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A Guide to use AI as your personal lawyer for Contract Reviews

Harish Thakur and Sanidhya Thakur

Are you tired of reading long contracts? Scared of signing contracts without fully understanding them?

Well, you should be!!

The hidden risks and obscure clauses in contracts can have lasting implications that affect you significantly. In today's world, contracts are the building blocks of countless interactions. Understanding these legal documents is crucial, but deciphering their complexities can be daunting.

But what if you could offload this daunting task to a personal AI tool? ChatGPT and similar AI technologies can offer you services like your own personal lawyer to simplify and secure your contract review process but only if you know how to harness that prowess.

These intelligent systems decode the legalese highlight potential risks, and provide actionable insights, making contract review less of a chore and more of a strategic advantage. With AI, you're not just reviewing a contract; you're gearing up to make informed decisions with confidence and ease.

This article explores how AI can transform your contract approach, ensuring you never fear the fine print again.

The AI Revolution: Simplifying the Legal Landscape

AI has become a game-changer, transforming the once-arduous task of contract review. By leveraging machine learning and natural language processing, AI tools act as intelligent assistants. They can:

  • Decode Contracts: Unravel complex legal jargon, translating it into clear, understandable terms.
  • Pinpoint Key Elements: Identify crucial clauses and obligations within the contract.
  • Flag Potential Risks: Highlight areas that might be unfavorable or require further clarification.

This shift empowers not just legal professionals, but individuals as well. Now, anyone can approach a contract with confidence, armed with a clear understanding of its implications.

Demystifying the AI Engine: Your Intelligent Partner

Imagine having a legal expert readily available to analyze your contract. AI contract review tools function similarly. Trained on vast libraries of legal documents, they possess the remarkable ability to:

  • Spot Patterns: Identify common contract clauses and structures, recognizing potential risks and opportunities.
  • Understand Legalese: Decipher intricate legal language, making the contract accessible and easy to comprehend.
  • Offer Tailored Insights: Provide targeted guidance specific to your contract, highlighting areas for negotiation or further scrutiny.

Step-by-Step Guide to Using AI for Contract Review

1. Define Your Goals

Start by clearly outlining your objectives for the AI review. Are you looking to:

  • Understand the key terms and obligations within a contract?
  • Identify potential risks or red flags that require further attention?
  • Compare the contract against industry standards or local regulations?
  • Prepare for negotiation by pinpointing areas for improvement?

Example Prompt: Understanding Key Terms and Obligations (Adobe Photoshop CC licensing agreement is used as an example)

2. Gather Contract Information

Before engaging with the AI, gather all relevant information about the contract. This includes:

  • Background Knowledge about the Agreement or Parties Involved: Acquire any background knowledge you may have about the agreement or the parties involved. Understanding the context surrounding the contract can provide valuable insights during the AI analysis process.
  • Highlight Confusing Clauses: Identify vague wording, unclear obligations, or unusual terms for the AI to analyze potential risks.
  • Flag Inconsistencies: Point out conflicting clauses or missing information for the AI to identify loopholes or drafting errors.
  • Provide Context: Specify contract type, industry standards, and (if available) prior agreements between parties to help the AI interpret the contract effectively. This will help AI to review in database similar type of contracts of that specific company/country.

Example: Identifying Intellectual Property Risks

3. Craft a Clear AI Prompt

With your goals and contract details in mind, create a concise and informative prompt for the AI. Here's an example: "Hello AI, I have a [type of contract] agreement with [name of the other party]. Within this contract, there are clauses pertaining to [specific terms]. Can you please conduct a thorough analysis of these clauses, taking into account standard practices and the applicable laws of [Country/State]? I am particularly interested in identifying any potential risks or unfavorable terms that may impact me. Additionally, could you suggest actionable strategies or points for negotiation to enhance the terms in my favor? Your insights will greatly inform my decision-making process moving forward. Thank you." Example: Contract Comparison and Negotiation Preparation

4. Analyze the AI Insights

The AI will review your contract and provide a report highlighting:

  • Key clauses and their implications in plain language.
  • Potential risks or inconsistencies in the contract terms.
  • Comparisons to industry standards or relevant regulations.
  • Suggestions for negotiation or areas for further clarification.

Example: Analyzing Confusing Clauses and Inconsistencies

5. Take Informed Action

Armed with the AI's analysis, you can now make informed decisions about the contract:

  • Negotiate Like a Pro: Leverage the AI's insights on key clauses and negotiation points to secure favorable terms.
  • Informed Decisions: The AI highlights risks and potential improvements. Negotiate, seek legal advice for complex situations, or explore alternatives - you'll make data-driven decisions
  • Empowered Action: With a clear understanding of the contract, you can proceed with confidence, whatever path you choose.

Example: Strategy Formulation and Negotiation Points

Beyond Efficiency: A Level Playing Field:

AI contract review isn't just about efficiency; it's about empowering individuals like John. In the past, complex legal documents often favored corporations or those with legal expertise. AI bridges this gap, offering insights that level the playing field during negotiations.


AI's impact extends beyond understanding legal jargon. It fosters a future where contracts are instruments of fairness and transparency. By demystifying these documents, AI empowers individuals and businesses to make informed decisions and advocate for their interests.

AI revolutionizes how we interact with contracts, transforming them from sources of confusion into opportunities for clarity and empowerment. This guide equips you not only to interpret documents but also to unlock their secrets, ensuring they work in your favor. As we navigate the evolving world of contracts, AI stands as a powerful ally, illuminating the path to understanding, fairness, and successful agreements.

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