AI-powered chatbots, for example, can help e-commerce shoppers find the products they are looking for, make a purchase, and return the purchase if it doesn’t satisfy them. On production lines, AI can carry out quality control, quickly identifying items with irregularities. However, there are processes that should not be entrusted to today’s artificial intelligence. Experts believe the writing of business contracts is one such process. “I don’t think it’s possible to use AI tools without the supervision of a lawyer, at least not for important contracts,” says Patrick Gruhn , the founder and CEO of Perpetuals.com . “Contracts are tools to incorporate the interests of the party in an optimal way, even if just to articulate the interest of the party for an AI tool. An attorney might already be required because the parties themselves might not even think about those factors or at least don’t understand the full impact.” Gruhn’s perspective is informed by an extensive background in both law and technology. He served as a Partner at K&G Lawyers, a Swiss firm specializing in digital assets, and as co-founder of DigitalAssets.ag, the company that made tokenized stocks available with an approved security prospectus. His most recent endeavor, Perpetuals.com, is a MiFID II market infrastructure startup for crypto derivatives trading designed to empower perpetual futures trading without boundaries.
The limits of legal AI Gruhn introduces an important term to the conversation about AI’s limits in the legal world: supervision. He echoes the feelings of other experts who assert AI can help draft contracts but should not be trusted to finalize them without human supervision. Speaking to Law360 Pulse recently, Gruhn argued that human wisdom is still needed in the contract process to identify and reflect the best interests of the parties involved. He pointed to the need for contracts to anticipate potential areas of conflict between the parties and to provide an agreed solution to solve those conflicts should they arise in the future. As an illustration, Gruhn offered a shareholder agreement for a family business holding, where the potential areas of conflict fall outside the realm of standard contractual issues. “The potential areas of conflict are less economic but pertain to emotional and personal situations, and AI cannot appropriately handle or predict those situations, in my opinion,” he told Law360 Pulse. Gruhn also spoke with Law360 Pulse about the problems that can arise when contracts must address novel developments and incorporate untested contractual rights. He offered a novel crypto token project where the tokens represent something new and unique as an example. “AI tools usually lack this kind of creativity and might not consider considerations from other legal areas like security or tax laws,” Gruhn shared.
The value of legal AI Templates are common in the legal world, providing professionals with a tested and proven starting point for drafting contracts and other documents. Some in the legal field have come to use the draft contracts AI can provide, similar to how they used templates in the past. Gruhn sees the content AI can provide as a much better version of legal templates. “The use of a template, or now an AI tool, can significantly enhance the creation process of a contract and have the lawyer focus on the real relevant areas while using best practice clauses for other parts of the contract that do not require an individualized solution,” Gruhn told Law360 Pulse. Speed, efficiency, and accuracy are key advantages AI can bring to the process. A key disadvantage is the lack of context. As Gruhn points out, contracts may ultimately be tested in a court of law. Lawyers must provide the context for the contract, bringing to the process their understanding of how a court could interpret the document and address any holes that might exist. “AI is way better at making sure that from the existing flood of information everything is considered, but to truly solve conflicts before they arise and to be really creative, we still need human lawyers,” Gruhn told Law360 Pulse. At this point, the question is not whether AI will be used in legal work, but how. One recent study found that 73 percent of lawyers plan to use generative AI in their legal work in the coming year. Another study revealed that 43 percent of the 200 largest law firms have a dedicated budget for investing in generative AI in 2024. Gruhn’s hope, and that of many other experts, is that AI will be kept primarily in a support role, especially when it comes to the drafting of legal contracts.
Nik Korba About the author: Nik Korba is a storyteller with more than 30 years of experience helping others to find their voice, capture their story, and share it with the world. He has served as a screenwriter, ghostwriter, news writer, novel writer, songwriter, and blog writer. A graduate of the University of Miami with a degree in screenwriting and English literature, Nik served as editor of Money Laundering Alert.
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