AI for Legal Documents: Benefits, Use Cases, and AI Tools

The evolution of AI technology has been nothing short of revolutionary and shows no signs of slowing down.

Large Language Models (LLMs) like GPT-3 and GPT-4 (iterations of ChatGPT) demonstrate the most significant jumps in artificial intelligence in years.

They accept text and image input and emit text-based replies based on their extensive knowledge gathered from public internet data and “data licenses from third-party providers.”

And with OpenAI bringing Chat GPT-4 to the masses, no industry has gone unaffected.

Many law firms have begun using ChatGPT to assist with tasks like legal research, document drafting, or contract review.

It’s often more effective than any intern or junior lawyer could be.

In March 2023, GPT-4, an advanced iteration of the Generative Pre-trained Transformer developed by OpenAI, passed the state bar exam with flying colors.

It also passed the US Medical Licensing Exam without clinician input.

These achievements show the potential of AI technologies like ChatGPT in professional fields requiring high levels of expertise and critical thinking.

Initially, AI applications in law focused on automating routine tasks and managing case files.

Today, they encompass a broader range of functions, including complex document analysis and predictive modeling, thanks to more sophisticated algorithms and computational power.

AI technologies currently used in legal document management vary from simple automation tools to advanced systems capable of generating, reviewing, and analyzing complex legal documents.

ChatGPT and similar large-language models are at the forefront of this. They offer solutions that drastically reduce the time and effort required to handle legal documents.

Examples of AI Applications in Legal Settings

The accomplishments of GPT-4 highlight not only the current capabilities of AI in the legal field but also its potential to redefine what’s possible. With AI achieving such milestones, the legal industry is poised for a future where technology and human expertise merge to enhance legal practices like never before.

It’s easy to see that AI is already changing the legal industry for the better. With AI helping to complete busy work, lawyers free up more hours for billable tasks. And it’s only going to get better.

Implementing AI in legal document management can help busy lawyers complete “low-value work” and spend more time on billable tasks.

Focusing on the use cases of AI legal document generation, review, and analysis, we see how these technologies streamline processes and introduce higher levels of precision and efficiency.

AI Legal Document Generation

Rather than spending hours drafting contracts, legal briefs, and other documents, lawyers can use AI tools to expedite the process and do so accurately.

Not only that but AI does so in the context and language you’d expect, thanks to the natural language processing and machine learning algorithms it’s trained on.

AI is also being integrated into many tools lawyers are already using. These AI-enabled tools use natural language processing and machine learning algorithms to generate entire legal documents in seconds.

You can then ask AI to draft or redraft entire documents.

Here’s an example of a prompt a lawyer would use to draft an NDA for his client.

Generate a simple Non-Disclosure Agreement (NDA) for a consulting engagement between my client, Acme Corp (the ‘Disclosing Party’), and a freelance graphic designer, Jane Doe (the ‘Receiving Party’). The agreement should be governed by the laws of California and must include the following key clauses:

• Definition of Confidential Information: Include standard definitions but ensure that Acme Corp’s business strategies, client lists, and proprietary technologies are explicitly covered.
• Obligations and Duties of the Receiving Party: Specify that the Receiving Party must not use the confidential information for any purpose outside of the consulting engagement and must take reasonable precautions to prevent its disclosure.
• Exclusions from Confidential Information: State that information publicly available or independently developed by the Receiving Party without using the Disclosing Party’s confidential information is not considered confidential.
• Term: The obligation of confidentiality should remain in effect for 2 years from the date of the agreement.
• Return of Confidential Information: Upon termination of the agreement or at the Disclosing Party’s request, all confidential information, including copies, must be returned or destroyed.

Please format the document for a professional setting and include a place for both parties to sign and date the agreement.

This process minimizes human error and keeps your consistency across legal documents. For instance, a real estate law firm might use AI to automatically generate lease agreements tailored to the specific terms agreed upon by the parties.

This capability significantly reduces the time lawyers spend on routine drafting tasks, freeing them up for more complex legal work.

AI Legal Document Review

AI excels in reviewing documents. It can quickly scan a legal document and identify key terms, clauses, and potential issues that might require closer inspection.

For example, you could ask AI to scan a document and look for inconsistencies and errors. And it can finish scanning through thousands of documents much faster than any human reviewer could, making case preparation much easier.

In fact, AI can reduce due diligence document review time by up to 70% on average, uncovering critical provisions across thousands of documents in minutes.

