Microsoft has unveiled a legal-document AI agent for Word called Legal Agent, it said on April 30 local time.

Legal Agent handles repetitive tasks in contract review and negotiation to help legal professionals focus on key judgments.

Legal Agent follows a structured workflow that reflects real legal practice, unlike general AI models that interpret instructions. It reviews contract clauses one by one based on a playbook.

It has four main functions. It analyses the full contract, examines specific clauses in detail and compares differences between versions to identify risk factors and obligations. If instructed on what needs to change, it generates negotiation-ready redlines across relevant clauses along with track changes. It also distinguishes existing edits from new proposals in documents that already include track changes, preserving the negotiation history.

It finds clauses that do not meet internal playbook standards and suggests revisions that can be applied case by case or across an entire document.

Legal Agent includes a redlining engine that understands Word document structure. The engine can convert Microsoft 365 document formats into a form that AI can analyse while keeping formatting, lists, tables and revision history intact, the company said.

Microsoft also applied a deterministic processing method rather than having a large language model generate every revision directly, it said. It said the approach increases reliability in handling complex contracts and reduces response time and cost.

All recommendations from Legal Agent include citations to the original source text so reviewers can verify them immediately. Legal Agent is currently available in the United States through the Windows desktop Word Frontier Program. It can be accessed directly from the Copilot agent dropdown menu and does not require separate installation.