Business Decisions and Artificial Intelligence: Contract Drafting in a Technology Driven Economy
DePaul Business & Commercial Law Journal
DePaul Business & Commercial Law Journal is a scholarly journal published biannually by an Executive Editorial Board.
As Artificial Intelligence (AI) becomes more widely used, especially with the use of Chat Generative Pre-trained Transformer (ChatGPT), there is growing concern regarding the developing regulatory system that derives from evolving area of technology and its impact on the labor market. AI is currently in the early stages of regulation in the United States. In Europe, lawmakers have reached an agreement on what could be the world’s first comprehensive legal framework, the European Union Artificial Intelligence Act (EU AI Act). Although the regulation is not yet in effect, the EU AI Act will apply to any provider or deployer of an AI system in United States if the output or data of the technology is used in the EU. Meanwhile, lawyers continue to grapple with how the emerging technology will play a role in the legal sector such as in commercial deals and transactions.??
AI can be defined as computer technology or software program with the ability to analyze various amounts of data.3 ChatGPT falls under the category of generative AI which refers to AI that uses unsupervised learning algorithms to create images, videos, audio, text, or other computer codes.4 Generative AI has the ability to learn the patterns from input data to generate new data using the previous inputs.??Past technological advances such as AI have led to efficient execution of agreements. The Electronic Signatures and National Commerce Act (the E-Sign Act) of 2000 legitimized the effect of electronic signatures.5 Thus, parties may now provide an electronic signature for a transaction or agreement instead of a wet signature. The use of AI in client-related work raises the concern for ethical implications and privacy issues. However, the success of previous technology advances prompts the question of whether AI, like ChatGPT, could increase efficiency in contract execution and even contract drafting.?
The traditional method of contract drafting typically involves a team of lawyers reviewing a contract, spotting negotiation points to discuss with the other party, and coming up with clever provisions to include in the agreement. Emerging discussions about the use of AI in contract drafting has drawn debate as to the efficiency and lower costs that AI allows in transactional work.6 Some proponents in favor of using models such as ChatGPT in transactional settings argue that AI allows the lawyer to focus on their role as counsel and deal with the high-level issues of the case, instead of merely serving as a contract reviewer. However, inputting client data into a system like ChatGPT still requires the lawyer to understand the client’s goals and the precise business decisions the client intends to pursue in the transaction to assist the AI model in adequately drafting certain provisions.??
Nevertheless, lawyers must still grapple with the ethical and privacy implications that comes with inputting private and confidential client information into an AI model, such as ChatGPT. Moreover, the use of AI to draft a contract may disrupt the significance of face-to-face interactions between lawyers and clients. These interactions between a lawyer and a client enables the lawyer to gather pertinent case information to draft such personalized documents. AI might serve to disrupt those important business connections in commercial and transactional settings. Just as the EU is currently balancing the interests of advancing technology and protecting individuals by following a risk-based approach under the EU AI Act7, lawyers may seek to follow a similar model to balance the interests of the client and the efficiency of securing business deals.
Author: Betsy P.
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