YOUR AI DRAFT IS NOT HELPING YOUR LAWYER.. AND IS PROBABLY COSTING YOU MORE IN LEGAL FEES

AI can generate a contract in seconds. Making sure it is accurate, complete, and legally sound is another matter. This article explains why AI-generated contracts still require careful legal review and how providing your lawyer with the facts and details of your transaction upfront can help control legal costs. 

1. A POLISHED CONTRACT CAN STILL BE WRONG

Artificial intelligence offers an appealing way for business owners to save time and control costs. AI can quickly produce what looks like a professional contract or business agreement. But AI-generated contracts can create a growing problem: business owners send them to their lawyers expecting to save on legal fees, only to discover that reviewing and correcting them can take as much time as preparing them from scratch—sometimes more.

AI can produce convincing language while omitting critical terms, making unsupported assumptions, or overlooking important details about the transaction. Often, the problem starts with the prompt. If the instructions leave out important details about the parties, their expectations, or the terms of the deal, the resulting contract may look finished but be incomplete or fundamentally flawed.

2. WHY LEGAL REVIEW OF AI-GENERATED CONTRACTS TAKES TIME

When a lawyer receives an AI-generated contract, the document must be evaluated for substance, not just grammar and formatting. That means identifying missing terms, checking for inconsistencies, assessing risks, and determining whether the agreement accurately reflects the parties’ intentions. 

Sometimes, rewriting the contract from scratch is more efficient than fixing the draft. That is not just proofreading; it is substantive legal work which takes time and is billable. Reviewing a flawed draft is not necessarily cheaper than preparing the contract properly in the first place. A lawyer’s ethical and professional obligations do not disappear because AI prepared the first draft. The lawyer remains responsible for independently reviewing the contract, verifying its accuracy, identifying potential legal issues, and ensuring that its terms protect the client’s interests. AI cannot replace the professional judgment, competence, and diligence required to provide legal services.

3. WHAT ACTUALLY HELPS YOUR LAWYER? THE FACTS.

AI can be a useful starting point for a contract, but your lawyer needs to understand the underlying transaction to determine what the contract needs to accomplish, whether or not AI has been used to prepare a draft. What is being bought or sold? What have the parties agreed to? What are the payment terms, deadlines, and potential risks?

Share the relevant facts, communications, and business objectives. If you are unsure how to address a particular concern or what terms to include, talk it through with your lawyer. A lawyer can explain common approaches, recommend standard clauses, and help determine what makes sense for your transaction. Providing this context upfront helps your lawyer draft or revise a contract that reflects your intentions, protects your interests, and minimizes time spent correcting assumptions or filling gaps.

4. AI CAN HELP. THE FACTS MAKE THE DIFFERENCE.
AI can be a useful tool for organizing information, outlining business terms, or identifying questions to discuss with your lawyer. But an AI-generated contract is only as useful as the information and instructions behind it. 

You do not need a complete contract before contacting your lawyer. Sharing the details of your transaction, business objectives, and any agreed-upon terms with your lawyer is often a more efficient starting point than spending hours trying to generate a contract using AI. Involving your lawyer early helps ensure the agreement reflects your intentions, protects your interests, and avoids unnecessary revisions and legal costs.

The SJS Law Firm can help your small business draft, review, and strengthen its contracts to protect your interests and reduce the risk of costly disputes. For a complimentary consultation, please contact us at (202) 505-5309.