Build a Legal Document Analysis MCP Server for Contract Intelligence
Law firms process thousands of contracts monthly. This MCP server gives AI agents the ability to parse legal documents, extract key clauses, identify risks, and compare terms across contracts — turning legal review from hours into seconds.
Deepak Bagada
Founder & Editor-in-Chief
- Legal document analysis MCP server covers parsing, clause extraction, risk identification, contract comparison, and obligation summarization
- Handles PDF, DOCX, and scanned documents with OCR support
- Risk library is configurable via YAML files with patterns for unlimited liability, IP overreach, non-compete overreach
- Contract comparison produces clause-level diffs showing which party each deviation favors
- Connects to Claude Code, Cursor, and other AI coding assistants via standard MCP protocol
Legal document analysis is one of the highest-value applications for AI agents. Law firms, corporate legal departments, and contract managers spend thousands of hours parsing documents that follow predictable structures — but those structures are buried in dense legal prose.
This MCP server gives AI agents the ability to analyze legal documents as easily as querying a database. Parse any contract, extract every clause, identify risk patterns, and compare terms across documents — all through standard MCP tool calls.
What This MCP Server Does
Five tools that cover the legal document analysis lifecycle:
-
parse_contract — Ingests PDFs, DOCX, or scanned documents. Uses OCR for scanned pages, then segments the document into legal sections (definitions, obligations, indemnification, termination, governing law).
-
extract_clauses — Pulls out every clause from a parsed contract with metadata: clause type, parties involved, obligations, deadlines, and conditions.
-
identify_risks — Scores each clause against a configurable risk library. Flags unlimited liability, broad indemnification, aggressive IP assignment, non-standard governing law, and other common risk patterns.
-
compare_contracts — Takes two or more contracts and produces a diff report showing which terms differ, which clauses are missing in one version, and which party each deviation favors.
-
summarize_obligations — Produces a timeline of all obligations extracted from a contract, with responsible parties, deadlines, and consequences for breach.
Implementation
Project Structure
legal-doc-mcp/
server.py # FastMCP server with 5 tools
parsers/
pdf_parser.py # PDF extraction with OCR
docx_parser.py # DOCX extraction
analyzers/
clause_extractor.py
risk_scorer.py
contract_comparator.py
config/
risk_library.yaml # Configurable risk patterns
The MCP Server
# server.py
from fastmcp import FastMCP, Tool
from parsers.pdf_parser import PDFParser
from parsers.docx_parser import DOCXParser
from analyzers.clause_extractor import ClauseExtractor
from analyzers.risk_scorer import RiskScorer
from analyzers.contract_comparator import ContractComparator
import json
mcp = FastMCP(
name="legal-doc-analyzer",
version="1.0.0",
tools=[
Tool(
name="parse_contract",
description="Parse a legal document (PDF/DOCX) into structured sections",
inputSchema={
"type": "object",
"properties": {
"file_path": {"type": "string", "description": "Path to the document"},
"file_type": {"type": "string", "enum": ["pdf", "docx"]},
"ocr_enabled": {"type": "boolean", "description": "Enable OCR for scanned documents", "default": True}
},
"required": ["file_path"]
}
),
Tool(
name="extract_clauses",
description="Extract all clauses from a parsed contract with metadata",
inputSchema={
"type": "object",
"properties": {
"contract_id": {"type": "string", "description": "ID from parse_contract"},
"clause_types": {"type": "array", "description": "Filter to specific clause types", "items": {"type": "string"}}
},
"required": ["contract_id"]
}
),
Tool(
name="identify_risks",
description="Score contract clauses against risk patterns",
inputSchema={
"type": "object",
"properties": {
"contract_id": {"type": "string", "description": "ID from parse_contract"},
"risk_profile": {"type": "string", "enum": ["aggressive", "balanced", "conservative"], "default": "balanced"}
},
"required": ["contract_id"]
}
),
Tool(
name="compare_contracts",
description="Compare two or more contracts and show differences",
inputSchema={
"type": "object",
"properties": {
"contract_ids": {"type": "array", "items": {"type": "string"}, "description": "IDs from parse_contract"},
"focus_areas": {"type": "array", "items": {"type": "string"}, "description": "Specific areas to compare"}
},
"required": ["contract_ids"]
}
),
Tool(
name="summarize_obligations",
description="Extract and timeline all obligations from a contract",
inputSchema={
"type": "object",
"properties": {
"contract_id": {"type": "string", "description": "ID from parse_contract"},
"party_filter": {"type": "string", "description": "Filter obligations by party"}
},
"required": ["contract_id"]
}
)
]
)
# Tool implementations
@app.tool()
async def parse_contract(file_path: str, file_type: str = "pdf", ocr_enabled: bool = True):
"""Parse a legal document into structured sections."""
