By Jamie Lasaki
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min read
In partnership with
Artificial intelligence is now, and for many has been, firmly embedded in the way businesses operate. Even if you don’t know it, you’ve used one form of AI or another: from call handling, to website chatbots or some app on your phone.
When it comes to business, we are seeing that tools such as Copilot and ChatGPT are increasingly being used by business owners to move quickly and reduce costs. While these tools can be highly effective when used appropriately, our recent experience highlights a growing risk: overreliance on AI without a full understanding of the legal consequences.
Importantly, the clients we support in these situations are not inexperienced. They are often highly capable and commercially astute individuals. However, they are not lawyers, and the risks they face tend to arise not from a lack of intelligence, but from a lack of legal nuance.
One recent example involved a business owner seeking to grow through acquisition. She had agreed commercial terms in principle with a target company and used an AI tool to generate what she believed to be a set of “heads of terms”. The document broadly reflected the commercial discussions that had taken place, and on the face of it appeared to her entirely reasonable.
However, upon review, it became clear that the document was not a non-binding expression of intent, but a legally binding share purchase agreement. Had it been signed, our client would have been committed to acquiring shares in the target business for hundreds of thousands of pounds before completing any due diligence and without resolving a number of key commercial issues. In reality, the deal ultimately fell through at the heads of terms stage, highlighting just how far away the parties were from being ready to commit.
In another matter, a client approached us for what was described as a “quick review” of a commercial agreement. The document had again been prepared using AI and appeared, at first glance, to be straightforward. However, a closer analysis revealed a number of significant issues, including an exclusivity provision that would have severely restricted the client’s ability to work with other parties and, in effect, limited her ability to generate future income. There were also gaps in the document where key commercial points had not been properly addressed.
These examples are not isolated. They reflect a broader trend where speed and accessibility are being prioritised over careful legal, and sometimes tax, considerations.
AI can be a powerful tool, particularly for early-stage thinking. However, it cannot replace the judgment, experience and contextual understanding that professional advisers bring. The difference between a document that reflects a commercial intention and one that creates a binding legal obligation can be subtle but the consequences can be significant and long lasting.
For business owners, the message is clear. AI should be seen as a starting point, not a substitute for professional advice. Taking the time to have key documents reviewed by professionals, particularly where significant financial or strategic decisions are involved, can prevent costly mistakes and ensure that your business is properly protected as it grows.
To discuss any legal matters with our team, contact David Gordon via david.gordon@healys.com
