AI in Contract Drafting: Opportunities and Challenges for Young Lawyers

AI can now help draft a contract in just a few minutes. Many law students and young lawyers are already exploring AI tools for legal research, summarising complex information, and drafting assistance. However, a clause that looks polished on screen does not necessarily offer adequate legal protection to a client. 

That is where your own drafting skills matter. PW Legal Skills offers the Contract Drafting Advanced Program, which focuses on drafting agreements, reviewing contracts, redlining and working with different Legal documents. These legal skills can help you check AI-generated drafts with more confidence instead of accepting them as they are.

Where Can AI Help and Where Do You Need to Be Careful?

Before using AI for contract work, it helps to know what it can do well and what still needs your attention. 

How Is AI Being Used in Legal Work Today?

AI is becoming increasingly common in legal work, with law students, legal professionals and law firms using it to support drafting, summarisation and contract review. Here are some examples of its adoption in India:

1. AI Adoption Among Legal Professionals

Manupatra’s 2025 survey of 227 Indian legal professionals and students found that 54.7% had used AI for drafting support and 65.7% for summarisation. The figures reflect the survey respondents and do not represent the entire legal profession.

2. Faster Contract Summarisation at Khaitan & Co

The law firm reported a 50–60% reduction in contract review time in certain large projects. It also reported efficiency gains of 50–75% in document list reviews and change-of-control provision analysis.

3. Contract Generation at Trilegal

The law firm has been experimenting with contract generation automation to support legal drafting processes.

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How Can AI Support Young Lawyers in Contract Drafting?

AI can support young lawyers in several stages of contract drafting by reducing repetitive work and making document reviews more efficient. Here are five ways it can help:

1. Faster First Drafts

AI can prepare an initial draft of an agreement such as a Non-Disclosure Agreement or a service contract. You can then edit it, add missing terms and adapt it to the situation. Think of it as a starting point, not a finished document.

2. Easier Summaries of Long Agreements

Reading a 40-page contract for the first time can be difficult. AI can summarise the main obligations, dates and conditions, which can help you understand the document before you review it in detail.

3. Comparing Old and Revised Versions

When a contract goes through several rounds of changes, spotting every difference manually takes time. AI can point out what has changed so you can focus on whether those changes are acceptable.

4. Spotting Missing or Inconsistent Clauses

AI can help you notice if a payment clause refers to a term defined differently elsewhere, or if a standard clause such as termination is missing altogether.

5. More Time for Advice and Analysis

When routine tasks take less time, you can spend more of it on interpreting the law and understanding what your client needs.

What are the Challenges of Using AI in  Contract Drafting?

If AI is so useful, why can’t you simply trust it? Manupatra’s survey found that only 4.1% of respondents fully trusted AI outputs without human verification. Here are the main concerns you should keep in mind.

• Incorrect or Made-Up Content

In the same survey, 58.1% of respondents were concerned about unreliable output quality, and 51.2% about hallucinated or incorrect content. An AI tool may refer to a section that does not say what it claims, or use legal language that sounds right but is wrong.

• Limited Understanding of Indian Law

Around 42.4% of respondents pointed to the lack of India-specific legal context in AI tools. A clause based on global practice may not suit Indian requirements.

• Confidentiality and Data Privacy

Contracts often contain confidential client details. Uploading them to an external AI platform can create privacy and security risks, which 47.67% of respondents raised as a concern. Law firms are also working on internal AI policies and lawyer training for this reason.

• Clauses That Do Not Fit the Client’s Needs

An AI-generated indemnity or termination clause may read well but still not reflect what your client actually wants commercially.

• Depending on AI Too Much

If you accept every suggestion without thinking, your own drafting judgement may not develop. Responsibility for the final contract stays with you, not the tool.

Why Does Responsible Use of AI Matter?

Is there any guidance on using AI responsibly? The India AI Governance Guidelines (2025), issued by the Ministry of Electronics and Information Technology, encourage AI adoption while highlighting the need to address several concerns. 

• Bias: Ensuring AI-generated content does not produce unfair or discriminatory outcomes.

• Transparency: Making AI-generated outputs understandable and identifying how they are used.

• Accountability: Ensuring humans remain responsible for decisions made using AI.

• Privacy: Protecting confidential client information and personal data.

• Security: Preventing unauthorised access to sensitive information and AI systems.

These are broad guidelines rather than specific rules on contract drafting. However, they highlight why human supervision matters. Before including an AI-generated clause in a final agreement, you should check its clarity, fairness and suitability and ensure you can explain its purpose.

How Does the Indian Contract Act, 1872 Help You Check AI Drafts?

The Indian Contract Act, 1872 provides key legal requirements that young lawyers can use to assess whether AI-generated contracts are valid and whether their clauses meet the necessary legal standards. Here are the important sections to check: 

• Section 10: What makes an agreement a valid contract

• Sections 13 and 14: Consent and free consent between the parties

• Section 23: Whether the consideration and object are lawful

• Section 29: Whether the meaning of the agreement is certain or can be made certain

• Sections 73 and 74: Compensation for breach and stipulated compensation

For example, a payment or termination clause may look neat but leave the obligations unclear. Checking it against these provisions can help you spot the problem before the contract is signed.

How Can You Use AI Responsibly as a Law Student?

Using AI responsibly requires a balance between technology and your own legal knowledge. Here are a few practical habits to follow while using AI for contract drafting: 

• Treat AI Output as a Draft: Read every clause and edit it before using it.

• Verify Legal References: Check section numbers and case references against the original Act or judgment.

• Protect Confidential Information: Avoid uploading client or sensitive documents to external tools unless the proper permissions and safeguards are in place.

• Learn the Basics First: Understanding how contracts work makes it easier to notice what an AI tool gets wrong.

• Keep Practising Manually: Drafting clauses yourself helps you build skills that AI cannot replace.

AI can help you work faster, but it cannot replace your understanding of Indian law, client requirements and contractual risks. The more confident you are in the basics, the better you can use AI as a support tool. If you want to build that confidence, PW Legal Skills’ Contract Drafting Advanced Program will help you practise drafting agreements, reviewing contracts and redlining, so you can review AI-assisted drafts with greater care.