Following my last blog post about the relationship between Internal Audit and in-house legal teams, I had an unsettling experience during a routine review. When I requested a register of contracts that the in-house legal function had reviewed or approved, they simply refused. There was no log, no index, and no archive. This felt as egregious as a Finance department claiming they don't retain vouchers or HR asserting they don't keep employee files. Without a documented review history, the completeness and integrity of contract information are fundamentally compromised. In the event of disputes, contract expiry, renewal deadlines, or litigation, we risk relying solely on memory and luck. For Internal Audit, this isn't just a control weakness; it's a ticking time bomb.
The Diminishing Comfort Zone of Invisible Contribution
For a long time, some professionals have comfortably occupied roles without genuinely solving problems. They've relied instead on titles, credentials, and legacy structures to validate their presence. However, artificial intelligence is shrinking that comfort zone by the day. When large language models can review, compare, and summarize contracts in minutes, even flagging hidden risks, it becomes increasingly difficult to justify resistance to basic information management. The room for "invisible contribution" is diminishing. Performance must now be measured by value delivered, not just hours logged.
AI in Action: A Personal Contract Review Example
I recently helped a relative negotiate with a property management company. The agreement they received appeared standard on the surface, but an AI-assisted contract review quickly revealed multiple clauses that placed disproportionate risk on the property owner. We proposed the following amendments to better protect ownership interests while maintaining the core structure of the deal:
Clause 3 – Last Month Rent Reserve: TSR shall not retain a full month's rent. Instead, a maximum of CAD 500 may be held as a contingency fund, to be used only for expenses authorized in writing by the Landlord.
Clause 4 – Tenants and Rental Terms: TSR shall inform the Landlord of the tenant name(s), lease duration, and monthly rent within 7 days of lease commencement. Any lease renewals at a rent below the previous rate require Landlord approval.
Clause 6 – Evictions and Law Enforcement: TSR shall cover all initial and subsequent legal expenses related to eviction, including LTB applications and court proceedings, if the tenant was selected solely by TSR without prior Landlord approval.
Clause 7 – Damages and Wear and Tear: In cases where a tenant fails to pay for damages, TSR will cover up to the lower of three repair quotes or CAD 2,000, provided the tenant was selected solely by TSR.
Clause 8 – Insurance Deductibles: In the event of tenant-caused damage, TSR will backstop the insurance deductible up to CAD 2,000 per incident if recovery from the tenant fails after reasonable effort.
Clause 10 – Rent and Lease Control: TSR shall not adjust rent below the current contract rate, nor extend leases beyond the term, without prior written consent from the Landlord.
Clause 11 – Termination Penalties: If the Landlord terminates early without 90-day notice, the only penalty shall be an administrative fee not exceeding one month's rent. No other discretionary penalties shall apply.
Each of these changes aimed to realign the agreement so that responsibilities matched the parties best positioned to control the outcomes. What was truly eye-opening was how quickly these risks became visible through AI-assisted contract review. The same review might have taken hours manually or been missed entirely if done casually.
Reskilling for the Future: Internal Audit in an AI-Driven World
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