Beware of the Risks: The Hidden Dangers of Using ChatGPT for Legal Documents

Published on

October 6, 2025

The use of AI (or Artificial Intelligence) is becoming a major topic of discussion across a wide range of industries. As this technology continues to evolve, many are asking: when is AI appropriate, and when is it truly useful? While generative AI platforms can offer some valuable assistance — particularly in explaining general background or generating ideas for consideration — they are not suitable for drafting legally binding documents or creating form contracts.

When it comes to important legal documents such as Wills, Real Estate Contracts, Service Agreements, and others, relying on AI tools like ChatGPT can lead to serious mistakes. These tools are not trained legal professionals and cannot guarantee accuracy, compliance with local laws, or legal validity. For example, a Wisconsin business will need a contract customized to Wisconsin law. A document may need to be customized even further, as local municipal or county rules may apple. Even small errors in legal language or structure can have major consequences, including unenforceable contracts, court disputes, or financial penalties.

For this reason, it is strongly recommended that individuals avoid using AI to draft legal documents. Instead, these tools should be used cautiously and only as supplements — not substitutes — for the guidance of a licensed attorney.

The Dangers Explained from AI

Even Chat GPT recognizes it has its limits. When asking Chat GPT about the dangers of using AI to write legal documents, it drafted the following criticisms of itself:

Lack of legal accuracy: AI is not a trained lawyer. It may misinterpret legal terms or provide outdated information
Jurisdictional issues: AI does not account for the different laws in different areas of the country
No liability or legal responsibility: If AI provides false information the client and or lawyer bear the consequences
Missing Legal Nuance: AI may generate legally ineffective or risky language
Confidentiality risks: Uploading sensitive information may breach confidentiality obligations even with the privacy safeguards
“Hallucinations”: AI may generate nonexistent laws, cases or clauses

This is important to note because even the AI services themselves, including ChatGPT, explicitly caution against using them as a substitute for professional legal advice.

The Legal Risks Associated with AI

The biggest concern when using a Generative AI platform when drafting a legal document is reliability. When researching the topic, there are many cases where a lawyer or client used AI to generate a legal document and the AI platform created its own case, or own opinion on the law. In one case using AI it generated 9 citations, 8 of these citations were false. This then makes the document invalid.

Another significant concern with using AI in legal contexts is that, unlike a trained legal professional, it often lacks the precision, reasoning, and attention to detail required in legal writing. Legal documents rely on a specific tone, structure, and specialized jargon — elements that AI tools may overlook or misapply.

The Consequences of Using AI

Using AI tools like ChatGPT to draft legal documents without professional oversight can lead to serious consequences—both financially and legally. While AI can generate content that appears convincing, it does not have the legal judgment or accountability of a licensed attorney. As a result, the use of AI-generated legal documents can expose individuals and businesses to significant risks, including:

Fines and Sanctions: Courts have the authority to impose fines or sanctions when parties submit inaccurate, misleading, or non-compliant legal documents. If an AI-generated document contains fabricated case law, misapplies statutes, or lacks required elements, it could be deemed frivolous or invalid—leading to penalties against the party that submitted it.
Liability for Opposing Party’s Attorney’s Fees: In some cases, submitting defective or misleading legal filings may result in the court ordering the party responsible to pay the other side’s attorney’s fees. This is especially true when the AI-generated content causes unnecessary delays, confusion, or forces the opposing party to spend time and resources addressing errors.
Reputational and Professional Damage: For legal professionals, relying on AI without proper verification can result in disciplinary action, including suspension or disbarment. For individuals and businesses, submitting AI-generated documents may damage credibility in court or in negotiations, potentially harming a case or business relationship.
Expensive and Time Consuming Litigation: While a Wisconsin resident or business may save a few hundred dollars on using AI to draft a Will or a contract, for example, improperly drafted documents often lead top litigation, which can take years and cost tens of thousands of dollars.

Our Recommendation

At Schloemer Law, we strongly advise our clients not to bring in AI-generated drafts of their legal documents — especially contracts. In most cases, we end up starting from scratch due to the issues outlined above, including inaccuracies, missing legal context, and formatting problems that can’t be easily corrected.

To help us better understand your needs and ensure your document is tailored properly, we recommend the following approach:

What to Bring Instead:

A bullet-point list of the key terms or points you want included
A brief written summary (1–2 pages) describing what the contract is for and what you hope to achieve
Any prior agreements, emails, or reference materials related to the matter
Your questions or concerns about specific terms, rights, or obligations

Next Steps

Please call our office at 262-334-3471 or email us at info@schloemerlaw.com to schedule a call or meeting with one of our attorneys.

Originally published: October 6, 2025