Paste a contract into a chatbot, ask it to flag unusual language, and within seconds, you have a summary that sounds thorough and uses the right legal terms. It feels like a reasonable shortcut, especially when you’re a business owner managing a hundred other things.
But when a contract goes sideways, the consequences are significant. From financial risk to lost partnerships, years of litigation and unexpected obligations, relying on an AI’s review can leave you accepting terms you don’t fully understand until it’s too late. What’s missing from AI contract review is a nuanced analysis of your specific business risk factors and your long-term strategy.
Here are some of the common gaps we see with contracts that are reviewed by AI.
Why You Shouldn’t Count on AI to Review Your Contracts
If Something Goes Wrong, No One Is Responsible
Attorneys carry professional liability for their advice. If they miss something that causes you harm, you may be able to seek compensation. In contrast, AI tools’ terms and conditions often protect themselves from being liable for any of the “advice” they give. They aren’t beholden to a professional licensing board or ethical obligations. This means they won’t have your back if something goes wrong, and there’s no motivation to be proactive.
Your Confidential Business Information May Not Stay Confidential
When you upload contracts to AI tools, you may be sharing sensitive business information with systems that store, analyze, or use that data in ways you aren’t aware of. Depending on the platform and its terms of service, client identities or other information may be exposed. Attorney-client privilege protects that kind of information when you work with a licensed attorney.
It Creates a False Sense of Security
AI outputs are designed to feel complete. The polished language can give you the impression that your contract has been reviewed in full when it actually hasn’t. It’s been reported that AI is making up legal cases and statutes that don’t exist and interpreting legal provisions in completely false ways. Attorneys have even been disciplined for relying on cases generated by AI that don’t actually exist. Yet, the average person would never catch these errors given their nuance and the confidence in which AI states them. Plus, with the rising popularity of AI, it’s possible that the contract you’re reviewing was also written by AI, increasing your risk of terms that simply won’t hold up in court and will create significant issues for both parties.
AI Likely Won’t Take Your Situation Into Account
Even when well prompted, AI models rely on their training from large datasets of legal language. They recognize patterns, but they likely don’t understand your business, industry, risk tolerance, what you’re trying to achieve with the contract, or how it fits into your larger business trajectory. An AI tool might flag a standard limitation of liability clause as acceptable without knowing that, given your industry, that clause exposes you to significantly more risk than the “standard” situation. Context is crucial in legal review, and human oversight is critical.
It May Miss Specific Requirements Based on Your State or Industry
Legal standards vary by state, industry, and contract type. An AI tool working from general legal language may not flag issues like how Washington and Idaho laws differ. It’s recommended to work with an attorney who is licensed in your state and has experience in your industry so you can benefit from their deeper understanding of the specific requirements relevant to you.
There is also often a delay between when a new ruling comes out and when AI learns about it. For issues that are continuously evolving, like 340B, AI may not have a grasp on the most recent changes that could have meaningful impacts.
Malek + Malek Can Give Your Business Better Protection
Contract review allows you to understand what you’re agreeing to, what you’re asking others to agree to, and whether the language reflects the deal you actually intend.
When vetting attorneys, you should choose one who is licensed in your state and has experience in your industry. They should ask for additional context like your business goals and past legal exposure to give a more holistic review of the contract. The attorney should also be able to explain what contract language means in plain terms, flag provisions that do not serve your interests, and help you negotiate before you are locked in.
The attorneys at Malek + Malek are experienced in business contracts, healthcare agreements, and general counsel services. We work with business owners who do not have the time to learn the law and cannot afford to sign agreements they do not understand. That includes FQHCs, healthcare organizations, and mission-focused businesses where a poorly structured contract can disrupt the work that matters most.
Frequently Asked Questions (FAQs)
Can AI replace an attorney for simple contracts?
Even agreements that appear simple can contain provisions with significant consequences depending on your specific circumstances, jurisdiction, and the other party involved. The risk is not limited to complex deals. Boilerplate language can carry real exposure if it is not tailored to your situation. An attorney can tell you what is standard, what is negotiable, and what to push back on before you sign.
What happens if an AI tool gives me wrong legal information and I act on it?
You absorb the consequences. AI tools carry no professional liability and are not bound by the ethical standards that govern attorneys. If incorrect AI-generated information leads you to make a business decision that causes financial or legal harm, you have no recourse against the tool. Your attorney, by contrast, carries malpractice insurance and a professional obligation to act in your interests.
Is it safe to upload my contracts to AI tools?
This depends on the platform and its data policies, and your individual privacy settings. Many AI tools retain the information you submit to improve their models. Uploading contracts can expose confidential business information, financial terms, or client identities. Before using any AI tool for contract-related tasks, review the platform’s privacy and data retention policies, or ask an attorney what approach is appropriate for your situation.
How long does attorney contract review typically take?
This depends on the length and complexity of the agreement, but in most cases an experienced attorney can provide a meaningful review within a few business days. If you are working against a deadline, communicate your timeline upfront so your legal team can prioritize accordingly.
What types of contracts most need attorney review?
Any agreement with financial terms, exclusivity provisions, IP ownership, limitation of liability clauses, indemnification, or termination conditions should have attorney review. This includes vendor agreements, service contracts, employment agreements, partnership agreements, and healthcare contracts. The higher the stakes, the more important it is to involve an attorney who knows your business from the start.
If you have questions about a specific contract or want to talk through your legal needs, reach out to the team at Malek + Malek.
This blog is not legal advice and does not create an attorney-client relationship with our firm. The content is intended to promote a general understanding of legal concepts and should not be relied upon as a substitute for obtaining legal advice from a qualified attorney regarding the reader’s specific circumstances. Readers should consult legal counsel for advice concerning their individual situations. All content is provided without any representations or warranties regarding completeness, accuracy, or timeliness.