Legal Review with AI

Speaker A: Welcome to the Humanize it podcast where we keep the human first. Each week, hosts Adam Walter and Skip Zigler will guide you through topics on how to empower your business in this new world being disrupted by AI. Let's get started with today's episode. Good morning everyone. This is Adam Walter and Skip Zigler with Humanize It. I uh, been so deep in AI recently I kind of lose track of when I need to record these. So um, today we're handling a little bit of a more boring topic and that is legal review with AI. How should you do it? So I've seen people like, they'll just, they'll take ah, a legal document like a terms of service or ah, um, a legal review or an agreement and it'll throw it into AI and say, please tell me what I need to know about this. Mhm. That's kind of the wrong way to look at this people. So I've been doing this a lot lately and you have to like work with the AI. And one of my favorite ones to use is claude. For those of you guys have been listening for long enough. And if you create a Claude project is the way I do it and I feed my legal reviews into there. But also when you do that, put your like operating agreement in there, put your terms of service and all of your other context that protects you.

Speaker B: Yeah.

Speaker A: But the things that protect you in there that your attorneys have written or you've had built over the past 20 years. So then Claude knows what your risks are, what you're trying to uh, you know, not disclose and that should help you a lot. But you still need to review. So you say in context with my, with my operating agreement or with my terms of service, please review this agreement and make sure there are no red flags specifically look for indemnification and these things you still need to ask the right questions and let it flag them for you. And here, here's the key point people, when using AI, when it makes a recommendation, go back to the original document and review that. So if it says, hey, section 7 1A looks like it's one sided, oh cool, go back and read it for yourself.

Speaker B: Mhm.

Speaker A: And figure out what actually is going on there. Because maybe the AI missed the context or maybe the AI, um, you know, is worried about something you're not like, oh, that's not a big deal, I can deal with that.

Speaker B: Yeah.

Speaker A: And so ask questions of it. Be like, what do you mean identification? Can you explain identification to me and have the AI do that for you? Because that is how we make good statements. And then when it's like, okay, well, how do I clean this up? Have it recommend verbiage.

Speaker B: Mhm.

Speaker A: Also, you need to make sure that like, Skip is in Texas, I'm in Nebraska, we have different legal systems. And so add that context and usually the AI will pick up on that from your operating agreement or your terms of service. Say, like, you're operating out of Nebraska as a headquarters and those things matter. But, uh, just in case it doesn't, just be aware, like, is this okay for Nebraska? Is there any recommendations you have for current items in Nebraska?

Speaker B: Well, when it looks at those agreements, I mean, you can have a valid legal agreement, but it might not be very good for you. Right. Um, and it might not even be disproportionately weighted between the other party and you. You really need to define what your goals are. And I have. I've been doing this a lot lately with AI, uh, agents. I usually kind of leave it three, because I come down to threes. I don't know why, but anyway, I, I always leave three bullet points of, uh, hey, these are the three things that are most important to me. And I usually try to prioritize those. So as the AI goes through there, it's looking at things and it might find a clause or something that says, you know, this could be a concern, but this is not even on Skip's priority list. All, uh, Right. So it's probably not something I need to worry about. And another clause in there might be kind of minor, but if it's at the top of my priority list, then the AI agent's going to get in there and talk about that more. And that's what you need to really focus on. Focus it on what's important to you. What are you trying to get out of these legal agreements? And in, uh, that context, like Adam mentioned with the CLAUDE project. That is great because you can throw all these other resources in there without typing all this stuff. Um, you know, you can, you can create this room of information and let CLAUDE operate within that room. And that can save you a ton of time.

