AI Contracts vs. Lawyer-drafted Contracts: What does Artificial Intelligence still miss?
Artificial Intelligence (hereinafter AI) has become an important part of our daily lives and is increasingly used in fields such as education, business, finance and law. It should be noted that AI should be used in a way that it does not put any restriction on person’s ability to think outside the box. In the legal field, AI tools are capable of legal research, reviewing documents, and even drafting contracts within seconds. Nowadays, this development has made some individuals think that AI has already replaced lawyers as it can potentially save time, decrease costs and make legal services more accessible. This raises one of the fundamental questions: if an AI is able to generate contracts, then why do we need lawyers in contract drafting?
What AI May Miss: The Client's Real Objective
One of the biggest risks of AI-assisted drafting is that the problem may not be an incorrect clause. Consider a software agreement between a bank and a technology company. A standard AI-generated contract may include confidentiality, intellectual property, liability and termination clauses. However, a lawyer would probably ask additional questions: What type of information will the technology company access, and what happens if the service becomes unavailable? Can the bank terminate the agreement immediately if there is a regulatory problem? These questions are important because the lawyer is trying to understand the transaction and identify risks before converting them into contractual provisions. AI can respond to the information it receives, but it does not automatically know the client's commercial priorities.
Context and Jurisdiction Matter
Contracts should be examined according to the legal systems in which they operate. A clause that is acceptable in one jurisdiction may be ineffective, restricted or interpreted differently in another. This becomes even more important in cross-border transactions. A lawyer may need to consider governing law, jurisdiction, mandatory legal provisions, enforcement and dispute resolution. For example, simply inserting a foreign governing-law clause into a contract does not necessarily solve every legal problem. Some rules may apply regardless of what the parties choose. AI can provide information about different legal systems, but relying on an AI-generated clause without checking the applicable legislation and case law can create serious risks. AI can also lead to mistakes, such as generating one clause based on the English legal system and another based on a different legal system, potentially combining elements of the Romano-Germanic and Anglo-Saxon legal traditions within the same contract. This is particularly important because AI systems may sometimes produce inaccurate or outdated legal information.
Contract Negotiation Requires More Than Drafting
Another important difference is negotiation. A contract is usually not prepared once and immediately signed. One party may change a liability clause, while the other party responds with a counterproposal, and both sides make compromises. This is also relevant to the mirror image rule, particularly in common-law contract systems, under which an acceptance must generally correspond to the terms of the original offer; a material change may instead constitute a counteroffer. For example, imagine that a supplier wants liability to be limited to the amount paid under the contract, while the customer wants unlimited liability for data breaches. The customer’s response may therefore not simply constitute an acceptance if it changes the supplier’s proposed terms. The parties could instead agree on a separate cap for data breaches, require insurance or make another contractual concession. Which option is appropriate depends on the transaction, the relationship between the parties and their willingness to accept risk. AI can suggest possible solutions, but determining how contractual terms should be negotiated and whether a response legally constitutes an acceptance or a counteroffer requires legal and commercial judgment.
Human Judgment Remains Important
Perhaps the most significant difference between AI and a lawyer is judgment. Not every contractual question has one correct answer. Suppose a company is negotiating a contract worth €500,000. The counterparty proposes a €100,000 liability cap. A lawyer would need to consider the likelihood of loss, the type of service, insurance coverage, the bargaining power of the parties. The lawyer may conclude that the cap is acceptable in exchange for a lower price or recommend a higher cap for certain types of losses. AI can assist with the analysis, but it does not replace the responsibility of making that decision.
Accountability and Confidentiality
There is also a professional responsibility issue. When lawyers provide legal advice, they are subject to professional obligations. They must protect client confidentiality and exercise appropriate care. However, using AI raises an additional concern: what happens to confidential information once it is entered into an AI system? A lawyer may provide sensitive corporate, financial or personal information to an AI tool in order to generate or review a contract. This creates questions about how that information is stored, processed, retained and protected, and whether it may be used for other purposes, including as part of the system's underlying data or model development. Therefore, lawyers need to consider not only whether an AI system can perform a particular task, but also how the system handles confidential information and what safeguards are in place to prevent unauthorized disclosure or use. The lawyer remains responsible for ensuring that the use of AI is consistent with professional confidentiality obligations and the client's interests.
To sum up, AI can prepare a draft contract very quickly, which makes the person save time, identify repetitive patterns, compare versions of contracts and produce initial drafts. These functions can make legal work more efficient. At the same time, lawyers bring something different: understanding of the client's objectives, legal judgment, negotiation skills, contextual awareness and professional responsibility. The most realistic future may therefore be one in which lawyers use AI as a tool rather than treat it as a replacement. AI can help lawyers work faster, but it cannot by itself determine what a client actually needs, what risks should be accepted or how those risks should be reflected in the final agreement.
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