The Impact of AI Contract Review & Drafting Software on Work With Legal Contracts

The legal industry is increasingly turning to technology to simplify the document drafting process, and AI-based tools are leading the way. But can we trust any AI contract drafting and review software to compose contracts that accurately comply with applicable laws? Are there potential pitfalls that we need to be aware of?

As AI contract drafting develops, lawyers are left wondering whether it can be trusted to handle legal issues. In this article, I will introduce the impact of artificial intelligence, machine learning, and natural language processing on work with legal documents based on the Loio example. Also, I will share how Loio brings AI contract analysis to the next level.

Dive in!

What Is AI in Legaltech?

AI is everywhere now, not only in legaltech. For example, many of us rely daily on various text editors, such as Grammarly. While such tools may not check the text 100-percent correctly and catch all the mistakes, they help identify many errors and typos the one could miss.

Another common case is car autopilot which uses AI for image and optical recognition. It helps the driver control the vehicle, but the driver makes the final decision and chooses the route. Importantly, this program can notify the driver of potential risks on the road or bring their attention back if they get distracted. But still, autopilot cannot replace the human driver.

Similarly, AI analysis in contract drafting software is a means to minimize the possibility of making a mistake. We use technologies where the cost of error can be high, so it’s essential to have every possible tool at our disposal.

One of the most popular applications of AI — especially machine learning and natural language processing — is to assist in creating legal documents. We have successfully implemented these technologies in Loio and see bulletproof results in various contracts. So how can lawyers draft their agreements with Loio? 

For instance, they can start with inserting necessary clauses from Loio’s Clause Bank. Then, after scanning the document, our AI contract review software analyzes it and suggests additional provisions that can be added to the text. Loio shows its users the exact clauses from its database, so there is no need to search for them elsewhere.

How do we teach Loio to work with AI contracts? 

Let’s take a peek under Loio’s hood to understand how AI contract review software works.

First, we choose one contract to create. It is essential to select a specific domain to minimize the probability of errors. For instance, a lease agreement for real estate and a lease agreement for vehicles are completely different documents, so they need to be analyzed separately.

Next, we collect as many variations of document examples as possible from the chosen practice area. We go through each document with lawyers specializing in this particular practice area to determine the ideal playbook — a list of mandatory or recommended clauses and clause characteristics that should be included in the chosen type of contract. Then, we teach our AI to understand and find clauses the way a lawyer sees and uses them, not how AI does it.

Then our research and development (R&D) team takes the prepared material and teaches our AI to search for, find, and differentiate these clauses from one another. This looks like a large dataset of tens, hundreds, or thousands of examples of these clauses, and we teach the algorithm to find them in the text.

The most challenging problem right now is not working with AI itself but, rather, forming a list of what exactly needs to be taught to AI. It takes time to get that “perfect” list of clauses and consider every possible detail. In comparison with this, automated AI contract review within contract drafting software is a common process in the tech world.

How AI Affects Contract Drafting and Review

If you’re drafting a contract without help, you may find a playbook and an example of a similar helpful document. After looking at the boilerplate and guidelines, you will better understand what’s missing and what clause needs to be added. Then you can find, copy, paste, or write it yourself.

In Loio, I would describe the process in the following way: you click “Check”, and the system tells you, “Look this agreement should have these clauses, and you have only some of them. Do you want to add them from our Clause Bank?”

As a result, no time is wasted because the system provides immediate recommendations and ready-made clauses that can be inserted instantly. As a result, you won’t need to revise the exact text once again and search for clauses that your document is lacking.

Risk mitigation with AI

While the main argument for using AI is speed, there is another fact that is often ignored. AI can mitigate risks caused by human error, such as overlooking something. Working cooperatively with AI contract review software is a way to quickly achieve what neither AI nor humans can do alone — 100 percent accuracy. Let me highlight an extra important statement that would dispel lawyers’ fears and eliminate all AI software prejudices in the legal industry:

In the world of AI contract drafting software, no one has enough time to check every word and find necessary information. Some may still think AI cannot be trusted to deal with legal issues, but any tool that can improve our work by even 5 percent. With AI, this percentage is much higher.

How To Work With AI

Previously, software on the market required employee training by providing them with a bunch of files to install it on premises. Loio has pre-trained AI — we already train it, so you don’t need to explain to this contract drafting software which clauses you need or how to draft an agreement.

The Loio AI contract review software tells you how to improve the document and gives quick access to ready-made clauses. We combine document analysis and drafting because that’s the most important thing. There are many tools for review, but none offer to correct errors, improve drafting, and streamline the whole process using just one tool.

Future of AI

Despite the incredible possibilities of AI in the legal industry, there are still things that require attention. Currently, AI has a weak ability to examine the contents of a document. AI can generally understand whether a clause exists in a document but does not understand its internal characteristics.

For example, suppose a contract has a termination clause. It must always have a date or a condition for terminating the contract. Now, AI cannot say, “You have a termination clause, but it lacks the condition for closing the contract.” It simply does not analyze the clause to that extent at this time.

So, our priority focus is to teach Loio not only to check the presence or absence of structural elements in a document but also to look at the validity of these documents.


AI is no longer something from science fiction movies. It is a reality we encounter daily and can improve our lives most significantly. Ignoring technology simply because it is unfamiliar or not 100-percent accurate means depriving oneself and one’s business of the opportunity to obtain the most helpful tool humans have invented.

In the future, AI-powered tools like Loio may perform all the manual work for the lawyer. The legal professional will then focus on resolving legal issues, working with clients, understanding problems, and searching for non-standard solutions.


How and when can AI help with document work?

AI contract drafting software can be used whenever a person needs to create a document, understand its structure, identify and find necessary clauses, and proofread the paper for errors, typos, or missing information.

AI contract review software like Loio can assist in creating and revising various legal documents. These platforms use machine learning and natural language processing to suggest additional clauses that can be added to the text.

AI can speed up the drafting process by suggesting missing additions and enabling quick implementation. It can also mitigate risks caused by human error and improve accuracy.

Can AI be trusted to draft contracts accurately?

Yes, the technology can be trusted for accurate AI contract drafting if adequately trained and used appropriately. AI can help minimize the possibility of errors and improve the accuracy of contract drafting and review. However, AI in legal tech is productivity software. It does not replace the person.

How fast does AI adapt to updates in the law?

The adoption of AI contract review software to updates in the law depends on the availability of accurate and relevant data. This is because machine learning algorithms learn from datasets, which must be updated regularly to ensure that the AI stays current with any changes in the law. 

However, this process can take time and requires significant effort to ensure that the datasets are accurate and up to date. Therefore, it may take some time for AI to fully adapt to updates in the law.

Also read:More Clauses for Contract Drafting and Tips for Contract Review: What’s New in Loio?

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Article by Yehor Melnykov

Yehor Melnykov is the CEO and a top-notch tech professional dedicated to making the lives of legal professionals and their clients easier with Lawrina. He's responsible for the entire Lawrina product development in all its technical details, including the functioning of Loio, an AI-powered tool.

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