Speaker A: Yeah. And money. Right. Uh, I'm not saying do the official REDLINE review, but you can come up with suggested document and you can do several iterations before it gets to your attorney. Mhm. So that when they get it, it's an easy read. So you still want to use people you can cut out and you can get what you want done a lot easier and talk to it like a human. Say, like, I'm really worried that my client will terminate service early. And, um, be open with that. And like, oh, in that case, you know, we'll put a, uh, clause in terms of service, whether it be a penalty, given that you're in Nebraska. And, uh, what it wants to do is this. We can put this in there, which will incentivize them not to terminate early. It'll make sure it's really clear on signing that they cannot terminate early. And let's have this conversation and let's put it into a legal format. And then when you, your attorney reviews it, he can go and go, yeah, that looks great. And so there won't be red lines coming back to you, and there won't be that expensive back and forth where you're paying 150, 300 to $600 an hour for an attorney to do what a paralegal can do. You're essentially replacing the paralegal and that you're, you're doing a quick review and getting answers, and you're getting them really fast. So, you know, carve out an hour to make sure that you have this in place and ensure that this is where you want to go. And it's covering the things that you as a human being want covered. It's just gotta turn it into the fancy, you know, legalese.

Speaker B: Yeah, that, uh, and on those. Yeah. So the AIs. The AIs and lawyers must be, I don't know, they're kind of the same cut. Right. They like some of the longer languages. Right. And I think putting those in more succinct terms, um, is a valid approach, uh, especially when you're working closely with your, your lawyer. Right. And if you come up with a clause or a little sentence in there that you're like, yeah, this is kind of saying the thing that I'm wanting. But it's, you know, I'm thinking one sentence and it's, it's got a whole paragraph in here. Go ahead and put in your one sentence. All right. Put that in there. Now here, here's the real key to that. You have to have, you know, your attorney review that. All right? Uh, but you can succinctly say, hey, this is what I'm wanting to do. And if your attorney feels it needs more of the legal language around that, that's their skill set, that's the value they bring. Right. They can add that in there. But sometimes a really, really simple sentence is very, very valid. It removes all ambuigity. You know, See, I used one of the legal terms uh, it removed, you know, all these other sort of phrases, but it makes it really, really clear. And that way when your lawyer reviews that, it knows what's really, he knows what's really important to you. So you know, don't, don't be afraid to edit what your AI agent may come up with. So it's, um, it needs to be a collaborative process. Don't, don't just think I'm going to turn this over and it's going to spit it out and that's going to be enough. No, you still need to be involved.

Speaker A: Yeah. And it's very frustrating. I'll get something back or I'll see something back from somebody where they just. It's. We used to have a name for these people back in the day. So we need a new name and I think I'm going to invent it right here. All right. Uh, so back in the day we had these sysadmins and these people who ran networks and they would go out to scripting guys or they'd go out to the site and they would grab a, they would Google for a PowerShell script or for a VB script that worked and did what it wanted to and it would copy and they would paste.

Speaker B: Yep.

Speaker A: Without any thought.

Speaker B: Yep.

Speaker A: And we call them script kitties. They could not write a script themselves.

Speaker B: That's true.

Speaker A: And maybe we need to start calling people AI kitties because it is insanely naive to go and, or arrogant or. What do you want to say? Like to go and trust an AI so much that you will, you will throw a legal document in there, have a review and spit out revisions and then paste those back in to somebody, uh, to review other than you. Like, you still gotta be involved. You've gotta understand what it is you're signing and why. These were red flags. And if you don't want to go through that pain, then don't do the process. Yeah, that's what I say. Like work in a context like, ah, a cloud project or somewhere where it understands your background because you need to understand that background too. Yes, it's boring to read through operating agreements. Yes, it's boring to read through SOPs and contracts and agreements. You need to understand them and at least. And you'll get better at it. You'll get it. So like where you start skimming pretty fast because you understand where the parts are that matter. Like, oh, this is filler, this is fluff, this is, oh, here's what I care about indemnification, that's important to me. And and be okay with that.

