Will I Be Replaced by ChatGPT?

After reading about it for months, I finally signed up for the free version of Open AI’s ChatGPT and decided to ask it the following basic question that has come up frequently in my law practice:

If I am forming an LLC to purchase real property in New York, should I organize the LLC in New York or Delaware?

I received the following response after a few seconds:

The decision to organize your LLC in New York or Delaware depends on your specific circumstances and goals. Both states have their own unique advantages and disadvantages. Here are some factors to consider:

Organizing in New York:

  • If you plan to operate the LLC in New York, it may be more straightforward to organize the LLC in New York as well.
  • New York does not require annual reports, but does require a biennial statement, which is a report on the status of the LLC, and has higher filing fees compared to Delaware.
  • New York has a higher annual franchise tax than Delaware, which may be a factor if you have a high valuation or net worth.
  • If you plan to purchase and hold real property in New York, there may be additional state and local filing requirements, such as transfer taxes or mortgage taxes.

Organizing in Delaware:

  • Delaware is a popular choice for LLCs due to its favorable business laws and court system, which is well-established and familiar with corporate law.
  • Delaware does not impose state income tax on corporations that do not operate in Delaware, but it does impose an annual franchise tax that is based on the number of authorized shares of the LLC.
  • If you plan to raise capital or eventually go public, organizing in Delaware may be advantageous due to its established legal system and business-friendly environment.
  • If you plan to hold real property in New York, you may need to register as a foreign LLC in New York and comply with New York state and local filing requirements.

In summary, it is important to weigh the benefits and drawbacks of each state and consult with a knowledgeable attorney or accountant before making a decision.

Then, I pasted the exact same question into Google, and the first non-sponsored link was to this LegalZoom article.

It’s immediately apparent in looking at both results that the ChatGPT response is far more tailored to my question than the article identified via Google, which doesn’t even mention New York LLCs. (To be clear, this is not a criticism of the article, which seems fine, but the point is that it wasn’t written to be directly responsive to my question; it’s just the web page that the Google algorithm thought was closest to what I was seeking.)

So, would I be able to simply pass along the ChatGPT response to my client without modification? No. It doesn’t mention, for example, the annual cost to a New York client forming a Delaware LLC of engaging a registered agent in Delaware, which wouldn’t be an issue if the LLC was just formed in New York. However, this response absolutely would be a useful starting point for me if I hadn’t already answered it for clients before. It’s clear that that this will be a significant time-saver for lawyers as it gets refined.

Attorneys, and other white-collar professionals, have been hand-wringing in the months since ChatGPT was introduced about how their jobs could be eliminated in the long-run by AI. However, the story of the last 100 years or more is that the introduction of a new technology has initially triggered this “replaced by robots” fear, but then somehow people manage to find remunerative work in the subsequent years. Lawyers, in particular, have worried for years about developments like document review software for litigators and form purveyors (like LegalZoom) for transactional attorneys. But here we are, and as of late last year, the unemployment rate for attorneys was a microscopic 0.1%.

If past is prologue, then, these AI tools will improve and become incorporated into attorneys’ practices, without replacing the job category. If I’m wrong, well, I guess I’ll get much better at golf in the coming years.