A tool like ChatGPT can suffice for many of these tasks.

However, you would need to take extra steps to:

ChatGPT could be good enough for solo attorneys or small law firms. However, I recommend AI contract review software made specifically for lawyers in most cases to bypass the headaches of using ChatGPT for sensitive legal documents.

AI Legal Document Analysis

AI tools can also dissect and analyze legal documents.

For example, an AI system could look at a contract and foretell potential disputes, giving lawyers a head start to sidestep potential problems.

AI can even generate contract summaries and contract abstracts for legal documents — an easy and effective way to generate summaries in plain language for you to share with stakeholders.

Deposition Preparation

AI tools can be a game-changer for deposition preparation, especially when dealing with mountains of documents.

By quickly summarizing previous witness statements and pulling out key points, AI helps lawyers get a clear, strategic view of the information they need. For example, an AI tool can highlight contradictions across depositions or flag important details, allowing attorneys to go into questioning fully prepared and focused.

With AI’s support, you can spend less time sifting through files and more time crafting targeted questions that strengthen your case.

Contract Compliance Monitoring

AI-driven compliance monitoring is a lifesaver for keeping contracts up-to-date with the latest regulations.

Imagine a new data privacy law comes into effect — instead of manually combing through hundreds of contracts, AI can quickly scan for any clauses that may need adjustments. It flags specific language or sections that might not align with the new rules, alerting you to what needs attention. Another time-saving use case that’ll make you wonder what you ever did before AI.

Legal Document Comparison

Keeping track of changes between different versions of a contract can be a headache, but AI makes it simple.

Instead of staring at two documents, trying to spot what’s different, AI compares them in seconds and points out even the smallest edits. Whether it’s a subtle tweak in wording or a significant change in a clause, nothing slips through the cracks.

This kind of quick, reliable comparison helps lawyers stay on top of revisions, saving time and ensuring no important details are overlooked.

There are many advantages to incorporating AI into your legal practice, many of which I’ve already discussed.

I’m going to go through those benefits again but also highlight some challenges the legal industry needs to navigate because of AI.

The Upsides of AI in the Legal Field

AI has many benefits, including:

Challenges Facing Legal AI Adoption

The unfortunate reality is that with any advancement in technology comes security concerns and potential bad actors who exploit those potential breaches.

Here are the main challenges I see law firms facing:

Despite these challenges, the benefits outweigh the challenges, and it’s worth getting on board early.

As technology continues to evolve, so too will the need to adopt AI — as will the strategies for overcoming these obstacles, paving the way for more innovative and efficient legal practices.

The key will be to find the right balance between leveraging AI’s capabilities and maintaining the high standards of the legal profession.

AI can significantly help your law firm become more efficient and scale, but only if you choose the right AI tools.

Any tools your law firm uses should be heavily vetted to make sure they are the right fit, and that is even more important with AI.

Here are some guidelines to help you evaluate an AI tool.

Ethical and Trust Considerations in AI for Legal Documents

Incorporating AI into your law firm can net significant efficiency gains, but there are issues around ethics, data security, and accuracy to maintain client trust to consider.

Data Security and Confidentiality

Legal professionals handle sensitive client information, making data security paramount. When selecting AI tools, ensure they comply with stringent data protection regulations, such as the General Data Protection Regulation (GDPR) in Europe. For instance, European law firms are increasingly adopting compliance management and cybersecurity solutions to meet these requirements.

Accuracy and Reliability

AI tools need to provide accurate and reliable outputs to be effective in legal contexts. Studies have shown that AI-powered document review can significantly reduce errors compared to manual processes.

Ethical Implications

The integration of AI in legal work raises ethical questions, including the potential for bias in AI algorithms and the need for transparency in AI decision-making processes. Legal professionals should be aware of these issues and ensure that AI tools are used responsibly, aligning with ethical standards and promoting fairness in legal proceedings.

By proactively addressing these considerations, law firms can leverage AI technologies effectively while maintaining the trust and confidence of their clients.

Embracing the Future: AI’s Role in Legal Document Management

The rapid adoption of AI in legal document management marks a historical shift towards more efficient and accurate legal practices. By automating document generation, review, and analysis, AI frees legal professionals to concentrate on billable tasks.

You now know just how to use AI for legal document management and have a good idea of what tools are best for your specific law firm.

I recommend you embrace AI with haste, as it is definitely going to become more prominent in the future and will become a necessity for all forward-thinking law firms.