Speaker B: And so go ahead and bring in other AI agents. You know, that's, uh, another powerful tool, is to have one, uh, agent review the output from another one. Uh, I'm doing a ton of that, ah, right now in our platform. And the interesting part about it is, um, I'm using a tool and the back end of that tool is anthropic. Right. And I'm getting really detailed information out of it. I take that and a variety of things, but most often because it's most productive, I take it to Claude. Right. And Claude is reviewing that information. And it's the same engine on the background. But I'll get not conflicting, but, you know, constructive M disagreements in how things, you know, should be focused or prioritized. And you kind of have to sort through that. They're both valid. All right, but then I need to look at that and decide, okay, these are both correct technically, but which one fits the. The context of what I'm trying to do? And, and sometimes that can be very enlightening as well, is understanding, you know, hey, yes, these are both technically correct, but which one applies to me the most? And life is still non binary. Right. Uh, we work, you know, with, with tech in a very binary manner, but when we get into everything else that we're actually doing, there is a lot of subjective qualities to it. And so understanding what you want, what your priorities are and making sure that's the focus is kind of your job in handling managing an AI, uh, agent. Is it doing the things that you want, not necessarily things that are just technically correct.

Speaker A: Yeah. And, uh, that's important technically. We talked about this a couple sessions ago. It is technically correct to plug in a Cap 6 cable between two ports. That's technically correct. But if you use the yellow one, somebody's going to yell at you. You did nothing technically wrong. And that context matters. And that's why I say load those documents in first so that you can have those answers. Use your own library. So if you're using Google, Gemini or Copilot, these largely should be involved. But you should ask the copilot, like, make sure that you reference this compared to my operating agreement from 2016 or whenever you created your operating agreement, make sure it's in the best interest of my company, uh, ensure that we are not, uh, held liable for any breaches of data. Ask these questions and make sure that they're applied to your state and city. Because the rules are different between states. PII is defined differently. M. And so we gotta make sure that we're smart enough to ask those questions. And then when you, when you really don't know and you get it to where, like, okay, I think this is what it'll work now send it to your attorney and have them do a redline review. Have the human finish it out. And we refer to this as human in the loop. Right. So that your AI isn't automatically doing everything. And every once in a while I get somebody on a call when I'm doing a demo and, and be like, I just want AI to make this easy. Like, okay, how? Well, I haven't really thought that through. Yeah, that's, that's the issue is that AI isn't a magic bullet. AI is a companion. So when you're doing legal review, it is a companion. It's helping you make this easy. And it does make things really easy. Unfortunately, if you're more of a script kiddie mindset, you'll have a review the document, apply changes, send back. Like, no, that is ignorant and really dangerous.

Speaker B: Yes.

Speaker A: Because you didn't review the document. You just assumed the AI had your best interest in mind. And it'll technically make it correct and it'll send it back.

Speaker B: And when you're providing that context, don't, um, don't just assume that it got everything correct. I don't know how many times I've seen something and gone, hmm, I don't know about that. And you know, I'll put in a statement like, are you referencing my priority list that we defined a little while ago? And so many times I've seen AI come back and go, oh, I'm sorry, you're right, I totally forgot to do that. All right, um, and you kind of have to keep it on point sometimes. You can't just assume that it, you've done it once. It's always going to work that way. That is not absolutely not the case. And so you need to pay attention to the details on those, those items.

Speaker A: But for personal use, this is kind of nice because if somebody sends you a document to sign, like, please sign this. Uh, you get those ones that are from that in your email. Like DocuSign request comes in copy and paste and throw it into copilot and say, hey, um, please review this. I'm, uh, signing to buy a car or whatever, and I want to make sure that I have an out in case the car is a lemon. And so let it help you. And, um, and when you, when you do that, you can now have a little bit more assurance or maybe it'll Tell you like, hey, here's the situations you're in. Be aware that when you walk into this deal, buying this car that you only have five days to, you know, bring it back to the dealer. Like that's their clause. And so you don't. Like, there's a lot of wording there. So have it break down. Like, please explain this docus, uh, document to me in a way that makes sense. And so when we can say things like that, then the co pilot, the um, the AI agent becomes very useful.

