In 2023 there was a huge buzz about ChatGPT, a new type of generative AI tool. Other tools swiftly followed.
Most of the contract professionals, contract writers and lawyers were testing its capability, including asking it to write contracts… but there were glitches in the outputs. Although many of those contracts looked superficially like they would work, they were missing content or using the wrong laws or inaccurate jargon, or were just too archaic to read.
Artificial intelligence is going to affect how we do deals but is not entirely clear how just yet.
What is artificial intelligence?
There are three types of artificial intelligence:
- artificial narrow intelligence (ANI) is designed to excel at performing specific tasks – this could be reviewing a contract clause against its memory/bank of clauses to see how that clause differs and if that difference is a cause for concern;
- artificial general intelligence (AGI) can master any intellectual task that a human can – currently this is not what deal-making discussions are concerned with;
- generative artificial intelligence (GenAI) which learns from a bank of existing content to generate new content. The bank from which it learns could be everything published on the internet before 2022 (like ChaptGPT) or a narrower dataset, such as publicly or privately available libraries of contracts.
What are the benefits? Why bother?
Not everyone is bothering to move towards using AI just yet… like all technology there are early adopters, the middle majority and laggards. The World CC 2024 Report on AI in Contracting shows that 46% of people don’t yet fully trust the datasets, the outputs or AI generally! So we are still in the early adoption phase.
However, there are many benefits to AI.
It is already being used to streamline transactional tasks such as reviewing existing contracts when a business is sold. The World CC 2024 AI Report confirms that – where it has been adopted – it increases productivity, reduces cycle times (ie get deals done faster), increases transparency in contracting activities and provides more accurate contract reviews/analysis.
These benefits (as well as the cost savings AI can create) are driving much better attitudes to AI with 76% of individuals showing enthusiasm for it – double the ranking for employers.
Unsurprisingly, the engineering and construction sector is lagging behind others – that may be because of the existing complexity of our contracts, our general slow adoption of digital technology or low profit margins reducing the opportunities for investment.
What should you do?
Start to explore how AI could help your business to contract more effectively. Try it out and read more about how it could help your business.
If you are in construction, test out my AI-based tools on the TermScout Community to review a small works building contract or a consultant appointment.
Related posts: will machines jeopardise your relationships? and techno-contracting.
