Challenges to the adoption of AI in contract law

Note: This article is just one of 60+ sections from our full report titled: The 2024 Legal AI Retrospective - Key Lessons from the Past Year. Please download the full report to check any citations.

Challenge: Data privacy concerns in AI adoption

Challenge: Need for improved AI interpretability

Challenge: Potential biases in AI-generated outcomes

Research Direction: Enhance sophistication of AI-driven contract tools with multimodal interfaces

Research Direction: Integrate AI with blockchain for secure contract management

Research Direction: Develop ethical standards and regulatory frameworks

Despite the numerous benefits, challenges remain in the widespread adoption of AI in contract law. Data privacy concerns, the need for improved AI interpretability, and potential biases in AI-generated outcomes are among the key issues that need to be addressed.

"In my opinion, the regulation of AI presents unique challenges compared to other technologies. While current approaches in the US, EU, Singapore, and Canada focus on harm prevention, risk-based frameworks, or voluntary guidelines, I believe they fail to address broader issues such as intellectual property rights, liability for AI-related harm, and the evolving nature of AI capabilities. I argue that granting AI a legal personality, akin to corporations, could fill these accountability and rights gaps. This approach would provide a clear framework for addressing liability and intellectual property disputes while offering the flexibility needed to adapt to future advancements in AI."

Frederick Chan, former GC (Technology and Innovation), Canada

Developing ethical AI standards for law requires collaboration between governments, legal bodies, tech companies, and researchers to ensure responsible and fair use. This joint effort aims to create adaptable guidelines that address ethical concerns like data privacy and bias, promoting responsible AI adoption in legal practices worldwide. We are still in the early stages of this process, and would recommend all readers to subscribe to their local bar association or regulatory body for updates, and reach out to participate in panels and forums.

Conclusion

The application of AI in contract law represents a significant step towards more efficient, accessible, and standardized contracting processes. AI-driven tools are democratizing legal expertise, empowering businesses and individuals to engage confidently with complex legal documents. As AI continues to advance, it will play an increasingly vital role in promoting fairness, transparency, and efficiency in contract law. However, stakeholders must remain vigilant regarding the ethical implications and strive for continuous improvement in these technologies to ensure a just and inclusive legal landscape.