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Contract lawyers are slow to address AI risks in technology agreements, Bloomberg Law finds
Most commercial tech contracts signed since 2023 lack any AI-specific terms, leaving liability, data handling, and output quality unaddressed. Lawyers face growing pressure to update templates before disputes expose these gaps in court.
Contract Lawyers Fall Behind on AI Risks
Commercial contracts signed since late 2022 rarely address the legal and operational risks that ChatGPT and other AI systems introduce into business relationships. Contract drafters have been slow to adapt, leaving agreements poorly equipped to handle AI-enabled workflows.
Technology service agreements and technology development agreements are where these gaps matter most. Lawyers drafting these deals would typically be the ones responsible for identifying AI risks and setting out how parties should manage them.
A search of publicly filed agreements shows the problem is widespread. Of more than 670 technology services and development contracts signed since the start of 2023-after ChatGPT's public release-AI-specific provisions rarely appear.
What's Missing
Standard contractual language has not caught up to the realities of how AI systems operate in commercial settings. Companies are deploying these tools in production workflows without corresponding agreements that address liability, data handling, accuracy, or performance guarantees.
The gap leaves both service providers and clients exposed. Without explicit terms, disputes over AI system failures, data breaches, or output quality fall back on general contract language written for traditional software or services.
What Lawyers Need to Know
Professionals in legal roles should expect pressure to update contract templates and review processes. The longer the delay, the greater the risk that existing agreements will be tested in court under unfavorable circumstances.
Drafting AI-specific provisions requires understanding both the technical capabilities and limitations of these systems, as well as the business context in which they operate.