Major Law Firm Debuts AI Tool that Writes Contracts

U.K.-based law firm Allen & Overy launched an AI tool that can write standard legal contracts, which it said can save lawyers time and money.

ContractMatrix can write non-disclosure agreements (NDAs), mergers and acquisition contracts, among others, according to the FT. Allen & Overy partnered with Microsoft and AI startup Harvey to launch the tool.

The AI tool uses existing templates for contracts to draw up new ones, which attorneys can accept or revise.

More than 1,000 Allen & Overy lawyers out of nearly 2,800 already use the tool. Five unnamed corporate clients are set to use it as well in January.

In a trial, Dutch chipmaker ASML and health tech company Philips used it to negotiate what they call the world's first 100% AI-generated contract between the two companies, according to the FT.

Allen & Overy plans to offer the tool to clients that come on board following its merger with Shearman & Sterling, a New York-based global law firm, slated to be completed in May. Clients will pay an annual subscription fee for the tool, with a minimum timeframe of five years. It expects to sign up hundreds of clients by the end of next year.

ContractMatrix also will be offered on Microsoft's enterprise software marketplaces Azure and AppSource, in the first half of 2024.

Related:Meet Harvey: AI Chatbot and Legal Assistant

'Significantly reduced' hallucinations

As for hallucinations, Allen & Overy partner David Wakeling told the FT that it could happen with ContractMatrix, but they were "significantly reduced" because of the templates the tool was trained on. Also, client data was not used for training and any inputs and outputs would be encrypted.

The tool is available for further training, or fine-tuning, if the client wants a more bespoke experience, Wakeling said. Allen & Overy can help in that regard.

“We are seeing it as a big open market opportunity  ... because in-house lawyers need efficiency and productivity gains as well,” Wakeling told the FT. “They can be that much quicker and that much more efficient than their competitors. And you would expect that to be attractive to clients because it is generally a bit cheaper, a bit faster, a bit better.”