Just closed a deal and ChatGPT did my write ups

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April 26, 2023

by a professional from Georgia Institute of Technology in Atlanta, GA, United States

Just closed on a proprietary deal (knew the owner). Used ChatGPT for the LOI and also the agreement. It was not an extensive agreement but enough to get both side lawyers happy for the final closing. For the lawyers and legal advisors here, what do you say the cons and pros are to this approach?

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Reply by an investor
from University of Pennsylvania in Charlotte, NC, USA
Interesting. And congrats on your deal!

Would love to hear from the lawyers here what they think, but as a principal and advisor I have trouble seeing how this would work, except in the simplest of purchase agreements in which case you or a lawyer could take one of dozens of lawyer-written-and-vetted templates off the shelf. How would ChatGPT know what reps and warranties, schedules, closing conditions, working capital definitions, etc,, etc. would be applicable to a specific deal? In general unless you have deep experience with purchase agreements, how would you be able to determine whether ChatGPT included all the important provisions, didn't expose you to non-obvious risks, etc.? Personally I've used it (ChatGPT-4 a fair amount (not for legal agreements) with highly variable results - significant errors of fact, hallucinations, etc..

As others have commented, I'd love to see the redacted agreement. If you're willing, please DM me.
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Reply by a searcher
from University of Rochester in Dallas, TX, USA
I struggle to see how machine learnings could be that useful in a merger agreement. There are endless templates to use already, and how you fill in the specific details should be based on the risks unique to the company and your personal situation, not statistical averages based on other agreements. My understanding is also that machine learning algos also have no idea if they are making mistakes since it's a statistical analysis void of logical reasoning. This seems like it could be dangerous pitfall when drafting legal language, cause even if you are specific with what's important to you, it might not output the correct language and if a lawyer doesn't review it'll be hard to tell, so in the end your legal costs will probably be the same. A lawyer will also be better positioned to tell you what risks you should care about. If someone has more knowledge on the technology and a different view, I'd be interested in your perspective.
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