AI Can Draft a Contract. It Can't Defend One in Court.
Using ChatGPT or similar tools as your lawyer could cost you more than hiring an actual attorney. These platforms are not licensed to practice law, and courts have begun holding them accountable for legal advice.
In 2025, Changhan Kim, CEO of gaming company Krafton, attempted to void a $250 million contract using a ChatGPT-generated strategy instead of consulting his legal team. The court rejected the approach and reinstated the contract, exposing the company to significant financial and legal consequences.
OpenAI faced a separate lawsuit from Nippon Life Insurance Company of America in Illinois. The company accused OpenAI of practicing law without a license after ChatGPT provided guidance that led a user to reopen a settled case and file meritless motions in federal court. OpenAI now faces $300,000 in compensatory damages and $10 million in punitive damages.
Law requires judgment, not just information
Practicing law differs fundamentally from tasks where AI excels. Chess and strategy games have fixed rules and measurable outcomes. Legal practice requires judgment and accountability.
Effective legal analysis demands understanding how facts evolve, how opposing counsel will respond, how a judge will evaluate a position, and how decisions affect broader business objectives. It requires understanding the real world-something AI systems cannot do.
AI legal advice is often unreliable
AI for Legal work tends to be overconfident, imprecise, and materially incomplete. The analysis is longer than necessary, less tailored to specific facts, and contains errors that aren't immediately obvious.
These mistakes carry real costs. A contract drafted by AI might appear sound but fail under scrutiny. A legal strategy generated by an algorithm might ignore critical precedent or jurisdiction-specific requirements. A court will not accept "the AI made an error" as a defense.
For legal professionals, the message is clear: AI is a research tool, not a replacement for judgment.
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