7 Things Not to Do When Using ChatGPT for Legal Contract Drafting
Using ChatGPT for drafting legal contracts can save time and streamline the process of creating agreements. However, like any tool, it comes with limitations and potential pitfalls that users must understand to avoid jeopardizing the validity of their contracts. Without proper precautions, reliance on AI could lead to critical errors, omissions, or non-compliance with legal standards. Here are seven key things NOT to do when using ChatGPT for contract writing:
1. Starting Without Providing Context
While many legal professionals emphasize the importance of human oversight, the most common obstacle is starting with ChatGPT without providing adequate context. For the best initial draft, you need to describe the context clearly—including your jurisdiction, contract type, and key objectives of the agreement.
ChatGPT performs best when it understands the specific framework within which the contract will operate. This initial effort sets the foundation for a more relevant and usable draft.
You can always ask ChatGPT to describe what context it needs for better contract writing.
2. Expecting a Complete Contract in One Prompt
Another common misconception is that ChatGPT can generate an entire contract in one prompt. This approach often fails because ChatGPT is optimized to respond with concise outputs, typically 500-600 words, and occasionally longer.
To draft a comprehensive contract, divide the writing process into manageable tasks. After providing the context, the next step should be asking ChatGPT to create a list of clauses or a Table of Contents (TOC) for the contract.
Once you have the TOC, do not proceed by requesting multiple sections at once. Instead, prompt ChatGPT to "Write one clause at a time and wait for my feedback before proceeding." This iterative approach allows you to ensure accuracy, make necessary adjustments, and maintain control over the drafting process, resulting in a more refined and relevant contract.
3. Choosing the Wrong Model
While it may be tempting to use free ChatGPT for drafting contracts, it often defaults to less advanced models (GPT-4o-mini), which can result in outputs with more errors or logical inconsistencies. Pay close attention to the model your ChatGPT uses.
At a minimum, use GPT-4o, but for higher quality and more reliable outputs, consider using o1. Choosing the right model ensures better accuracy, reduced errors, and a more professional result.
Check the LegalBench benchmark results of different models.
4. Relying Solely on AI Without Human Review
ChatGPT can draft contract language efficiently, offering a starting point for legal agreements. However, it lacks the capacity to grasp nuances, context, or intricate legal standards, which are essential for ensuring the validity and enforceability of contracts.
Involving a qualified legal professional who can review the AI-generated draft ensures the document complies with local laws, incorporates jurisdiction-specific requirements, and reflects the intentions of the parties accurately.
5. Ignoring Data Privacy and Security
AI tools often process sensitive information, which may be subject to data protection laws like GDPR or CCPA. Avoid using ChatGPT without verifying that your data remains secure and compliant with applicable privacy regulations.
When you are in the EU, it is best to subscribe to ChatGPT for Teams and sign an additional contract with OpenAI ( Data Processing Addendum), to ensure full compliance with GDPR requirements and safeguard sensitive information.
Additionally, before drafting any such contract, make sure that you have turned off the participation in model training. Everyone can disable this option to ensure your data is not included in training future OpenAI models.
6. Assuming AI Outputs Are Bias-Free
AI-generated content can carry bias that impacts legal agreements through discriminatory terms, ambiguous language, and unfair clauses. Such biases may violate anti-discrimination laws, cause disputes, or lead to reputational harm and regulatory penalties. To avoid these issues, review AI outputs thoroughly and involve legal professionals to ensure fairness and compliance.
7. Mistaking ChatGPT for a Legal Expert
ChatGPT is not a substitute for professional legal advice. It cannot analyze complex legal situations or provide guidance tailored to specific jurisdictions. Limit AI use to drafting assistance and consult a lawyer for substantive legal questions.
Conclusion
By avoiding these pitfalls, you can effectively integrate ChatGPT into your contract drafting process while maintaining legal validity and ensuring compliance. Remember, AI is a tool to assist—not replace—human expertise in legal matters.
