The Corporate and Mergers & Acquisitions practice group at Forchelli Deegan Terrana LLP would like to share with you this short overview of the potential impact of artificial intelligence on contract drafting.
Artificial intelligence (AI) holds significant potential to revolutionize contract drafting. By employing machine learning and language understanding techniques, AI can enhance both precision and efficiency. The capabilities of AI range from adherence to regulations and assistance in negotiation via real-time feedback to risk reduction. However, several hurdles, including the need to ensure data quality and interpretation issues, remain.
Despite AI’s recognized potential, its practical application in contract drafting in the United States is still in its nascent stages. According to a 2023 survey from Bloomberg Law, while most legal practitioners are aware of AI, its actual utilization remains relatively low.
The adoption of AI in contract drafting necessitates careful consideration of ethical factors. This is particularly due to AI’s tendency to generate “hallucinations,” a term used when the program invents things that do not exist, which could potentially lead to misinformation. Therefore, it is crucial for lawyers and their clients to fully understand AI’s capabilities and limitations before its implementation.
AI should bring remarkable improvements to the field of contract drafting. Despite its recognized utility and a general awareness among legal practitioners, AI’s application is still in the early stages. Challenges and issues remain. However, as AI’s capabilities mature and gain wider acceptance, its importance to contract lawyers is likely to evolve. AI tools could assist in routine drafting tasks and in identifying potential risks. Looking forward, the legal sector can expect significant transformation, driven by the innovative potential of AI.
This article was co-authored by Joseph V. Cuomo, Chair of our Corporate and Mergers & Acquisitions practice group, and Robert Ricigliano, a legal intern with the firm.
Should you have questions regarding the content of the article, or any other corporate law matter, please call 516.248.1700 or contact Joseph V. Cuomo.