3 Contract Management Uses for ChatGPT

One question I’ve heard a lot during 2023: "So, Gemma… is ChatGPT going to take your job?"

Well, obviously I hope not! And also… NO. I love playing with ChatGPT, and I can see huge future potential for its use in automating contract drafting. But, it is not ready to draft commercial contracts yet.

Hallucinations: No, there should NOT be a "water slide clause" in your privacy policy

For me, the risk of "hallucinations" is the key reason you should not use ChatGPT to draft or review your business contracts. ChatGPT is a language model that operates by mining data to "predict" the answer to your question. It can’t make analytical decisions about the quality of its answer, which means it can’t provide you with a legally sound contract. Or not yet anyway.

Here’s an example. I like experimenting with ChatGPT, and recently I asked it to draft a plain English privacy policy for a professional services consultancy, to see what it would look like. Privacy policies are pretty vanilla documents, and I’d say there’s limited risk of errors. But ChatGPT gave me a privacy policy… WITH A RANDOM CLAUSE ABOUT WATER SLIDES! I’d never have believed it if I hadn’t seen it myself.

So what CAN you use ChatGPT for?

ChatGPT cannot replace a comprehensive legal review, but here are 3 ways it might help you manage contracts.

1. First pass review

If you have the paid version of ChatGPT 4, you can use it for a first-pass review of a contract, by entering the contract into the model and asking for a summary of the risks. You can also ask it to check for missing elements that usually appear in similar contracts. This certainly won’t identify every issue but it would be a good "quick and dirty" way of filtering out any serious red flags.

2. Help you develop a contract management plan

I wouldn’t suggest you rely on it to prepare your entire contract management plan, BUT you could ask it to suggest some strategies for performance monitoring and management, appropriate performance indicators and risk management.

3. Suggest some negotiation points

Don’t ask ChatGPT to write you a negotiation script unless you want to sound like a stilted robot. BUT, you could prompt it to give you some potential negotiation points and counterarguments, to get you thinking about how you’ll present your case.

What are the risks with ChatGPT?

I’ve already mentioned hallucinations, which is the biggest issue. As well as this though:

• US FOCUS: As the US is so enormous, the bulk of the data that ChatGPT mines is created there. This means it is heavily US-focused and won’t identify Australian legal risks accurately
• MAY NOT BE CURRENT: ChatGPT 4 is said to be current to January 2022. That means, for example, that it would not pick up the WHS Regs that took effect in WA in March 2022, and it would not assess whether payment terms are current with WA’s reformed security of payment legislation that came into effect in August 2022.
• IT CAN’T THINK: We call it "artificial intelligence" and it feels mind-blowing how well it can respond to very specific questions in "humanlike" dialogue. BUT… it is just a language model. It is making predictions based purely on historical data. ChatGPT can’t think for itself. It can’t analyse the risks in the contract in the context of the scope of your services or give you legal advice. You know where to go for that!

Band of Batchers

In 2023, I decided to lift my writing game. I signed up for a series of batch writing days with the fabulous Holly Cardamone. Holly and my fellow Band of Batchers and Write Here Write Now-ers have been my greatest cheerleaders and I have loved every minute I’ve spent with them. Recently, Holly asked me to tell some stories about myself, and I was only too pleased to answer the call. You can find out about my greatest extravagance, my most treasured possession and other secrets here.

About Gemma

I help construction, engineering and consulting businesses create and negotiate clear contracts so they can make more profit and achieve great project outcomes.

I founded SoundLegal to help SMEs in the engineering, construction, consulting and light industrial sectors manage their risk to support business growth, by finding practical, common sense solutions to contractual and other legal challenges.

Subscribe to the SoundLegal newsletter “No Jargon” to hear monthly business insights from me.

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