INTRODUCTION
ChatGPT is a name that has become widely famous all over the world within weeks of its launch in November 2022. ChatGPT is an artificial intelligence chatbot developed by San Francisco-based AI research company OpenAI[1].
As it happens, with every new technology unveiled in this century, there arises apprehension and excitement about the ways in which the technology could prove to be useful or harmful, whichever is applicable. Being a generative AI, ChatGPT is fully capable of generating new pieces of literature including legal literature, be it research, contracts, or agreements.
Contract Drafting on the other hand is something that has become inevitable in the field of commercial relationships. Contracts mark out the obligations of the parties and their rights against each other and other third parties and various other clauses that ensure smooth transactions and business. Since they need to be unambiguous in nature and definitive to allow the resolution of claims in case of future disputes, contract drafting is both a valuable skill and a daunting task all at once.
The introduction of AI in contract drafting seems to be an attractive idea at a glance but exploring if it really is so in the long run is the study area of this article.
WHAT IS CHATGPT AND HOW TO USE IT?
ChatGPT is an artificial intelligence (AI) chatbot that uses natural language processing (NLP) to create humanlike conversational dialogue. It is a form of ‘Generative AI’ which means, it is able to create brand new output, such as text, photos, videos, code, data, etc., from the vast amount of data it has been trained on, essentially by making predictions on the trained data.[2]
Using this AI chatbot is extremely easy, perhaps that is also why, it has become so popular in such a short time. Users generally only have to give, that is, enter prompts into the dialogue box and the chatbot generates a response accordingly.
Contracts, on the other hand, are usually written in text format and contain clauses setting out specific terms and conditions that capture their agreement. The textual nature of the contracts presents a great potential for using natural language processing (NLP) to contribute to and assist the drafting process, ChatGPT exhibits this potential in spades.[3]
In general, contract drafting involves the following two-step process-
- Selecting a contract template that contains clauses specific to the requirement of the situation.
- Modifying the clauses to better suit the client’s specifications or needs.[4]
In order to generate or draft a contract by the way of this technology, one, hence, has to give the prompt, “Draft a Shareholder agreement for………” (wherein the words specify the requirements of the contract to be drafted), and the chatbot will automatically generate the contract within seconds based on the data that it has been trained on or the data it already has in its repository.
POSITIVE IMPLICATIONS OF USING CHATGPT FOR CONTRACT DRAFTING
The first and foremost positive implication of using AI for contract drafting is of course time effectiveness. Drafting a water-tight contract that will account for any future event could take from anywhere around several weeks to a few months, even a one-page agreement could take a few days[5].
Cost-effectiveness is another advantage of using these technologies to draft contracts. Generally, startups and small businesses just entering into the market are not able to afford the fees of Counsels or attorneys for drafting contracts to protect their business in addition to other investments, for them, these alternatives might seem to be an attractive option.
Nuances of legal language that slip from the grasp of people not in the know can easily be handled by employing the use of AI for contract drafting, in addition to ensuring the effectiveness of the contracts.
All these positive implications however also have some not so very implications as well, some of which have been discussed in the succeeding section.
NEGATIVE IMPLICATIONS OF USING CHATGPT FOR CONTRACT DRAFTING
The most negative implication of using such a technology in drafting contracts is to consider the privacy issues. OpenAI has access to one’s inputs and outputs for ChatGPT and its employees and contractors may read them as part of improving the service[6]. Drafting contracts requires providing intimate details of one’s company which means using this particular technology for anything related to sensitive information may prove to be a security hazard, especially for startups who only have their uniqueness in the business to rely on.
The next negative implication to take into account is the data, which the chatbot has been trained on. Since ChatGPT is trained on a large amount of data based on which it predicts the outcomes, the quality of the data on which it has been trained, should be taken into consideration as well. In terms of contract drafting that means, the quality of contracts that have been available for its training, if they have been good then the AI will produce good quality contracts but otherwise depending on it blindly for a water-tight contract would be futile.
Another point to consider is that the AI is in its developing stages, which means, it has still not developed the necessary technology to request further clarifications while giving a response to a prompt. This makes it difficult to fine-tune a basic contract template according to one’s own needs and specifications. This has also been claimed as a quality unique to human attorneys. The lack of specifications in a contract might lead to complications for the parties in the future, sometimes even rendering a contract unenforceable on the grounds of unambiguity and vagueness.
Furthermore, the chatbot has been reported to have produced responses that are completely fictitious as well, which means, the AI in question is inclined to give responses that might seem true and correct but in reality, are riddled with faults and imperfections. In fact, OpenAI Chief Executive Sam Altman himself has stated that it would be “a mistake to be relying on it for anything important right now.”[7]
THE WAY FORWARD
The implications discussed in the article are not exhaustive. Some other problems are also possible to emerge in the future which have not been discovered till now. The negative implications, however, do not mean that the discussed AI cannot be used for drafting contracts. It could prove to be extremely useful in the hands of legal experts as a matter of fact. A lawyer well versed in contract drafting will be able to review the contract generated by the AI and adjust it according to the needs of the clients. The prompts however would need to be given in a manner that would protect the confidentiality of their clients.
In fact, there is another AI also developed by OpenAI, named Harvey which has been employed by Allen and Overy, a London-based law firm for contract drafting by the Attorneys of the Firm. The technology, however, is also not fool-proofed, and hence the firm has a ‘careful risk management program around the technology’ to carefully check the generated documents.[8] The firm, however, acknowledges that the integration of AI has greatly reduced its workload.
CONCLUSION
The generative AI chatbot, ChatGPT is a new ‘it’ in the world of contract drafting. With the use of a few words in the form of ‘prompts’ whole multi-paged contracts can be drafted within minutes, thus, saving time, money, etc. The technology, however, is also prone to various negative implications chief among them being security issues, quality issues, and lack of specificity which might cost someone greatly in the long run.
Using ChatGPT for drafting contracts by novice individuals is, hence not advisable. However, in the hands of lawyers well-versed in contract drafting, the technology may prove to be a boon for automated legal document generation.
Author(s) Name: Aditi Pramanik (C.M.P.Degree College, University of Allahabad)
References:
[1]Karen Hao, ‘What is ChatGPT? What to know about AI chatbot that will power Microsoft Bing’ (The Wall Street Journal,10 Feb 2023) < https://www.livemint.com/technology/tech-news/what-is-chatgpt-what-to-know-about-ai-chatbot-that-will-power-microsoft-bing-11675865538918.html> accessed 25 Oct 2023
[2] Amanda Hetler, ‘ChatGPT’ < https://www.techtarget.com/whatis/definition/ChatGPT> accessed 25 Oct 2023
[3] Kowak-Yan Lam et al., ‘Applying Large Language Models for Enhancing Contracts’ (2023)
[4] ibid
[5] ‘How to Draft a Contract: 6 Steps to Follow’ (17 Aug 2021) < https://www.contractscounsel.com/b/how-to-draft-a-contract > accessed 25 Oct 2023
[6] Karen Hao, ‘What is ChatGPT? What to know about AI chatbot that will power Microsoft Bing’ (n 1)
[7] Karen Hao, ‘What is ChatGPT? What to know about AI chatbot that will power Microsoft Bing’ (n 1)
[8]Chris Stokel-Walker, ‘Generative AI is Coming for the Lawyers’ (Wired, 21 Feb 2023) <https://www.wired.co.uk/article/generative-ai-is-coming-for-the-lawyers> accessed 25 Oct 2023
