Can Artificial Intelligence Be Trusted to Draft a Construction Contract?

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Originally published by the Daily Journal of Commerce on June 15, 2023.

If you ask one of the leading artificial intelligence (AI) chatbots, ChatGPT, if you should rely on it to draft a construction contract, it responds that it is “highly recommended to hire a construction attorney rather than relying solely on ChatGPT or any AI model to draft a construction contract.” As support, ChatGPT provides a handful of reasons construction attorneys haven’t (at least yet) gone the way of the dodo, including:

Legal expertise

While there may come a day when AI provides accurate legal advice, we are not yet in that reality. For now, many AI models include disclaimers such as “I am an AI language model and not a legal professional.” While AI is quite good at brainstorming or flagging potential issues, and at times exceptionally good when jargon is used to ask the right questions, growing pains show when you ask AI to craft legal documents that align with applicable laws and regulations. For example, ask ChatGPT to draft a mechanic’s lien waiver form for use on a project in California and it will spit out a form that appears to check all the right boxes. The form may even include a reference to an on-point California statute, which makes it look even more legitimate. The problem is that some states, including California, set out a required lien waiver form by statute and the AI-generated form misses the mark (despite my multiple attempts to prompt the model to get the form right). While the use of AI may be tempting to avoid bringing in a legal team, project owners and contractors and design professionals should think twice before signing on the dotted line if their new “attorney” is a free robot.

Customization

This article is in no way a condemnation of AI. There are many ways AI can enhance what lawyers already do and improve efficiency for owners, contractors, and attorneys. But when it’s time to customize a contract to address a particular project’s unique requirements, specifications, and risks, that’s when the experience and creativity of counsel can be invaluable. Many construction projects also rely on customization of template contract forms, such as those generated by the American Institute of Architects, DBIA, or ConsensusDocs. Such forms are protected by copyright and AI models generally can’t provide the full text of the documents—leaving AI software unable to customize many standard industry forms.

Risk assessment and mitigation

Dovetailing with the need to customize each contract to a particular project’s needs and applicable legal requirements, sole reliance on AI to generate the significant risk-shifting provisions is rife with problems. For example, prompting ChatGPT to generate an “EPC (Engineering, Procurement, and Construction) contract for a complex construction project in Oregon” results in an EPC contract drafted from scratch within seconds. Like the mechanic’s lien waiver form example above, the resulting contract looks pretty good from a high level, with sections on project description, responsibilities of the contractor and owner, compensation, warranties and guarantees, indemnification, limitation of liability, and termination. But the whole AI-generated EPC contract is shorter than two pages—whereas real-world EPC contracts are often very long documents—and addresses each of the listed topics in a very superficial manner. Knowing the right questions to ask, you can prompt AI software to customize and expand each of the particular contract provisions and add missing provisions, but doing so results in a Frankenstein contract. Attempting to create a state-specific contract can also produce anomalies with real-world consequences, such as an EPC contract for a project in Oregon that is subject to dispute resolution under arbitration rules made up, or “hallucinated” in AI speak, by the AI software. (As a further cautionary tale of “hallucinations,” an experienced lawyer recently made international news by submitting a court filing he later admitted was generated by ChatGPT and included “bogus judicial decisions with bogus quotes and bogus internal citations,” as the judge pointed out in response to the court filing.)

Negotiations

Unless you’re comfortable negotiating the contract document generated by AI alone, you will need an attorney to assist with contract negotiations. Even crafting the document is somewhat of a one-way negotiation with your own computer as you must prompt the AI software to add provisions A and B; make provisions C and D more owner (or contractor or architect) friendly; make provisions X, Y, and Z apply to Oregon law, and so on. And once the one-way negotiation with yourself ends, the real work starts when you must negotiate the contract with the other side.

Peace of mind

The final reason given by ChatGPT for why you shouldn’t rely solely on AI to generate a construction contract is a sound one. Peace of mind is why we hire attorneys and what attorneys strive to provide.

In summary, if you’re planning to experiment with the use of AI on your next construction project, don’t necessarily stop, because it can be an amazing tool. But loop in a construction attorney before the draft document goes out the door.

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Mario R. Nicholas
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