Blog

Learn all about the world of company compliance with Australia’s leading compliance experts.

Scroll Down

The risks of using automated legal advice systems

Technology is now such an integral part of everyday life. It helps us work more efficiently and can make light work of some of the most mundane tasks. While it’s convenient to take advantage of technology when we can, sometimes it isn’t always the best idea. Automated legal advice tools are a case in point.

These range from chatbots that pop up to answer your questions when you visit a website to systems that create legal documents that you order online. While they may seem like a good idea, the risks of automated legal advice systems are many. To show you how, we’ll use the example of legal documents, like contracts and trust deeds that you can order online.

Machines don’t understand the complexity of people

While you may think your request is relatively simple say you need a trust deed to set up your self-managed superannuation fund (SMSF) there are many different ways that this can be done. When you speak to a lawyer, they ask a wide range of questions about your objectives, desired outcomes and needs so that they can tailor the document to your specific needs.

Thanks to machine learning, artificial intelligence and natural language processing, technology is becoming smarter every day but it still does not have the same capabilities as people. People understand complex ideas like negotiation tactics and decipher subtle messages related to your values and individual interests. This is because we are capable of communicating in an unstructured way.

Technology relies on structured communication methods to be able to “understand” what you want. It doesn’t have the ability to understand hypotheses or reason causality. This can be particularly dangerous when it comes to creating a legal document. That’s because legal documents have to preempt potential situations and consequences in advance. This often involves an understanding of not only past cases and legislation, but also human behaviour and motivations. Where the rules are clear, a machine may be effective, but the law is often complex and complicated.

While it may seem like the document you’re creating is easy,  that’s probably because a good lawyer has made it appear that way. If you rely on a machine to create a legal document for you, it will probably miss these subtleties and create something that doesn’t quite meet your needs now or in the future. This is a huge risk, but you may only become aware of it months, years or even decades down the track. By then it may have cost you a significant amount of money or leave your best-laid plans in tatters.

You’re relying on a programmer to understand the law

Technology relies on software that’s created by a computer programmer or software developer. So if you’re using legal documents that have been created by technology, then you’re effectively relying on the legal knowledge of the software developer. If they don’t have the requisite legal knowledge or understanding then they may not incorporate the complexities of the law into their code. This means the document that they generate for you may be missing something or mean something very different in law to what the software developer believed or intended.

It’s important to get legal documents right because they will govern your transactions and can be held up in a court of law. If you’re not certain about whether the technology really knows the law, then you’re potentially placing yourself at a significant risk.

The legal document may be out of date

The law is dynamic. Every day judges interpret the law in a way that may change its meaning. While Parliament and regulatory bodies review new legislation and regulations that affect the legal obligations of individuals and businesses. An automated program is relying on a software developer to make it aware of this information. While some technology can learn, it still relies on being able to access and understand information as it happens to remain up-to-date.

By relying on automated legal advice systems you put yourself at risk of using a document that is no longer current. If the law has changed recently or a new case has affected a finer point of law, you may not find out that your documents are out of date until it’s too late.

Machines can’t negotiate for you

When you’re putting together a legal document, there are often two parties to the transaction. One of the most valuable roles that a lawyer plays is helping you negotiate the finer points of the document.

Negotiations are nuanced and there are many different trade-offs that you may be willing to make. Automated legal documents don’t give you the opportunity to convey these trade-offs and may not have the smarts to understand the shades of grey. They also can’t sit around the negotiating table and hold your hand through the process.

If you don’t negotiate a document, you are at risk of not getting the best outcome for yourself. Instead, you’re just accepting the document that you’re given without considering whether you have any other options available to you.

A non-lawyer may not know the difference

One of the biggest risks of using automated legal documents are that they can be used by anyone, including professionals who don’t have the requisite legal knowledge. For example, while accountants are skilled in their profession they’re not lawyers. This means they may not understand the subtle differences between one trust deed and another when setting up an SMSF.  This can put you at risk of using a document that is out of date or doesn’t meet your specific needs.

That’s why it’s important to seek legal advice when drafting and reviewing legal documents. To avoid putting your company at risk, get in touch with CCASA if you’re considering using an automated legal advice system.