Do you trust ChatGPT in your legals?

We need to talk about generative AI… The pros and cons of using free AI as your lawyer.

More and more we are seeing and hearing that companies are turning to generative AI for legal advice or even drafting documents. We have received documents from clients or potential clients which have clearly been drafted using such AI. These documents often are created using American English spelling (Endeavors, Authorize, Color) and always have a number of glaring omissions.

In this blog, we’re going to explore the pros and cons of using free to use generative AI as your legal advisor and source of templates. We shall split this out into Advice and Drafting.

Advice

Commercial legal advice ranges from quick enquiries to in depth questions of the applicable law. This can include contractual interpretation - one commercial lawyer may interpret a provision completely differently from another commercial lawyer depending on the context, who they are acting for and their own knowledge and experience.

Commercial lawyers are also skilled in assisting with negotiation, advising on commercial decisions, providing solutions to legal issues and/or providing options to navigate complex problems, based on their knowledge of the law as well as their experience in the applicable commercial sector. Is it better to turn to AI to answer these questions? Below we have provided a pros and cons list relating to the use of AI for such matters:

Pros

• It’s free - We can’t argue there; ‘free’ advice is cheaper than the average solicitor. This is likely the biggest factor as to why businesses may turn to AI.
• It’s fast – Again, we can’t lie, we’ve seen ChatGPT compile research at speeds that would make The Flash blush…

• It’s available 24/7 – Whether you're burning the midnight oil before a big pitch or catching up on a Sunday evening (we’ve all been there), AI doesn’t need sleep (or a coffee break, unlike us!).
• It can help you understand legal points – What is an indemnity? How are damages calculated? Often generative AI can help steer you in the right direction with some of your questions. Often, you can ‘brain dump’ your thoughts into the AI and it can easily refine your question and identify the key issues.

Cons

• It’s not regulated or covered by your insurance – ChatGPT isn’t a solicitor, doesn’t carry professional indemnity insurance and won’t be struck off by the SRA for giving you pants advice. If something goes wrong, there’s no one to hold accountable. What's more, if you are a director, relying on generative AI could put you in breach of your directors’ duties which are statutory obligations and this could have serious consequences.
• It doesn’t know your business – Legal advice should be tailored. An experienced lawyer will consider your goals, industry nuances, commercial priorities, and risk appetite, then apply the law and his/her experience accordingly. Much of our experience comes from working with our clients for years at a time, building trust, insight and confidence. ChatGPT? It’s clever, but it works from fact and fiction.
• It can be confidently wrong - We have all been guilty of this at a pub quiz, “a Zebra is definitely white with black stripes!” “Lucky Star was Madonna’s first UK single” (Bridget Jones, anyone?) and like these examples AI can produce answers that sound perfectly plausible but are legally inaccurate or irrelevant. That confidence can be dangerous, especially if you don’t realise it’s wrong or realise until it’s too late.
• It lacks legal resources – Free AI does not have access to the legal resources used by lawyers such as Westlaw and Lexis Nexis (and others). These databases and platforms are hidden behind pricey subscriptions that free AI doesn’t have access to. These resources track the latest developments, insights and practice in the law, giving lawyers an understanding of the ever-changing law in its current state. This means AI like ChatGPT will mostly rely on secondary sources it accesses from publicly accessible material on the internet and is unlikely to be able to identify the latest law in that sea of secondary sources.
• Jurisdiction confusion - Like the spelling, unless specifically instructed, AI can default to US law, which is often embedded in templates or answers. That’s fine if you’re in Delaware. Not so useful if you’re in Dingle.
• AI appears to be generated to please you – It seems have a preference to say ‘yes’. For example, if you ask, ‘do I have a claim/remedy here?’, you might get a yes when really it’s a no. The AI may simply cherry pick information to support your request, rather than understanding the differences and nuances that may be required for that query.

Drafting

When it comes to contracts, policies, or T&Cs, getting the wording right is crucial. A single clause can make or break a deal… or land you in hot water. So, how does free AI fare when it comes to actual document drafting?

Pros

• It gives you a starting point - If you’re staring at a blank page thinking “where do I even begin?”, AI can help. It can generate outlines or rough, skeleton drafts in seconds, helping you move from zero to something pretty quickly.
• It helps with idea generation - Not sure what a Data Protection Policy might include? Or what clauses to expect in an NDA? AI can throw out some helpful suggestions or remind you of things you hadn’t considered.
• It can save time on first drafts - For more standardised, internal documents (board meeting templates, basic forms, simple internal policies), it might be a decent shortcut if you know what you're looking for and how to check it.

Cons

• The fewer the words there are, the more it leaves it open to interpretation – Whilst a 3 page template drafted by ChatGPT might be fine for a start-up business, we’d never recommend that it is used by a more sophisticated business entering into complex / high value contracts. It leaves the door open for either those provisions that are included to be interpreted differently to the way you may have intended or those that aren’t, for the law to imply something in its place. It is also extremely unlikely to cover everything that it needs to and will not be detailed enough to minimise a business’ exposure to risk.
• It won’t help you negotiate - Commercial legal assistance isn’t just drafting or typing; it’s strategy. Knowing what to push back on, where to soften language, and how to protect your client’s position takes years of experience (and often, a fair bit of caffeine). AI can’t replicate that.
• Missing key clauses or adding the wrong ones -AI might (and does) miss crucial terms or include clauses that just don’t belong. Lawyers have access to precedents that they (or their external resource) have internally developed over years of practice, developments and experience. From looking at documents sent to us, where one party has used AI, we can see that payment terms are ambiguous, third party terms (such as those that relate to Microsoft) are not addressed, and standard boiler plate terms are missing.
• Language matters (a lot) - Contracts rely on clear, specific, and enforceable language. AI might give you something that looks good, but legal drafting is an art as much as a science. A misplaced “shall” or an ambiguous phrase can change the meaning entirely.
• Liability - If a contract you “drafted” using ChatGPT goes wrong and costs your business money, you won’t be able to sue your laptop. With a real law firm, you have the comfort of getting advice and expertise that is covered by insurance if something goes wrong.
• It could devalue your business if you are building to exit– If you are looking to sell your company, all of your documentation and contracts will be scrutinised during the due diligence process. Those reviewers will be looking for any excuse to lower the purchase price. If they discover a contract in place with a customer, contractor or supplier that has been drafted by AI and has missed key risk areas for the business, this could dramatically reduce the purchase price to reflect the risk that the buyer may take on!
• One-size-fits-all doesn’t work for contracts - AI doesn’t know your business or the commercial context, your negotiation position, or what you're willing to compromise on. A contract that works for a SaaS company in California isn’t going to cut it for a UK fintech scaling into Europe.

Conclusion

We get it, AI is impressive. And used wisely, it can be a useful tool. But it’s not a lawyer, and you shouldn’t treat it as one. If you’re using AI, think of it like a calculator: it helps with the maths, but you still need to know the formula.

So when it comes to getting clear, correct advice, or finalising, reviewing, or negotiating your contracts, we’d always recommend having a (human) lawyer in your corner.

And if that sounds like something you need - send us a message for a 30-mins free consultation! We promise not to talk in code (legal or otherwise).