The emergence of Generative artificial intelligence (AI) has sparked both curiosity and speculation in the legal landscape. In fact, a survey by Thomson Reuters indicates a prevailing optimism among in-house legal departments, with 82% of respondents supporting the application of Generative AI to legal.

Generative AI is an infant technology with immense potential to reshape how lawyers draft and manage contracts. However, it needs to be implemented with caution and, most definitely, needs a detailed policy outlining its usage to ensure safe and ethical contract management practices.

Let’s delve deeper into Generative AI, exploring its implications for legal teams and addressing the critical question of its safety when employed in contract-related tasks. 

What is Generative AI?

Generative AI is a kind of artificial intelligence that has revolutionized the way machines create content. It can generate text, code, voice, images, videos, processes, and even the 3D structure of proteins.

It is important to note that Generative AI differs from predictive AI, another approach within the field of artificial intelligence. Predictive AI relies on labeled historical data to make predictions about future events, while Generative AI focuses on the creation of new and original content.

At its core, Generative AI utilizes machine learning techniques to generate new data by analyzing existing data. It leverages the power of two neural networks working in tandem. 

Generative AI for in-house legal

One of the most applicable forms of Generative AI is text generation, which has found significant utility in the legal services industry. Its ability to automate laborious and time-consuming tasks leads to increased efficiency and productivity for legal. 

“I cannot even begin to think how much all the different categories of AI are going to change how legal work is delivered internally and by law firms as well as by ALSPs over the next couple of years. Understanding that is a key role that legal operations will play."

‍~ Akshay Verma, Head of Legal Ops, Coinbase
Shaping a Purpose-Driven Career in Law

For instance, Generative AI can automate document review and comparison, summarization, and even the initial drafting of contracts or legal memos. By relieving lawyers of these routine tasks, Generative AI enables them to focus on more complex and high-value work. This shift not only enhances productivity but also opens up opportunities for significant cost savings and growth within legal practices.

Also read: AI in Contract Management: Reviewing and Drafting Contracts Within Minutes

Benefits of Generative AI for in-house legal teams

Generative AI offers numerous benefits for legal teams, revolutionizing their workflows and enabling them to deliver more efficient and accurate services. 

#1 Efficiency and time-saving 

Generative AI automates repetitive and time-consuming tasks, like document review, contract drafting, and legal research, allowing you to focus your time and expertise on higher-value activities. You can accomplish more work in less time, leading to faster turnaround times and increased capacity to handle complex legal matters.

#2 Accuracy and consistency in contract analytics and review

Unlike humans who may experience fatigue or overlook details, Generative AI systems can meticulously analyze vast amounts of data without losing focus. This improves the accuracy of document review, contract analysis, and legal research, minimizing the risk of errors and inconsistencies. 

#3 Enhanced contract drafting and review processes

By analyzing large datasets of existing contracts, Generative AI can provide intelligent suggestions and automate the creation of contract templates. It can identify potential issues, flag inconsistencies, and even propose alternative clauses based on specific requirements. This accelerates the contract drafting process, reduces the likelihood of errors, and ensures compliance with legal standards. 

Additionally, Generative AI can streamline the contract review process by automatically extracting key information, comparing clauses, and identifying potential risks, enabling legal teams to review contracts more efficiently and thoroughly.

#4 Streamlined legal research and analysis

Generative AI enhances legal research and analysis by quickly sifting through vast amounts of legal information and extracting relevant insights. It can rapidly analyze case law, statutes, and legal precedents to support legal arguments and provide valuable legal research summaries. It can assist in identifying relevant legal sources, extracting key facts, and even predicting outcomes based on historical data. This expedites the research process, enabling you to make well-informed decisions.

#5 Quick summary generation

Generative AI excels at producing concise summaries of long texts or collections of texts. This capability is particularly useful in the legal field for summarizing due diligence reports, legal research findings, or legislative changes. 

#4 Rapid content repurposing

Generative AI can transform content into new types, formats, or styles. This could involve simplifying complex legal language to make it more accessible and understandable. By utilizing Generative AI's ability to analyze and rephrase content, legal teams can effectively communicate legal concepts and documents to clients, stakeholders, or non-legal professionals.

