In the rapidly evolving landscape of legal technology, the buzz around generative AI is undeniable. From automating routine tasks to drafting complex legal documents, AI tools are reshaping how legal departments operate. However, Linsey Krolik, a seasoned law professor at Santa Clara University and former in-house counsel at PayPal, suggests that a fundamental component is often overlooked in the rush to adopt these technologies: contract literacy.

During a recent episode of "Notes to My (Legal) Self," Krolik emphasized the importance of understanding the data fed into AI systems, particularly contracts, which are the lifeblood of legal AI applications. She argues that without a deep understanding of these documents, AI tools may simply propagate existing errors or create new complexities.

The Problem with Current AI Implementations in Law

Many legal teams are quick to question which AI tool to use or how reliable it can be, but Krolik points out that the more pressing question should be about the quality and structure of the input data - the contracts themselves. "AI is a mirror," Krolik stated, "If your contract data is a mess, it will show."

This issue is magnified by the pressure within in-house teams to adopt AI solutions to improve efficiency and reduce costs. However, without a solid foundation in contract literacy, these tools may not perform as expected, leading to frustration and potential legal risks.

Educating Tomorrow's Legal Minds

Krolik is not just critiquing current practices but is also actively involved in preparing the next generation of lawyers. She integrates AI tools into her curriculum, where law students learn to draft, review, and analyze contracts with the help of AI. This hands-on experience not only enhances their drafting skills but also deepens their understanding of contract structures and their implications in business contexts.

By doing this, Krolik hopes to bridge the gap between theoretical knowledge and practical skills, ensuring that future lawyers are not only tech-savvy but also deeply knowledgeable about the underlying business processes that contracts govern.

The Bigger Picture: AI as a Tool, Not a Solution

Krolik's insights shed light on a crucial aspect of AI integration in legal settings: AI should not be seen as a standalone solution but as a tool that complements the expertise of well-trained professionals. She stresses that AI can enhance legal operations significantly if the professionals using it are well-versed in the nuances of contract law and business needs.

As AI continues to permeate various sectors, the legal field stands at a crossroads. The choice isn't between adopting AI or not; it's about preparing adequately to harness its potential responsibly and effectively. According to Krolik, the key to AI readiness starts not with a new software installation but with a return to the basics of contract literacy.

In conclusion, as legal teams navigate the complexities of AI adoption, they might find that enhancing their contract literacy is not just beneficial but essential. It is the groundwork upon which the successful implementation of AI in legal practices is built. Linsey Krolik’s advocacy for a fundamental shift towards understanding contracts in the digital age serves as a call to action for legal professionals everywhere.