Speaker B: And yeah, there are a significant portion of a lot of legal agreements that they're just in there, right? And they're just kind of one of those accepted chunks of data that, that move around. And to be honest, they, they probably don't really apply or have much bearing on what you're trying to do. And sorting out the parts that are impactful versus the ones that aren't is where AI can really, really help you out because many of these documents are incredibly long. Um, back in the early 2000s, um, my wife and I were doing some of the real estate flipping sort of stuff. We kind of got into that just a little bit on the side. And um, we, we bought this house and we're signing, uh, all the, the documents and if you ever a closing like that, you know, it's, it's a, you know, a good inch worth of paperwork that we're going through. And I can skim documents pretty quick. And so, uh, we're taking a few minutes. My wife and I are kind of a team there. She's, she's kind of, you know, running interference, uh, with, you know, questions and conversations and different things. And I'm over there just, you know, speed reading through this. And our intent of was to purchase, renovate and sell. Right? But there was a little clause in this agreement about rentals. All right? And I was like, you know, that is not our priority, but it is Plan B on this. And if I sign this document as is, then that, that removes Plan B from our, our, our business process here. And it was just a great catch. I mean, to be honest, it was very fortunate on, on my side because it was a lot of information. But finding that one little sentence or, uh, one little paragraph in there, um, that could potentially affect, you know, what we wanted to do was a big game changer because that property out of the handful that we did, is one that we, yes, we decided to keep as a rental for a little while. And so getting that worked out provided Plan B for me on that one So I could, you know, have other options and just identifying those elements that are important to you and allowing you to focus on that and not necessarily focus on all the other parts that really don't apply or not important to you is where you'll get the most value out of your review time with the agents on these.

Speaker A: Yeah. And I really want people to know, like, again, it's a companion and it's a time saver. It's that friend you have that's really good. Maybe they're an attorney, or maybe they're just, um, you know, business savvy. That is going to help you understand. Like, okay, here's kind of what you need to know about this, uh, account. This is what you need to know about these, um, things. And, um, it's not legally binding. Right. They're just trying to give you good, solid advice. Like, if you come to me and you ask me like, hey, how do I set up an operating agreement for a business? I'd be like, okay, here's generally what you need to be looking at. Um, but I'm not an attorney. What you, what you need to do is you need to go talk to your attorney and have them help you, um, help you re. Re. Revise this in a smart way for your industry. I won't even say go talk to any attorney. I'll say, go talk to attorney specific to your area, uh, of expertise. Like, if you're a technology company, get a, uh, an, uh, attorney who's familiar.

Speaker B: Yes.

Speaker A: With technology, because we have a different set of rules and the AI will help you find them. Like, is there any attorneys in the area that can help me do the legal review on this once you're done? And like, oh, yeah, here are several law offices, Barry Law, blah, blah, blah, that actually specifically work with or have AI divisions or have, uh, you know, technology divisions that can help you with this. And so being able to put things into context like that are important. Don't just blind, especially with legal review. Don't just blindly trust AI output. Read it, proofread it, act like somebody who's just very naive, who's very good at their job, competent, but they still need somebody to say, why does this document exist? So when you get a. So to sum all this up, when you get a docusign, or you get an operating agreement, or you get something you have to sign, run it through an AI first. Especially one that already has some of your previous legal documents in it that can say, this is good, this is bad. This is what you need to look out for whether it's signing, uh, for a house, a, ah, car, a uh, simple NDA. Just pipe it through your Claude instance that has your legal documents in it and get it to answer the questions like what should I be worried about? Or any major red flags for Nebraska. And then read it where it suggests.

Speaker B: Yeah.

Speaker A: And then if you have concerns like, ooh, that doesn't sound right, talk to your attorney. And when you do that, you're going to come out way ahead and you're going to save a ton of time and you're not going to be second. One of those situations where you bought a car, you didn't know that the window was five days and now it's day 12 and you've got a major failure in the car. They're like, you can't bring this back because you bought it as is and you're past the window and there may

Speaker B: be agreements where it's not something that you're going to change. All right, there are some of those agreements out there. It's like, hey, here, you agree to this or you don't. Right. Uh, and there's not much negotiation there, but there can be a lot of details in there and the AI agent can say, hey, okay, if you're going to sign this, just be aware of these things like the five day window that you were referencing there. Um, and sometimes those details are buried in, in the fine print. And so going forward with these agreements, even without changes, being aware of milestones or key elements that are in there will help you operate under that agreement much more efficiently. So that someone isn't telling you. Well, I'm sorry, but you know, paragraph, you know, X, subsection 42 says you can't do that and you're kind of blindsided by it. So you know, keep that handy, uh, just so you know exactly what you're agreeing to.