#5 Information extraction

Generative AI can provide natural language answers to natural language questions based on a given text or knowledge base. This capability is particularly useful for legal self-service requests, where repetitive questions that require a level of legal insight can be addressed efficiently. 

Also read: How to choose the best AI contract review software

Also read: 8 Top Contract Management Software Platforms

Is it safe to use Generative AI for contract management?

The use of public Generative AI for contract generation offers numerous benefits in terms of efficiency, speed, and convenience. 

However, it is essential to carefully consider the safety implications associated with relying on public Generative AI tools to produce legally binding contracts. 

#1 Quality and reliability concerns

AI algorithms used to generate contracts must undergo rigorous testing and validation to ensure the accuracy and completeness of the generated content. Generative AI may sometimes yield made-up responses or come up with different answers for the same question.

“When I asked research-related questions, ChatGPT spit back something that sounds very intelligent [and] provided a conglomeration of citations that look real but don’t actually exist.”

~ Ashley Armstrong, Assistant Clinical Professor of Law, University of Connecticut
Generative AI and the Law

Unreliable or erroneous Generative AI contracts can lead to significant legal disputes, financial losses, and damage to professional reputation. 

#2 Legal implications and ethical considerations

The adoption of public Generative AI for contracts raises important legal and ethical considerations. From a legal standpoint, it is crucial to determine the jurisdiction's requirements and regulations governing the use of AI-generated contracts. 

Additionally, ethical considerations include issues such as informed consent, transparency, privacy, and data security.  

“The number one rule since the birth of the internet is ‘don’t do anything stupid’ online. You need to think ahead of time: are you and your client comfortable?”

~ Greg Lambert, Chief Knowledge Services Officer, Jackson Walker LLP‍
Generative AI and the Law

#3 Bias and fairness issues

Generative AI systems learn from existing data, and if that data contains biases or discriminatory patterns, the generated contracts may inherit such biases. This can lead to unfair or discriminatory terms and conditions, which not only pose legal risks but also undermine the principles of fairness and equal treatment. 

#4 Responsibility and accountability in Generative AI for contracts

While the AI system itself does not possess legal personhood, the responsibility for the actions and decisions made by the AI ultimately lies with the individuals or organizations that deploy and maintain the system. 

Also read: How AI Is Changing Contract Management for Legal Teams

Embracing legal tech to ensure safe and ethical contract management with Generative AI

“What you should be doing is taking the GPT AI model and licensing it through a software as a service provider.”

~ John Buyers, Partner, Osborne Clarke
Public-Generative AI: The risks and opportunities for in-house teams

To ensure safe and ethical contract management practices, there is a need for legal-specific capabilities in Generative AI, and there are various options to leverage these capabilities.

#1 Integrating AI into existing legal tech platforms

A few established legal tech providers are incorporating Generative AI into their platforms. For example, SpotDraft AI helps you unlock a new level of productivity and gain valuable insights from your contracts while using the platform for contract drafting or information extraction. 

With SpotDraft, you can:

• Generate contract templates instantly
• Conduct comprehensive due diligence on multiple contracts at once, and review contracts 7x faster with AI clause match
• Extract critical insights from your contracts, empowering better decisions across your organization
• Compare clauses with past versions side by side, and make quick changes
• Generate precise contract summaries to identify data trends and facilitate decision-making

Moreover, using our Microsoft Word plugin, Draftmate AI, you can turn any document into a SpotDraft contract template in under 5 minutes.

Also read: Smarter contract management with SpotDraft AI

#2 Supplementing generic models with proprietary content

New Generative AI legal tech tools enable organizations to enhance generic (non-legal) models with their own proprietary content. This approach allows legal departments to customize the AI models to align with their specific legal requirements and expertise.

#3 Leveraging Generative AI tools from legal information providers

Legal information providers are developing Generative AI tools that provide AI capabilities on top of their existing knowledge bases. These tools offer legal departments the ability to leverage AI for contract management while utilizing trusted and comprehensive legal content.

