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What Are the Risks in Using Generative AI to Draft Business Documents?

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In recent years, there has been an increase in the use of Generative AI in business documentation drafting. From crafting responses to unsatisfied customers to formulating internal company policies, using Generative AI for drafting documentation has streamlined many business operations. But there is a catch. While AI offers speed and convenience, businesses must be aware of risks when relying on it to draft business documents. This article will explore the potential dangers of using Generative AI and provide strategies to mitigate the identified risks. 

What is Generative AI?

Generative AI stands for Generative Artificial Intelligence, a type of artificial intelligence focused on creating new data. This can include creating text for your business documents or other forms of content. The process involves using a set of algorithms, such as deep learning, to generate unique, varied, and new data. You can then use the generated data in various art, media, and entertainment applications. 

Generative AI is a rapidly developing and growing field with new developments and applications constantly being discovered. It is a powerful tool that is growing from infancy. 

For example, you can ask Generative AI to draft a business document on your hiring procedures at your company. These customised templates must be carefully reviewed to show that they are accurate and reflect what your company really wants. 

In New Zealand, no specific laws exclusively address using Generative AI for drafting business documents. However, you should consider existing laws and regulations that cover privacy, data protection, consumer rights and contract laws including:  

  • the Privacy Act 2020, as you should be aware of the potential risk of privacy breaches through the use of Generative AI; 
  • the Fair Trading Act 1986 and Consumer Guarantees Act 1993, where AI-generated documentation must adhere to provide accurate and fair information to consumers; and 
  • the Contract and Commercial Law Act 2017 governs contract formation and execution, meaning if your business documents involve contractual agreements, they must meet the legal requirements for a valid contract. 

For business documents, there tends to be a heavy focus on precise legal language and specific terminology relevant to your business that needs to be incorporated. Therefore, to ensure that these are all covered and compliant with the law, you should be aware of the principal risks of generative AI for drafting business documents. 

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Risk of Incomplete Understanding and Bias 

Generative AI relies on patterns and data to generate content. This means it will not understand every aspect of your business and what you require, nor the legal nuances and specific terminologies required. 

Business documents can become quite complex and often require a deep understanding of local laws, business practices and the ultimate goal of the document. AI may need help grasping these intricate details, leading to inaccuracies or improper terms in your business documents. 

Furthermore, bias can creep into your AI algorithms as the Generative AI systems make decisions based on training data, including human prejudice and stereotypes. 

An Example

For example, you ask Generative AI to draft business documents for upcoming hiring roles and job descriptions. If the training data includes historical job postings favouring certain demographics or exhibiting gender-biased language, the AI might generate documents that unknowingly perpetuate those biases. 

This highlights how biases in the training data can manifest in AI-generated content, impacting the fairness and inclusivity of business documents. 

Risk of Privacy and Data Breaches 

Using AI to draft business documents raises ethical concerns, especially regarding data privacy, as they will gain access to confidential or personal data. AI algorithms may access and analyse sensitive information to generate content, posing data breaches or misuse risks. 

In New Zealand, where privacy laws like the Privacy Act 2020 are stringent, businesses must exercise caution when utilising AI to handle sensitive data. This can lead to severe legal implications, alongside reputational and financial damage. 

Risk of Misinterpretation and Customisation Challenges 

Business documents often require personalisation and customisation to suit the unique needs of each case or transaction. 

Generative AI might lack the ability to interpret specific business requirements accurately, resulting in generic or insufficiently tailored documents. This limitation could undermine the effectiveness of contracts or agreements in addressing the precise needs of the parties involved.

Generative AI cannot replace critical thinking and the knowledge professionals bring to document drafting. 

Risk of Misinformation 

While AI can expedite document drafting processes, it may only sometimes produce reliable or accountable outcomes. Errors or inaccuracies in AI-generated content can be challenging to trace back to their source, potentially leading to disputes or legal challenges. 

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Businesses must consider the accountability aspect and be prepared to take responsibility for any discrepancies in documents created by AI.

Mitigation Strategies 

There are various mitigation strategies that your business can utilise, including the following:

  • form a specialised human team to revise AI-generated business documentation, leveraging expert oversight to identify and correct inaccuracies. This will require continuous updating and improvement to refine these documents better to suit the changing business requirements and environment. However, it is important to note that these Generative AI risks will always be present as they are not human; 
  • seek legal advice if the business documentation involves legal matters; 
  • stay updated with the evolving AI regulations and ensure legal compliance when utilising Generative-AI for business document generation;
  • include proper Generative-AI use training within your company so all employees know its risks across all business units; 
  • conduct testing to identify vulnerabilities and weaknesses in your Generative AI; and 
  • if you have the means, you can also develop your own internal Generative AI software to upload and store confidential information in a secure location. 

Key Takeaways

Generative AI has many benefits for businesses, but there are always unprecedented risks that need to be taken into account and considered for the long-term stability of your business. Companies need to balance leveraging AI capabilities and integrating human expertise to ensure the accuracy and reliability of their business documents. 

If you need assistance with the use of Generative AI for drafting business documents, LegalVision’s experienced business lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 0800 005 570 or visit our membership page.

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