Remember your first business?
Not a startup.
Not a side hustle.
A rickety lemonade stand.
I'm talking about:
A folding table held together by hope
A cloudy plastic jug your mom said not to use
Sugar everywhere except in the cups
No business plan. No “strategic citrus alignment.”
Just a pitcher, some hustle, and the mission:
Get lemons → Mix it → Sell a few cups → Count your coins
Turns out, that’s a pretty solid framework for using AI too.
Why Contracts Make AI Panic
Contracts hide risk like toddlers hide candy—badly, but everywhere.
You’ll find:
Liability caps that don’t match real-world exposure
Vague or missing data protection terms
Termination clauses written like escape hatches
Jurisdiction traps that scream “hire a lawyer”
Traditionally, lawyers comb through this stuff line-by-line. It's slow.
AI can help — if you give it structure.
⚖️ How Lawyers Actually Review Contracts
Lawyers don’t read contracts like bedtime stories.
They go straight for the big three:
Liability & Indemnity
Data Protection & Privacy
Termination & Exit
That’s where the danger lives.
Everything else — IP, SLAs, governing law — comes after.
Don’t ask AI to “summarize the whole contract.”
Ask it to run a lemonade stand.
🍋 The STEP Framework: Your Lemonade Recipe for Contract AI
STEP gives AI a structured way to reason through contracts.
It stands for:
S → T → E → P
Set → Target → Evaluate → Produce
Let’s break it down — lemonade stand style.
🟡 S — SET (Get the Lemons)
What’s the actual decision you're making?
🎯 One clear sentence. No kitchen sink.
✅ Good: “Assess top 3 risks in this SaaS contract before signature.”
❌ Bad: “Tell me the risks, summarize everything, rewrite it, and be my lawyer.”
Why it works: A sharp objective keeps AI from wandering off like a kid chasing the ice cream truck.
🎯 T — TARGET (Pick the Ingredients)
Choose the 2–3 most critical categories.
For contracts, that’s usually:
Liability & Indemnity
Data Privacy
Termination & Exit
Not ten. Not “everything.” Just the juicy bits.
Why it works: Focus prevents the AI from going on a tangent-filled tour of the entire document.
🧠 E — EVALUATE (Make the Lemonade)
Compare facts against the target categories.
Keep it short and specific — 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 it works: You turn legal language into something you can actually use — lemonade, not lemon soup.
📝 P — PRODUCE (Serve It)
Decide your output format before hitting enter.
Do you want:
✅ A table for Slack?
✅ Bullets for a memo?
✅ JSON for legal ops?
Pick first. Don’t let the model freestyle.
Why it works: Format = function. Give people lemonade they can drink, not sip politely and toss.
🧪 STEP in Action: Contract Risk Example
Scenario:
Sarah in procurement has 40 minutes before a vendor call.
She's reviewing a SaaS contract with:
Liability: Cap at 12 months’ fees, no IP carve-out
Data: No GDPR appendix, vague breach terms
Termination: 90-day notice, no transition clause
A lawyer would flag:
Liability: No carve-outs, no third-party indemnity — high risk
Data Privacy: No GDPR terms or breach notice — high risk
Termination: Vendor can walk with no handoff — medium risk
Her AI prompt:
Use the STEP method to assess this contract.
Target: liability, data protection, termination.
Be concise. Return JSON.
Output (simplified):
{
"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"
}
✅ Clear
✅ Specific
✅ Actionable
Three minutes later, Sarah walks into the meeting with a real risk map.
😩 What Bad Looks Like (Without STEP)
Here’s the kind of output Sarah might get without a structure:
“This contract has moderate risk in sections 3.2, 7.4, and 12.1. Liability is limited to fees paid. Data protection terms should be evaluated. Termination allows for exit via notice…”
Okay… but what matters?
What’s high risk?
What do I do with this?
That’s a book report.
STEP gives you a decision.
✅ Try This Prompt Today
Next time you get a contract, don’t say:
“Analyze this.”
Say:
“Use the STEP method to assess this contract.
Target: liability, data protection, termination.
Be concise. Return in a table.”
You’ll get structured insight — fast.
No citrus TED Talk required.
🔄 STEP Beyond Contracts
This method works for anything that needs structured reasoning.
Examples:
🎯 Vendor Selection
Set decision → Target cost, support, reliability → Evaluate → Output a scorecard
📄 RFP Analysis
Set evaluation goal → Target must-haves → Evaluate proposals → Output ranked list
👩💼 Resume Screening
Set role → Target skills, experience, fit → Evaluate candidates → Output shortlist
🐞 Bug Prioritization
Set release goal → Target severity, impact, frequency → Evaluate → Output fix list
📊 Market Research
Set strategic question → Target market segments → Evaluate landscape → Output insights
🧠 Pro Tips for Better STEP Outputs
✅ Stick to 3 categories max — More = messy
✅ Define your output format upfront — JSON? Table? Bullets?
✅ Run it 2–3x for critical work — Cross-check results (aka “self-consistency”)
🚫 Don’t use STEP for creative brainstorming — It’s made for analysis, not idea generation
🧃 The Bottom Line
Don’t ask AI to write you a citrus documentary.
Give it a recipe.
S — Set one clear objective
T — Target 2–3 key categories
E — Evaluate with short, specific findings
P — Produce in a format people actually use
When Legal drops a contract at 2 p.m., you’ll be ready.
You’ve got the lemons.
You’ve got the recipe.
Go make some lemonade.
⚡ Want the Plug-and-Play Version?
I’ve built a plug-and-play Contract Analyzer + bonus prompts for all the use cases above.
Just sign up, copy the template, and start using STEP like a pro: https://get.mindstudio.ai/agentfoundry
🎓 Want to build AI agents that don’t suck?
Check out MindStudio Academy:
https://bit.ly/46C0rYy — use code READYSETAI061 for 20% off