By Lavona Appanna / Associate / Mooney Ford Attorneys
- AI can draft your contract but cannot take responsibility for it.
Artificial intelligence has transformed the way information is accessed, analysed and processed. It can produce a contract in seconds, analyse documents and provide what appears to be a clear legal answer to almost any question. That convenience is precisely what makes it dangerous.
The question businesses should be asking is not whether AI can provide a legal answer. It is whether they can afford to rely on that answer when it is wrong.
- A convincing answer is not necessarily a correct one.
One of the greatest risks of AI is that it does not necessarily sound wrong when it is wrong. AI can produce an answer that is polished, confident and entirely plausible. It may cite legislation or case law that does not apply (or even exist). It may misunderstand the facts, overlook an important qualification or generate a contractual provision that appears commercially sensible but creates an unintended legal consequence.
A lawyer is trained to do something AI cannot do independently, exercise professional judgment in the context of a client’s specific circumstances.
Legal questions rarely exist in isolation. The correct answer depends on the facts, the evidentiary documents, the applicable law, a client’s commercial objectives and, importantly, information that was never included in the original question on an AI platform.
- The hidden cost of the “free lawyer”.
Why pay a lawyer to draft a contract when AI can do it for free?
The problem a client faces when asking this question is that legal advice is not simply the production of words on a page. You are paying a lawyer to identify risks you may not know exist. You are paying for someone to ask the next question, challenge your assumptions and identify consequences that may not be immediately apparent. You are also paying for accountability.
AI platforms themselves acknowledge their limitations. Their terms and disclaimers prominently warn users that AI-generated information may be inaccurate and should not be relied upon as a substitute for professional legal advice.
If an AI-generated contract contains a defective clause, who do you call? If an AI-generated legal answer contributes to a substantial financial loss, who accepts responsibility? If confidential information is uploaded into an AI platform and subsequently exposed, who answers for that decision? The answer is not the AI.
- Confidentiality is another risk.
Legal matters frequently involve highly sensitive information, including shareholder agreements, employment disputes, acquisitions, financial information, trade secrets, litigation strategies and privileged communications. Uploading that information into an AI platform without understanding how the information is processed, stored, retained or used creates an additional layer of risk.
Lawyers operate within a professional framework that imposes duties relating to confidentiality and the protection of client information. Those obligations exist because clients entrust lawyers with information that may be commercially sensitive, privileged or deeply consequential. That protection should not be exchanged for convenience without carefully considering the risks.
- Directors cannot outsource judgment.
The same principle applies to corporate decision-making. AI may assist directors and executives with research, financial analysis, document review or risk assessment. It can be a valuable tool in the right circumstances. It cannot, however, assume a director’s legal duties. A director cannot simply say, “that is what the AI told me.”
Using technology does not transfer responsibility for a decision. Directors remain responsible for exercising the required degree of care, skill and diligence and for making decisions based on appropriate information and professional judgment. The more consequential the decision, the less appropriate it is to treat an AI generated answer as the final word.
- AI should assist lawyers and not replace judgment.
There is an important distinction between using AI to assist a lawyer and using AI instead of a lawyer. The first can be extremely valuable. The second can be expensive.
AI can help lawyers work more efficiently. Used properly, it can enhance the delivery of legal services. The value of a lawyer is not simply in knowing the law. It lies in applying the law to the client’s particular circumstances, identifying risks, exercising judgment and taking responsibility for the advice given.
Yes, AI can draft your contract, it can summarise the law, it can identify a potential issue, it may even produce an answer that sounds more convincing than the answer your lawyer gives you. But it does not understand your business, your objectives and your risk in the same way a professional adviser does. That is the distinction businesses should not overlook.
The question is not whether AI can answer your legal question. It probably can. The better question is who bears the risk if that answer is wrong? That is where the short term saving can quickly become an expensive long term mistake.
Use AI to enhance legal expertise, not to replace it. When the consequences matter, you need a lawyer, not just a quick answer.
