In recent years, some Japanese companies developed AI systems that analyze contracts.
Under the Japanese Attorney’ Act, only lawyers may give legal advice based on professional legal knowledge: AI systems may not.
So, the question is, whether the analysis of contract by such AI system amounts to legal advice. If it amounts to legal advice, it means that it is illegal.
In August 2023, Japan’s ministry of legal affairs issued a guideline named “Relationship between the provision of contract related business support services using AI and other technologies and the Attorney’ Act Article 72.”
Under Japan’s guideline, in the following situations, it would be deemed that the AI system is providing legal advice:
(1) If the AI system outputs a draft contract which is not a template but a case specific one.
(2) If the AI system shows the analysis of case specific risks, and gives suggested changes of the contract.
(3) If the AI system automatically indicates case specific legal risks, or the need for individual legal action to be taken based on such risks is indicated
On the other hand, under Japan’s guideline, in the following situations, it would not be deemed that the AI system is providing legal advice:
(1) When the AI system selects templates from those already in the database and displays them in accordance with the user’s mechanical input.
(2) When the AI system automatically displays the differences between and/or similarities with the wordings in the templates already in the database; or, when the AI system displays general commentary, or related court cases.
(3) When the AI system classifies contract details in the contract (such as the parties involved, the date of the contract, the date of performance, the date of contract renewal, whether the contract is automatically renewed or not, the contract amount); or, if you register in advance specific dates (or conditions) such as the date of expiry of the prescription, and the AI system will automatically tell you when that date arrives (or the condition is met).
Japan’s guideline might work for the time being, and may especially help and benefit the legal profession (while restraining the developers of AI systems that analyze contracts), but as the AI systems develop and become reliable, it is likely that it would no longer be justifiable to maintain the guideline as it is.