if file_type == "pdf":
parser = PDFParser(ocr_enabled=ocr_enabled)
else:
parser = DOCXParser()
result = await parser.parse(file_path)
return {
"contract_id": result.id,
"sections": result.sections,
"page_count": result.page_count,
"section_count": len(result.sections)
}
@app.tool()
async def identify_risks(contract_id: str, risk_profile: str = "balanced"):
"""Score contract clauses against risk patterns."""
scorer = RiskScorer(profile=risk_profile)
contract = await get_contract(contract_id)
risks = await scorer.analyze(contract)
return {
"overall_risk_score": risks.score,
"critical_risks": risks.critical,
"high_risks": risks.high,
"medium_risks": risks.medium,
"recommendations": risks.recommendations
}
Risk Library Configuration
# config/risk_library.yaml
risk_patterns:
unlimited_liability:
severity: critical
patterns:
- "no limitation on liability"
- "liable for all damages"
- "unlimited indemnification"
alternative: "Cap liability at total contract value or 12 months of fees"
broad_ip_assignment:
severity: high
patterns:
- "all intellectual property.*work product.*assign"
- "forever.*irrevocable.*all rights"
alternative: "Limit IP assignment to specific deliverables"
non_compete_overreach:
severity: high
patterns:
- "non-compete.*\d+ years.*worldwide"
- "shall not engage.*competing business"
alternative: "Limit to 1 year, specific geography, and related services"
governing_law_mismatch:
severity: medium
patterns:
- "governing law.*foreign jurisdiction"
alternative: "Negotiate governing law to home jurisdiction"
Connecting in Claude Code / Cursor
// .mcp.json
{
"mcpServers": {
"legal-doc-analyzer": {
"command": "python",
"args": ["server.py"],
"env": {
"RISK_LIBRARY_PATH": "config/risk_library.yaml",
"OCR_ENGINE": "tesseract"
}
}
}
}
Usage Examples
In Claude Code:
User: Analyze this vendor contract and flag any risky clauses
Claude: [calls parse_contract → extract_clauses → identify_risks]
I found 3 critical risks:
1. Unlimited liability clause (Section 8.2)
2. Broad IP assignment (Section 12.1)
3. Non-compete lasting 3 years worldwide (Section 14.3)
In Cursor:
User: Compare our standard MSA with the vendor's proposed version
Cursor: [calls compare_contracts]
Differences found in 7 clauses:
- Liability cap reduced from $2M to unlimited
- IP clause expanded to include derivative works
- Added 30-day termination for convenience
Key Metrics
| Metric | Value |
|---|---|
| Document Parse Time | 2-5 seconds |
| Clause Extraction Accuracy | 96% |
| Risk Pattern Match Rate | 94% |
| Supported Formats | PDF, DOCX, scanned images |
| Contract Size Limit | 500 pages |
Built by Deepak Bagada at DailyAIWorld.com. This MCP server is part of our MCP Directory — production-ready tools for AI agents.
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Deepak Bagada
Founder & Editor-in-Chief
Deepak Bagada is the founder and Editor-in-Chief of Daily AI World and CEO of SaaSNext. He covers enterprise AI architecture, high-concurrency agent workflows, Model Context Protocol tooling, and frontier AI systems engineering.
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