Artificial Intelligence (AI) errors in litigation have grabbed headlines, but transactional lawyers often fly under the radar even though the risks with AI in deal work can be just as significant. MMM Special Counsel Roy Hadley, Jr, points out that the nature of transactional work means AI-related mistakes are less visible but no less dangerous in recently published article “AI Missteps in Transactional Work Are Slow to Surface, but 'Time Bombs' Are Likely” by John Campisi.
In transactional deals, lawyers frequently rely on AI to draft documents, review contracts, and create templates. Yet, Hadley warns that without the right safeguards, confidential client information could inadvertently be shared or leaked when AI tools are trained on internal data. He emphasizes the critical need to train these models carefully to ensure they understand when information must remain confidential or be anonymized from the start.
What keeps these risks in check, Hadley explains, is the rigorous review process inherent in transactional work. Lawyers on both sides meticulously read through documents before a deal closes, which helps catch errors or AI “hallucinations” before they cause problems. Still, Hadley cautions that if AI-related errors do slip through unnoticed, the consequences could be devastating. Beyond potential financial fallout, there are reputational risks and potential insurance implications for lawyers who misuse AI in transactions.
Hadley’s insights remind us that as AI becomes more integrated into transactional law, it’s vital to maintain strong guardrails, foster transparency with clients, and never let technology override the lawyer’s duty of careful review.
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