Can ChatGPT Replace Construction Lawyers?
If you haven’t wondered (or asked ChatGPT), Can AI replace my job? lately, congratulations! You don’t subscribe to as many technology newsletters as we do. It’s a scary but fair question, worthy of discussion. Autonomous robots sparked a similar debate in 2015 when SAM the bricklaying robot was unveiled.
The “Which technology will replace which construction jobs?” question has mostly centered around jobsite workflows - but what about automation back in the office? Can autonomous systems, like AI chatbots, replace bid coordinators, project managers or even your construction law attorney? Instead of explaining why we don’t think this will happen, we’ll show you. We had a licensed construction attorney, equipped with Document Crunch, analyze a construction contractor agreement produced by ChatGPT.
How does a construction contract usually get reviewed?
We’re getting ready to publish an eBook on the phases of construction contracts and what they’ll look like with AI (sign up here to reserve your copy), but in the meantime, here’s a quick summary:
Business Development - When general contractors actively receive or pursue project opportunities and have preliminary discussions on contract scope and terms.
Bidding a Job - When GCs get serious about an opportunity, they are invited to submit a bid for the project. In this phase, it is often expected that their price for performance be based on specialty contractor input with regard to the scope. However it is also common that the Owner submits contract terms for review, and the expectation is that the price is also based upon the terms of the contract. Now is the time that any terms that are problematic be qualified and/or noted by the Contractor as needing further discussion upon award.
Negotiation - An award is made to the contractor. At this point, owners and GCs negotiate the terms and fees associated with executing the project based upon the placeholders in the contractor’s bid.
Buyout + Project Execution - The project is won and it’s time to lock in subcontractors, materials and get started.
Most small to medium construction companies don’t engage lawyers throughout this process - at least until the award/negotiation phase. Of course they would also engage legal counsel during construction if a dispute has escalated. Large contractors often use third-party law firms or have their own in-house counsel even to help with bid qualification. According to some labor statistics, in-house counsel can cost a company a minimum of $280,000 (fully burdened) per attorney. That is a lot of money invested in doing bid qualifications, especially when oftentimes the contractor only has a ⅓ or ¼ chance of being awarded the project.
Owners normally issue the draft general contractor agreement. However in limited circumstances, the contractor gets to source the draft contract. The general contractor almost always drafts the form subcontract to be used. Once they’ve customized a template, a typical lawyer, on either side of the table, may use that template multiple times before involving expensive third-party lawyers again. You can see why it’s tempting to use rapidly advancing AI to help edit and customize those contract templates for subsequent projects instead of involving construction law attorneys every time. We also wanted to see how this would play out, so we turned to ChatGPT. And here’s what we found.
What prompt did we give ChatGPT to draft a construction contract?
We gave ChatGPT an opportunity to produce a subcontract agreement using a simple prompt. The prompt was for a general subcontract, not specific to a project, location or industry. Incorporating these details may or may not have produced more targeted results.
The Prompt: Please draft a construction subcontract agreement.
Did ChatGPT produce a usable construction contract?
As you can guess, with this prompt, the simple construction contract template produced by ChatGPT was not usable. A sample of the Document Crunch analysis can be found below and you’ll see it found many critical terms and provisions missing.
Should contractors use ChatGPT to draft construction contracts?
We don’t believe ChatGPT or any other AI can or will fully replace lawyers experienced in construction contract law. Their input and expertise will always be necessary to contextualize and negotiate the most complicated clauses of construction contracts like Indemnification, Waiver of Consequential Damages, Insurance and Delays, among others. Until Owners and GCs are willing to negotiate with AI, we will always need lawyers.
It’s also worth noting that when we prompted ChatGPT more specifically to draft a contract with the terms and provisions that Document Crunch looks for it got a bit closer to a usable construction contract, however even that still needed a lawyer’s intervention to bring it to what we would consider to be usable.
The moral of the story, ChatGPT can be an incredibly valuable tool when the right subject matter expertise is inserted into the prompt, but its output shouldn’t be used blindly. In a similar vein, you may always need a lawyer to negotiate a contract, but AI may be able to help identify where the critical or non customary terms are. Software like Document Crunch can validate terms and provide talking points to that lawyer. In other words, it can get you down the road, but we believe humans must still finish the job.
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