sounds fluent, errors are easy to overlook. A wrong answer in a polished paragraph is more dangerous than a clumsy one.

The confidentiality question

Client information is protected, and lawyers have professional duties to keep it safe. Pasting a sensitive contract into a public chatbot could breach those duties. That is why many firms prefer tools with strict data terms, private deployments or contracts that forbid the vendor from training on their inputs.

Before any tool is adopted, firms ask where the data goes, who can see it, how long it is stored and whether it can be deleted. Procurement and security teams are as involved as the lawyers.

A practical example helps. Imagine a company with hundreds of supplier agreements and a question about which ones renew automatically. A person could spend days opening files. A tool can scan them and produce a list in minutes. But a lawyer still needs to spot-check, because a missed clause in one contract may be exactly the one that matters.

Most careful pilots look similar. A small group picks a defined task, such as reviewing a particular type of agreement. They measure how long it takes with and without the tool, and how often the output needs correction. Senior lawyers review the results.

The best setups keep a human accountable at every step. The tool suggests; the lawyer decides. Some firms also require staff to record when AI helped with a work product, which supports review and client transparency.

Training is part of it. Junior lawyers traditionally learn by doing the grunt work. If software handles first drafts, firms must find another way to teach judgment, perhaps by having juniors critique and correct machine output.

What it means for clients and the profession

For clients, the hope is lower costs and faster turnaround on routine matters. Whether savings reach them depends on how firms price their work. Hourly billing sits awkwardly with tools that shorten tasks, which is pushing some firms toward fixed fees.

There are access-to-justice implications as well. People who cannot afford a lawyer may use AI tools to understand a notice or draft a simple letter. That could help, though without professional review the risk of acting on a bad answer is real.

For the profession, the likelier change is a shift in tasks rather than a vanishing of roles. Time spent on rote review may shrink while time spent on strategy, negotiation and advice grows. Regulators and bar associations have been publishing guidance on responsible use, generally stressing competence, confidentiality and supervision.

Vendors are responding with features aimed at trust: showing the exact passage a claim came from, linking to sources and flagging uncertainty. These help, because they make checking faster. They do not remove the need to check.

Smaller practices face a different calculation. Without large technology budgets, they may rely on general tools and need clear internal rules about what can be entered. A short written policy covering approved tools, banned inputs and mandatory review is a sensible first step for any size of firm.

A grounded view

If you are considering AI for legal tasks, treat it as a capable but unreliable intern. Give it clear, contained work, check every claim against the source, and keep confidential material out of tools you do not control. The technology is useful. Trust, in law, is earned by verification, and nothing about AI has changed that.

AI legal work is promising for drafting and research, but a lawyer still has to check it. The Wikipedia article on law firms describes how the profession is organised, and confidentiality is the key question in AI legal work.

In short, AI legal work is easier to judge when you slow down and check the basics.

Related reading: How Startups Get Valued: Why Legal AI Companies Can Carry Sky-High Numbers and Mind-Reading Headbands? How Brain-Sensing Wearables Actually Work.

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