Remember when you were a kid and ran your own lemonade stand?
Not some polished Pinterest operation.
I'm talking about a rickety folding table… a half-bag of sugar… maybe a cloudy plastic jug your mom specifically told you not to use.
You weren't running a Fortune 500 company.
You had one mission:
Get some lemons
Mix it up
Sell a few cups
Count your coins
No business plan. No "strategic citrus alignment." Just a pitcher and hustle.
Why Contracts Make AI Panic
Contracts hide risk like a toddler hides candy—sloppily, but everywhere:
Liability caps that don't reflect real exposure
Vague or missing data protection terms
Termination clauses written like escape hatches for the other guy
Jurisdiction traps that lead straight to expensive lawyers
Traditionally, a legal team combs through these line by line. Painstaking. Time-consuming.
With the right structure, AI can triage the risk fast not to replace legal review, but to flag what actually matters before the clock runs out.
How Lawyers Actually Review Contracts
Real talk: lawyers don't start at page one and read to page thirty like it's a bedtime story.
They go straight for the heavy hitters:
Liability & Indemnity
Data Protection & Privacy
Termination & Exit
These three are where most of the real risk lives.
The rest IP, SLAs, governing law comes after the initial triage.
So don't ask AI to summarize the entire contract like some over-eager intern.
Ask it to run a lemonade stand. Focus on what matters first.
The STEP Framework: Your Lemonade Recipe for AI Reasoning
Think of STEP as your lemonade recipe.
Instead of dumping a pile of lemons on AI's lap and saying "figure it out," you give it a clear sequence.
S → T → E → P
Set Target Evaluate ProduceNo rambling. No citrus lectures. Just results.
🟡 S — SET (Get the Lemons)
What's the actual decision you're making?
One clean line. No kitchen sink.
✅ Good: "Assess the top 3 risks in this SaaS contract before signature."
❌ Bad: "Tell me the risks, rewrite the contract, summarize all clauses, and give me legal advice."
Why this works: A sharp objective keeps the model from wandering off like a kid chasing the ice cream truck.
🎯 T — TARGET (Pick the Key Ingredients)
Choose the 2–3 most critical categories.
For contracts, that usually means:
Liability & Indemnities
Data Protection & Privacy
Termination & Exit
Not ten. Not "everything." Just the juicy parts.
Why this works: This step replaces rambling "stream of consciousness" with disciplined reasoning. You're telling AI exactly where to look.
🧠 E — EVALUATE (Make the Lemonade)
Now compare the facts against those categories.
Short, punchy reasoning—not a legal sermon.
Example – Liability: "Cap at 12 months' fees, no IP carve-outs—high risk."
Example – Data Privacy: "No GDPR appendix, vague breach obligations—high risk."
Why this works: This is where the lemons turn into something you can actually drink. You get specific findings, not generic observations.
📝 P — PRODUCE (Serve It)
Decide what good output looks like before you hit enter.
Do you want:
A table you can drop into Slack?
Bullets for a quick memo?
JSON to hand off to legal ops?
Pick your format first. Don't let the model freestyle.
Why this works: This is "selling the lemonade"—output people can actually use, not sip politely and throw away.
STEP in Action: Contract Risk Assessment
Let's see it work.
Scenario:
Sarah from procurement has 40 minutes before her vendor call. She's got a SaaS contract with:
Liability cap: 12 months' fees, no IP carve-out
Data protection: vague, no GDPR appendix
Termination: 90-day notice, no transition clause
What a lawyer would flag:
Liability: Low caps, no carve-outs, no third-party indemnity
Data Privacy: Vague GDPR terms, no breach notification
Termination: Vendor can bail easily, no safety net
Her Prompt:
Use the STEP method to assess this contract.
Target these categories: liability, data protection, termination.
