Over nearly three decades specialising exclusively in recruitment law and contracts, I have seen almost every way an agency can lose a fee. What I have not seen – until recently – is the speed with which some businesses are now willing to put their entire commercial protection into the hands of an algorithm.
I am talking about AI-generated client terms of business and client service agreements.
Having now been asked to review several of these documents, here’s my comment.
On the surface they look polished. The language is fluent, the formatting is neat, and I am told that the document arrives in minutes. Advantage: immediate, looks good, little or no cost. For a busy recruitment business under pressure to get terms out quickly, the temptation is obvious. Yet the risks these documents create are real, immediate and, in my experience, frequently underestimated.
Recruitment is not a generic supply of services. The relationship between an employment agency and its client is relatively straightforward, but key issues like timing, acceptance and unambiguous terms remain key. It is not so straightforward for employment businesses as a good part of the contract needs to be shaped by commercially protective clauses and a specific body of legislation – the Conduct of Employment Agencies and Employment Businesses Regulations, the Agency Workers Regulations, IR35 and off-payroll rules, data protection requirements, and a growing set of tax and compliance obligations.
A properly drafted client agreement does far more than set out payment terms. It determines:
These are not abstract legal points. They are the difference between getting paid and writing off a potential five- or six-figure invoice.
We have tested the leading AI tools ourselves by asking them to produce client terms of business for a UK recruitment company. The results are consistently poor.
They pull clauses from multiple jurisdictions, mix concepts that do not sit together under English law, and produce wording that sounds authoritative while being commercially and legally incomplete. Common problems include:
The document may look professional, but it is neither comprehensive nor reliable.
When a dispute arises – a client refuses to pay, a candidate is hired without your knowledge, or a fee is challenged months later – the weakness becomes expensive. We have seen agencies lose substantial fees because their terms did not do the job they thought they did. Prevention has always been better, and cheaper, than cure, yet poor drafting can not only result in lost fees but also invite the very problems you want to avoid.
The attraction of AI is cost and speed. The true cost appears later: lost fees, damaged client relationships, time spent on disputes that should never have arisen, and in some cases regulatory exposure.
Specialist recruitment contracts exist for a reason. They have been tested against real commercial behaviour and real legislative change over many years. In the case of the contracts my company, Lawspeed, has supplied since 1997, they have never to our knowledge been successfully challenged in a dispute. They have avoided the need for legal proceedings time and time again. That track record is not accidental. It comes from deep, continuous focus on one sector and one set of targeted commercial risks.
AI does not have that focus. It has pattern recognition across a vast and mixed dataset. Pattern recognition is not the same as expertise.
Don’t be driven by the apparent immediate cost saving of AI, it’s a false economy. One fee recovered or dispute avoided because you have used the right contract will massively outweigh the cost of investing in that contract every single time. In short, your terms of business are not an administrative formality. They are a primary tool that determines whether the work you do turns into revenue you keep. Worth investing in.
I am not opposed to technology; Lawspeed has invested heavily in it over the years. Our own digital platform, Proterms, exists precisely to make the content, issue and tracking, of robust contracts fast and straightforward. Technology should remove friction, not remove judgement.
If you are tempted to use an AI-generated client agreement, at the very least have it reviewed by an expert who understands contracts and recruitment law in the UK. Better still, start with terms that were written for the industry you actually operate in, kept up to date as the law changes, and designed from the outset to watch your back.
In a competitive market, that protection is not a luxury. It is fundamental.
If you have any questions on the above then please call the team on tel: 01273 236236 to discuss how we can support you.
Adrian Marlowe – CEO
