Artificial intelligence ChatGPT Contract drafting

How to use ChatGPT for contract drafting 

Learning how to use AI could also be your unfair advantage against established seniors, the old guard, who rest on their laurels and decades of experience, believing themselves to be immune from new entrants. 

Let me show you a few examples of how to deploy it to your advantage for IP work. 

Contract drafting

1 – draft clauses 

Imagine that you want to assist a client who wants to enter into a deal with a reseller to sell his software internationally. 

How would you go about it if you had to draft the agreement? 

Most lawyers will try to find a template and then customize it, clause by clause.

Often, one template is not enough. You need to review multiple templates and then write a clause that meets your client’s needs. 

It takes a lot of time, and the quality of your output depends on their skill and experience.  

It’s also a painful process and you may not have such a rich library of related templates with you, unless you have worked on a lot of similar deals earlier. 

Let’s try it with one clause – this clause will define the Licensed Products. This is what I found from a free template available on the SEC’s website here

So how can a new entrant use AI to compete with someone who does this work day in and day out? 

Enter: Chat GPT. 

Here’s what I typed in ChatGPT:

Now, it took me about 30 seconds to type the prompt, and I got this answer in 3 seconds. 

I can simply edit the above paragraph and define the Licensed Product as follows: 

“Licensed Product” refers to software or other products that have been developed, manufactured, or otherwise created by the software manufacturer, including software, documentation, updates, upgrades, and other related materials for sale to end-users.” 

The good news is that the answer is providing me a lot of additional information that I can use to assist my client, regarding the following:

  1. Whether the reseller deal should be exclusive with the reseller or non-exclusive
  2. If it is exclusive, would there be geographical restrictions to the exclusivity
  3. Chat GPT also apprises me of additional terms and conditions that I must include in the agreement, such as pricing, payment terms, marketing obligations, support and maintenance requirements, and any restrictions on the use or distribution of the Licensed Product
  4. If needed, I can ask further questions and drill down to more precise answers

In short, my brain is fired up, and from not knowing what to do, I have a good idea about a few things to add. 

2 – Understand the commercial intent of the parties more deeply

I decide to add more prompts: 

Isn’t it amazing?

It is literally a superpower that reduces your time and amplifies your ability. It flattens the world. I can match or even beat an experienced lawyer who doesn’t know how to use these tools. 

The work isn’t done, I still need to draft the clauses. 

But I have the headings in place.

I just showed you how to draft one clause. You can now draft the others using similar techniques, right? 

One thing ChatGPT can’t help you with is the questions or the prompts. This is where your prior understanding is very important. 

If I provide the wrong prompts, I will get the wrong answer.

3: Improve language (even grammar), and reduce ambiguity.  

I’ll show you a poorly drafted clause – every contract has a few of them. 


The Licensor agrees for signing any papers to implement this license.

Let’s see what ChatGPT can do:

Fantastic, right?

Now, I have a question. 

What if the Licensee charges money for executing such documents or agreements? What about any additional government charges that are to be paid? 

It could add costs for the Licensor. How do you allocate this cost to the Licensee? 

A major function of contracts is to allocate risks, responsibilities and costs amongst parties. 

Notice that I did not prompt ChatGPT specifically to do this, so it left this part open ended. This is a major challenge with AI. 

The output produced by AI will be determined by the quality of the prompt and the intelligence and understanding of the person using it. 

A trained person will produce better results than an untrained person, even here.   

This is why the need for human intervention is still very high. AI can support you to do the basics faster, but you still need to check whether the outcome is as per your client’s interest. 

So, how do I improve this clause once I realise this gap? 

I can add in a human element further and end the clause with “at no cost to the Licensor”.

Here’s another interesting clause that Chat GPT helped me draft.

Let’s say that you want to draft a non-compete clause in a consultancy agreement for a Canadian client who wants to hire a software developer as a consultant. 

How do you go about it? 

Here’s my prompt to ChatGPT:

Here’s what I got: 

Most lawyers/paralegals will draft only the first two paragraphs. Adding the third and fourth paragraphs adds additional firepower by adding how the non-compete agreement may be enforced, and why it is necessary to protect business interest.

It also clarifies that the developer has obtained legal advice before executing this agreement. 

These clauses provide additional firepower for the company in case the non-compete is violated, because courts across the world tend to scrutinise such clauses very strictly and tend to be pro-employees. 

Adding this clarification increases the likelihood of the court ruling in your favour.

At the end, of course, it clarifies that you must consult a lawyer, but the first draft itself is very very good – the client can give it to a lawyer for review (if necessary) and save 90% of the bill that would otherwise be payable!

If you learn how to use it, you could improve your speed by 50-70% and even multiply your accuracy! 

In many cases, you will notice that ChatGPT has not prepared the final response. However, it has helped me think through it. It is a great use of ChatGPT to use it as a co-pilot who brainstorms along with you but you cannot completely rely on it.

For outreach 

1 – Reaching out to potential clients

We will show you the messages that ChatGPT can assist you with writing to startup founders in the bootcamp.

2 – Conducting interviews 

Let’s say that you are interviewing a startup founder to assist him/her with brand building. 

Or, you want to get him/her invited to a podcast. 

What are the questions that should be asked? 

You can also use it for interviewing lawyers. 

3 – Writing and publishing content to build your track record and personal brand

What we showed you here is just the tip of the iceberg.

There are hundreds of things you need to learn to harness the power of AI and get ahead of all other lawyers

Nobody other than our students are learning this – and there is your chance

Our students are now training themselves every week to use AI-based tools like ChatGPT for everyday legal assignments to take their skill and productivity to the next level.

Before you think that Chat GPT can do everything and you need to not learn any skills, one note of caution:

  1. ChatGPT cannot do your job, but it can make your job much easier. Those who don’t use AI could become redundant and will not be able to compete with those who use AI.
  2. ChatGPT will only answer what you ask of it – so the questions you ask are of top priority. it cannot help you with identifying the questions. This is where your skills, knowledge and understanding come into play. 
  3. Knowledge of commercial intent behind transactions and deals is extremely important to provide the right prompts.  
  4. ChatGPT is often inaccurate for statutory research – we have got incomplete answers on multiple occasions – so you need to verify answers manually.

Would you like to learn how to do these things?

International contract drafting work is soaring right now – it is a good time to tap into international opportunities before the market saturates with a few hundred big players or millions of individual service providers. 

Five years down the line, we can expect the success story of remote contract drafting will be so evident that everyone will be rushing to grab these opportunities.

It will be harder to establish yourself, or even find your place in that frenzy, unless you have already built a track record earlier. 

You don’t want to start at the bottom 5 years later, look back at this day and wonder why you didn’t take timely action. 

So do you want to build a career in international contract drafting?

Remember, it’s not just for the purpose of securing international remote freelance work (although it pays more), contract drafting is relevant no matter what kind of legal work you want to do.

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