AI Tools Are Writing Your Contracts—Should You Trust Them?

In 2025, artificial intelligence is doing more than writing emails and social media content—it’s now being used to draft legal contracts. With tools like ChatGPT, Harvey AI, and other legal tech platforms widely available, many startups, creators, and small businesses are turning to AI for quick and low-cost agreements.

But here’s the big question:
Should you trust AI to write your contracts—without a lawyer?
Let’s break down what AI can (and can’t) do, and what recent legal developments reveal about the risks.

Why AI Contract Tools Are So Popular

AI-powered platforms are being used to draft documents like:

  • NDAs (Non-Disclosure Agreements)

  • Independent contractor agreements

  • Influencer contracts

  • SaaS terms and licensing agreements

  • General business contracts

Popular platforms include DoNotPay, Spellbook, LegalZoom AI, and enterprise-level tools like Harvey and Ironclad AI.

The appeal is obvious:

  • Speed: Drafts in seconds.

  • Affordability: No legal fees up front.

  • Accessibility: Small businesses and startups can generate documents without navigating legal jargon.

 What AI Can Do Well in 2025

AI tools excel at:

  • Generating basic first drafts of standard contracts

  • Highlighting inconsistencies or missing clauses in existing agreements

  • Recommending common terms or clauses based on industry norms

  • Assisting with bulk contract generation for high-volume use cases

If you're experienced with contracts and need a simple agreement fast, AI can offer a useful starting point.

 What AI Can’t Do (And Why That’s a Risk)

Despite major advancements, AI has limitations that can expose your business to serious legal liability:

1. AI Doesn’t Understand Your Business Context

It doesn’t know your strategy, goals, risk tolerance, or specific terms you care about. That matters in every contract.

2. It Doesn’t Follow Jurisdiction-Specific Laws

AI often fails to include clauses required by local or international regulations (e.g., California labor law, GDPR, etc.).

3. It Cannot Strategize or Negotiate

AI won’t catch loopholes or advise you on negotiation leverage—or help you avoid legal traps written into vendor terms.

4. It May Mislead Users into Believing It’s Legally Sufficient

Without legal review, many AI-generated documents contain vague, unenforceable, or incomplete terms.

 Real Case: DoNotPay Faces Class Action Lawsuit for Faulty Legal Docs (2023)

In early 2023, the popular AI legal app DoNotPay was hit with a class action lawsuit in California. The claim? That it illegally practiced law without a license and created flawed legal documents—including contracts and filings—that harmed real users.

“Unfortunately for consumers, DoNotPay is not actually a robot, a lawyer, nor a law firm. DoNotPay does not have a law degree, is not barred in any jurisdiction, and is not supervised by any lawyer.”
— Class Action Complaint, US District Court, Northern District of California, 2023

Allegations included:

  • Drafting defective contracts without appropriate disclaimers

  • Misleading users into thinking they had received valid legal advice

  • Causing legal harm through poor document quality

This lawsuit, which is ongoing, highlights the legal risks of relying on AI-generated contracts without proper legal review.

When You Absolutely Need a Lawyer

AI tools can assist with drafts—but a licensed attorney is essential when:

  • The contract involves intellectual property, international terms, or complex licensing

  • You’re entering a high-value or long-term agreement

  • You want the contract to be enforceable in court

  • You need negotiation insight or custom clauses

Smart Use: Combine AI + Legal Oversight

Want the best of both worlds? Here’s how:

  • Use AI to generate a first draft or clause suggestions

  • Have a qualified attorney review and revise for accuracy, compliance, and clarity

  • Don’t rely on AI for legal advice—use it as a tool, not a replacement

Use AI for Speed—Not for Strategy

AI is changing the nature of legal work, but it has not replaced lawyers. Poorly drafted contracts can result in costly disputes, intellectual property loss, or regulatory violations. Investing in proper legal review can prevent significant financial losses for a business over time.

At Borderless Counsel, we help startups, creatives, and global businesses modernize their legal strategy without cutting corners.

 Ready to launch with confidence?

 Contact us for a flat-fee contract review or custom agreement tailored to your needs.

This article is for informational purposes only and does not constitute legal advice. Always consult a licensed attorney for legal matters.

Guest User