Can AI Replace My Lawyer? What Recruiters Need to Know
For recruiters, the prospect of dealing with lengthy legal documents is unwelcome. The thought of paying a lawyer thousands of dollars without knowing precisely what you'll end up with also highlights the allure of AI-powered contracts.
It's easy to imagine a world where you can quickly generate terms of business or an employment contract with just a few clicks. It sounds like a game-changer, right?
The rise of artificial intelligence has created a vast array of tools promising to simplify various business processes, and legal document creation is no exception. These platforms leverage natural language processing (NLP) and machine learning algorithms to analyse existing legal documents, understand standard clauses, and generate new contracts based on user input.
Why Embrace AI for Contracts?
Several compelling reasons might lead a recruitment agency to explore using AI for drafting legal contracts:
Cost Savings: Hiring a lawyer can be a significant expense for a small business.
Speed and Efficiency: Time is money, especially in the fast-paced world of recruitment. AI can generate initial drafts of contracts in minutes, a stark contrast to the hours or even days it might take to draft one from scratch or receive a draft from a lawyer.
Accessibility and Convenience: AI tools are often user-friendly and accessible to individuals without legal backgrounds. This makes them less daunting for agencies that might feel overwhelmed or underwhelmed by the traditional approach.
The Legal Risks of Relying Solely on AI-Generated Legal Documents
Despite the appealing advantages, relying solely on AI-generated legal documents carries significant risks that recruitment agencies must carefully consider:
Lack of Context: While AI can identify patterns in legal language, it lacks the deep understanding of the specific legal requirements and market nuances that apply to your recruitment agency.
Inadequate Protection and Unforeseen Liabilities: AI tools may not be equipped to anticipate potential risks and liabilities specific to your business or the particular transaction.
Failure to Comply with Local Laws and Regulations: Employment contracts in Australia have specific requirements regarding minimum wage, leave entitlements, and termination procedures that a generic AI might overlook, alongside recruitment-specific risks such as commission structures and client poaching. Client terms must comply with unfair contract terms laws where the penalties for breaching these laws are significant.
Potential for Errors and Omissions: Errors in the underlying data or flaws in the algorithms could lead to mistakes or omissions in the generated legal documents. Relying on such errors could have serious legal consequences.
The 90%
I've worked with hundreds of recruitment agencies, and more often than not, the initial request for my help involves producing legal documents. However, the agency usually leaves with a lot more. In fact, I do not hesitate to say that creating recruitment-specific and accurate legal documents is only 10% of the service I provide.
Before you jump onto Chat GPT and start prompting it for new Terms of Business, consider whether the remaining 90% is worth the investment:
No one values anything free: When AI tools offer access to free legal documents, it's easy to forget that what costs nothing may also be of little value—until a costly mistake proves otherwise.
Collaboration and Training: An AI tool can generate a document, but it cannot provide legal advice or guide you through the process of creating legal documents for your agency. This process is invaluable for two main reasons:
Truly understanding your legal terms means you can explain and negotiate them effectively.
Tailored training will always mean your team buys in.
Market Knowledge: Your clients engage you because you are talking to candidates they want, and everyone else wants. Working with a lawyer who understands recruitment should be viewed in the same way – they are constantly observing what works and what your clients are saying, and continually pushing agencies to accept (FYI, one of the most common questions I receive is ‘what are other agencies doing?’). Of course, confidentiality matters, but nothing beats real-time market knowledge.
Support: I can't speak for other legal professionals, but I will probably decline support for a document produced by AI. This isn’t ego or hurt feelings, but because the investment needed by the agency always outweighs the benefit of starting again with effective and compliant terms. You should consider where this expert help might come from if you get in trouble, and what it might ultimately cost you.
A Pragmatic Lawyers Take
Lawyers aren’t immune to AI risk – they're expensive and often still charge for time rather than results. Like recruiters, AI is increasingly taking on repetitive, administrative, and data-driven tasks that lawyers may still charge for.
As a business owner myself, I utilise AI to enhance efficiency and save time on client work that adds real value. I never rely on it as a complete replacement for fundamental business requirements, such as binding legal terms.
I recommend that recruiters combine the efficiency of AI with the critical oversight of a lawyer who understands recruitment. This way, you will still be best placed in 2025 to mitigate key risks and ensure your legal documents are robust, legally sound, and tailored to your specific needs.
