Artificial Intelligence is trending worldwide, with many governments (including the UK government) looking to regulate its use. As a commercial solicitor, I see AI as an exciting emerging technology which provides a number of tools to help businesses thrive. However, as AI develops, there are also some foreseeable pitfalls that businesses should avoid. 

What is Artificial Intelligence?

Artificial Intelligence (or AI for short) is software that is written to perform tasks that humans would usually carry out. This could include writing text, transcribing voices, analysing data, or drawing pictures and diagrams.

AI has to be “trained” in order to work effectively, and this can be done by scraping vast amounts of data across the internet and combining them to create the AI’s knowledge. The AI then draws from this knowledge to follow any instructions given to it.

One popular way that AI is used is in conversational software, such as ChatGPT, where the user writes questions and submits them to a chatbot, and the AI will respond. Some software is more niche and focuses on a specific purpose, such as generating images or, more excitingly(!) generating contracts.

How can AI help businesses?

There are several examples of how AI can help businesses. In my view, saving time and resources by automating repetitive tasks is a key use of AI and one of the most convincing reasons to implement AI-driven solutions. Aside from this, other examples include  

• Proofreading software which analyses your writing and makes suggestions as to your tone, sentence structure, and target audience, amongst other things. AI can also assist with customer service, such as chatbots, which can be placed on websites to point people in the right direction. These tools are great for small teams who might not have the resources to have an in-house marketing team.
   
• AI programs that can analyse your business performance and statistics to help forecast sales and stock requirements. This exercise can take significant time when carried out manually, so having a computer that can help out can save a lot of time.

In these examples, AI is typically used in a support role, acting as an aide to businesses rather than a replacement for staff and brain power. They allow the company to prioritise resources more efficiently and can be a source of cost savings when implemented effectively.

Where is AI more of a hindrance than a help?

Where AI crosses over into “replacement” territory, we begin to see areas where significant issues could arise in the use of AI. Instead of helping businesses, AI could be detrimental to a company.  

In the United States, a firm used ChatGPT to write its legal arguments for a court case. Whilst this can be an excellent way to create a starting point for a document, this firm did not proofread their work and instead presented it to the judge - the document featured 6 made-up court cases, and the firm was sanctioned. Surprisingly, this has happened on more than one occasion.

This is an example of business using generative AI. As AI continues to evolve, we anticipate seeing it used more and more for generating documents for businesses – advertising, artwork, and even contracts.

With contracts, it is already common for companies to use template agreements that they have found online. This is seen by many as a cost-saving measure as it avoids the need to instruct solicitors to draft the contracts. AI would, therefore, be seen as a great alternative, as not only can it generate contracts, but it will “personalise” those contracts to include your company name and perhaps some key terms that you want to include in the contract.

However, as is the case with using template agreements, there are a significant number of downfalls that might be encountered.

What can go wrong with using AI for your contracts?

There are a number of issues that could arise by using AI to generate contracts, with the immediate concerns being that the AI may not generate a valid contract or provide your company with sufficient protection. Potential issues include:

1. The AI provides a contract that is not relevant to the company. It may have the wrong terminology, refer to wrong laws and statutes, or may have incorrect information, binding your company into a contract on terms that are not favourable or protective of your company.

2. The contract might contain clauses that would be invalid under English Law, meaning the company couldn’t rely on the protections offered by that term (for example, a limitation of liability or a clause to compensate a party for non-performance of the contract).

3. The contract could have content in it that is protected by copyright law. This is an area that is currently under review and debate. Still, the risk to businesses is that your contract could end up looking very similar to another company’s contract (perhaps even a competitor), which could lead to a claim being brought against the business for copyright infringement.

Each of these examples exposes companies to costs, potential claims against them, as well as reputational damage that could occur.

Is AI the key to a successful business?

The AI scene is evolving so quickly that it’s hard to say whether AI is the key to a successful business. As it stands, AI is a great support tool for your business, saving companies a lot of time. However, AI is no replacement for actual human brainpower and input, particularly in areas where decision-making and creativity are required.

For contracts, it is safer and cheaper in the long run to have your documents drafted by solicitors – these can be tailored specifically to the company’s requirements, giving companies assurance that their terms are valid and give them sufficient protection.

Our business team is excellently placed to help you put contracts in place for your business. You can find out more about how we can help here, or to discuss your requirements in more detail, I can be contacted on 01206 217352 or via email at chloe.vertigen@birkettlong.co.uk