Be concise. Return JSON.Output (simplified for clarity):
json
{
"decision": "Assess SaaS vendor contract risk before signature",
"factors": ["liability and indemnity", "data privacy", "termination"],
"risks": [
{
"category": "liability and indemnity",
"issues": [
"Liability cap limited to 12 months' fees with no IP infringement carve-out",
"No indemnification for third-party claims"
],
"severity": "high"
},
{
"category": "data privacy",
"issues": [
"Data protection terms vague and non-GDPR compliant",
"No breach notification obligations"
],
"severity": "high"
},
{
"category": "termination",
"issues": [
"Vendor can terminate with 90 days' notice without cause",
"No transition or handover clause"
],
"severity": "medium"
}
],
"recommendation": "approve_with_mitigations"
}Result:
✅ Clear categories
✅ Specific issues
✅ Actionable mitigations
No legal epic. No citrus TED Talk.
Just lemonade.
Three minutes later, Sarah walks into her call with a risk map her legal team can actually use.
What Bad Looks Like (Without STEP)
For contrast, here's what Sarah would've gotten without structure:
"This contract has moderate risk in sections 3.2, 7.4, and 12.1 related to liability, termination, and data protection respectively. The liability provisions limit recovery to fees paid in the preceding twelve months. Data protection compliance should be evaluated against applicable regulations. Termination procedures allow for notice-based exit..."
Cool. Which one do I fix first? What's actually high risk? What do I tell my boss?
Without STEP, AI gives you a book report. With STEP, you get a decision.
Try This Today
Next time you're handed a contract, don't say "analyze this" and hope for divine wisdom.
Give AI your lemonade recipe:
Use the STEP method to assess this contract.
Target: liability, data protection, termination.
Be concise. Return as a table.You'll get a fast, structured risk map you can actually hand off—not a vague shrug in JSON clothing.
STEP Beyond Contracts
The Lemonade Stand Method works anywhere you need structured reasoning:
Vendor Selection
Set your decision, target 3 weighted criteria (cost, reliability, support), evaluate each vendor, produce a comparison scorecard.
RFP Analysis
Set evaluation goal, target must-have requirements, evaluate each proposal against criteria, produce ranked recommendations.
Resume Screening
Set the role requirements, target key qualifications (experience, skills, culture fit), evaluate candidates consistently, produce shortlist with notes.
Bug Prioritization
Set release goals, target severity factors (user impact, frequency, workarounds), evaluate each bug, produce prioritized fix list.
Market Research
Set strategic question, target key market segments, evaluate competitive landscape, produce board-ready insights with clear recommendations.
The pattern is always the same: sharp objective, focused categories, structured evaluation, defined output format.
Pro Tips for Using STEP
Stick to 3 categories maximum
More than three and you're back to "analyze everything" mode. Focus beats fluff every time.
Define the output format upfront
Tell AI whether you want JSON, a table, bullets, or prose before it starts writing. This prevents the dreaded format mismatch where you get an essay when you needed a spreadsheet.
For critical contracts, run multiple STEP passes
Use the same prompt 2-3 times and compare results. This technique (called self-consistency) helps catch edge cases the model might miss on a single pass. If all three runs flag the same issues, you know they're real.
Treat outputs as triage, not gospel
STEP makes AI useful for fast risk assessment, but it doesn't replace legal review. Use it to identify what needs deeper human attention, not as your final answer.
When NOT to use STEP
Skip STEP for creative brainstorming or exploratory thinking. It's built for decisions and analysis, not discovery. If you're in "what if we tried..." mode, let AI roam freely.
The Bottom Line
Don't let AI hand you a citrus documentary. 🍋
Give it a lemonade recipe: STEP.
S — Set one clear objective
T — Target 2-3 key categories
E — Evaluate with short, specific reasoning
P — Produce in your chosen format
STEP turns vague prompts into sharp, structured reasoning you can trust.
And next time Legal drops a contract on your desk at 2 p.m., you'll be ready.
You've got the lemons. You've got the recipe.
Now go make some lemonade.STEP Beyond Contracts
I’ve got a plug-and-play version of the STEPS framework and the a remix to the contract analyzer just sign up and copy the Contractor Analyzer and as a bonus get the prompt for each of the use cases above.
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