#4 Creating custom capabilities

Larger law firms and corporate legal departments may choose to develop their own Generative AI capabilities. This can be accomplished by leveraging legal-specific platforms or even utilizing more generic Generative AI models. Creating custom capabilities allows you to tailor the AI system to your specific needs and enhance the safety and ethical considerations in contract management.

Also read: Roadblocks to adoption of generative AI for in-house legal

Best practices for Generative AI contract management

The integration of Generative AI into the legal workflow brings both opportunities and challenges for in-house legal teams. To ensure the successful and safe utilization of Generative AI for contracts, it is crucial to follow these best practices.

#1 Establishing clear guidelines and protocols

You need to establish clear guidelines and protocols, or a policy, so to say, for working with AI-generated contracts. 

The policy should outline the scope of AI usage, including specific use cases, limitations, and potential risks. It is important to define the roles and responsibilities of team members, ensuring they understand how Generative AI-generated contracts fit into their workflow. 

“Most organizations are realizing that they should have a policy in place for AI adoption, because, otherwise, there's a risk of customer data or confidential data being put into the public tooling.”

~ Ken Priore, ex-Director of Privacy, Atlassian
Mastering the Intersection of Law, Technology, and Privacy

Clear guidelines help maintain consistency, ensure compliance with legal requirements, and mitigate potential errors or misunderstandings

#2 Collaborating with AI experts and technologists

AI professionals possess the technical knowledge and expertise necessary to develop and deploy AI systems for your team. By involving AI experts from the early stages of implementation, you can benefit from their insights and ensure the AI models are properly trained, validated, and optimized for legal applications. Collaboration helps bridge the gap between legal and technical domains, leading to more effective and reliable AI contracts.

#3 Continuously learning and adapting

Staying updated with the latest developments in AI and understanding how they impact the legal industry is crucial. You should actively participate in training programs, workshops, and conferences related to AI and legal tech. This ongoing education allows legal professionals to effectively leverage AI contracts and adapt to changes in the technology landscape.

Also read: 5 Indian Legal Events that GCs need to watch out for in 2023

#4 Balancing automation with human expertise

You need to maintain human oversight and involvement throughout the contract management process. As the in-house legal counsel, it is up to you to review Generative AI contracts and ensure accuracy, legality, and alignment with specific client needs. 

“Automating document review gives you more-accurate results faster. But the ethical obligations to maintain client confidentiality, avoid conflicts of interest, and provide competent representation require human judgments that cannot be delegated to machines.”

~ Olga V. Mack, VP at LexisNexis and CEO of Parley Pro
The Future Of Legal: Combining AI And Human Expertise For Improved Outcomes

Human experts possess the domain knowledge, contextual understanding, and ethical judgment necessary to identify and address complex legal issues that AI systems may overlook. Combining AI automation with human expertise enhances the quality, safety, and ethical considerations of contract management.

Also read: How AI contracts can boost deals

Responsibly implementing Generative AI for contract management

Generative AI for contracts has the potential to bring transformative changes to the legal industry. It can automate routine tasks, improving efficiency, and enabling more sophisticated legal risk management, enabling in-house lawyers to focus on higher-value work and drive growth opportunities. 

However, responsible implementation, specialized models, and thoughtful integration of Generative AI into legal workflows are essential to harness its full potential and ensure accurate and reliable outputs.

“Some people are scared of AI but I honestly think it's just going to make everyone's life so much easier. You really can't substitute a lawyer. Take risk tolerance, for example. Maybe AI can give you data on which path you can take but, at the end of the day, you need context to be able to make a call. So, I personally don't think it’s scary. It’s actually really cool.”

~ Katayoon Tayebi, Associate General Counsel, FIGS
Accelerating Your Career as In-house Counsel

While Generative AI can significantly streamline processes and increase efficiency, it can never replace the invaluable legal knowledge and judgment of lawyers. Instead, it should be viewed as a powerful tool that complements and augments the capabilities of legal professionals.

To experience the benefits of Generative AI in contract management, request a demo of SpotDraft AI. SpotDraft AI offers specialized legal models and advanced automation features that enable seamless contract generation and management. Contact us today to see how SpotDraft AI can revolutionize your contract management processes.