Using Artificial Intelligence in Contract Creation, Review, and Management

As generative artificial intelligence (AI) becomes more prevalent and capable, its use cases expand. With proper oversight, AI can boost your campus contracting efforts by simplifying review processes and automating reminders.

Understand Your AI Policies and Practices

Before bringing AI into your contracting process, work with legal counsel to understand and review your institution’s AI policies and any relevant laws and guidelines that may apply.

Ensure you can answer the following questions:

• What is your institution’s AI policy?
• What federal and state laws may apply to your use?
• Does your institution contract with an AI vendor?
• Which AI vendors does your institution prohibit?

Legal counsel overseeing the use of AI in contract review also should familiarize themselves with relevant portions of the American Bar Association’s ethics guidance on the use of AI, Formal Opinion 512:

• Competence. Reasonably understand the AI’s capabilities and limitations. Don’t rely on AI’s output without an appropriate degree of independent verification.
• Confidentiality. Lawyers have a duty to keep confidential all information relating to the representation of a client. Before inputting client information into an AI tool, evaluate the risks that the information will be disclosed to or accessed by others.

Your legal counsel’s state bar may have additional AI ethical guidelines.

Uses

You can use AI at these points in your contract creation and review process:

• Review multiple versions of contracts to identify unintended differences. At points during the contracting process, you may be responsible for comparing different versions of the contract to identify changes. Sometimes you may be comparing a pdf with a word document. AI can help flag inconsistencies between versions.
• Redline a contract. Often, multiple parties’ contract preferences must be combined into a single document. AI can help redline the contract, creating a single document highlighting contested segments.
• Check spelling and grammar. AI can provide an extra set of eyes when you edit a contract for spelling, grammar, and even math mistakes.
• Create an overview. AI can simplify complicated contractual language into outlines for contract review purposes.

You can also use AI to do the following as part of your contract management processes:

• Send notifications. Some AI tools can identify important dates within the contract and send alerts. For example, the AI may identify when the contract is up for renewal and remind the contract manager that they need to act.
• Create visualizations. AI can create visualizations and charts depicting contractual information. You can use this to highlight and illustrate contract information, like dates and actions, and share contract information with stakeholders who aren’t parties to the contract.

Common AI Problems

Be aware of prevalent AI issues including:

• Data confidentiality concerns. Only use confidential information when the product contract specifies that your institution retains original data rights or operates as a “closed” system. Unless stated otherwise, the AI company will get access to your data, and the AI typically uses the data to inform its global training efforts.
• Legal inaccuracy. AI is not a lawyer with state-specific expertise in contract law. AI doesn’t replace a lawyer’s review of contract language.
• Incorrect information. Don’t assume AI output is accurate. Review all text and explanations for errors. If you find something difficult to understand, don’t assume the language is correct. If you don’t have the expertise to review the AI’s output, find someone who does.
• False research or citations. Never rely on AI research without reviewing it first. AI is intended to create writings that sound legitimate; it’s not intended to conduct factually accurate research. At times, AI references research or citations that don’t exist. Additionally, references may be wrong even when they do exist. Sometimes AI will include a link as a reference even if the linked resource is unrelated to the AI output. When creating references, it’s often looking for matching words rather than providing the source of its output.
• Repetition. Watch for repetition throughout, whether it’s repeating a full clause verbatim or repeating information using different words.

More From UE

Using Artificial Intelligence Tools in the HR Lifecycle: Risks to Consider

Generative Artificial Intelligence Use Policy or Guidelines for Employees

Additional Resources

Risk Management Magazine: Mitigating the Risks of Using AI in Contract Management

How To Contract: Webinar Series on AI

Thomson Reuters: Artificial Intelligence in Contract Review Software