Speaker A: Yeah. And again, use this. Especially if like you can't afford an attorney. It's the next best thing, I guess. Um, there's a lot of you out there who cannot afford a $300 an hour Attorney just to do a review on a truck agreement or on a non disclosure or a, an employment agreement. You get a new job.

Speaker B: Yeah.

Speaker A: Again, use this advice we've given you. Create the context, throw your document in there and ask it for red flags. Ask for anything you should be concerned with as somebody who has a family or who is concerned about, uh, just put your concerns in as a human being and let the AI help you understand that. And then when you go Back to them you say, hey, I got the terms of service, or I got the, uh, employment agreement, or I got the agreement for the truck. I'm concerned about this, the five day window. You know, there was some oil leaking or it's a high mileage car. I'd love to have a 10 day window instead so I have time to take to my mechanic and bring it back. That's how you negotiate, that's how you get ahead. Yeah, hey, I'm concerned about this verbiage. Um, and you sound really smart too, right? But it's because you could, you express what you had. You put it into context and then you actually read what was going on. And so now you can have more protections in life and you get some of those benefits that people who have attorneys working for them do. So please review this contract. Uh, give me lines that I need to go back and talk to. That's what attorney's gonna do. They're gonna say, you need to go back and talk to them about this. This is a no go. You do not want to sign this. And an AI will do that really well for you. I know this is a really boring topic today, people, but it's a really handy one. We all have to do legal review. We all have to sign contracts eventually. And we all. I've seen even myself, I've blindly sign and, uh, just assuming everybody's operating in good faith now you can actually go in and you can advocate for yourself. Now you can actually say, well, I don't like this area. Can we, can we change this? Or is there any way I can have it in writing that I am able to bring this back in 10 days in case there's an issue after my mechanic looks it over? You can do those things. They're more than happy to do those things. You just gotta ask. Yeah. And you don't ask if you don't know what the terms are.

Speaker B: Right. And don't feel afraid to. Especially when you're dealing with larger organizations. Uh, you know, the overall contract that you're signing, there might not be any wiggle room. I mean, they've had their whole legal team. They're like, no, this is our binding contract. We're not changing elements just for you. Um, but there are additions that they can make to that and it in effect can give you more options. So if there's a specific window for something, uh, you may be able to get an exclusion on one particular area with a greater window of opportunity, whatever it is, there are things that you can add to Those, uh, without necessarily changing the core agreement that is being used. So don't hesitate to put out some negotiation elements on that if you need to.

Speaker A: Okay?

Speaker B: Yeah.

Speaker A: And so just be. Just allow this, like, be okay with this. And this is a very helpful thing. Just don't blindly trust it. That's my final advice here. All right, everyone. I do like this topic. It has been really handy for me the last couple of months. Um, you know, I'm usually the person who, like, reads through the policies, and I look through, like, different sections that are usually of concern to me, but my brain starts fuzzing out after a little bit. This has really helped me, like, gain focus and add in context and say, okay, I can write policy. I can read policy. I seem to kind of have a little bit of assistance on where to go, what the concerns are, because a lot of it's just fluff. A lot of it's copy paste, you know, fluff for different clauses. But there's the parts that you really do care about, and AI is really good at calling those out and allowing you to review them. Use it for your home, uh, reviews. Use it for your Terms of Service. Use it for anything you need to sign. Just put it in context with your other legal documents. All right, everyone, it was nice talking to you, Skip. We'll see you all next week.

Speaker B: All right, see you.

Speaker A: Thank you for joining us today. If you like our podcast, please subscribe, comment, and check out our Facebook page. Also, encourage others who want to see it transform to subscribe as well. We could always use your help.