A Few Good Clauses: Comparing LLMs vs Domain-Trained Small Language Models on Structured Contract Extraction

[2605.05532] A Few Good Clauses: Comparing LLMs vs Domain-Trained Small Language Models on Structured Contract Extraction

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Computer Science > Computation and Language

arXiv:2605.05532 (cs)

[Submitted on 7 May 2026]

Title:A Few Good Clauses: Comparing LLMs vs Domain-Trained Small Language Models on Structured Contract Extraction

Authors:Nicole Lincoln, Nick Whitehouse, Jaron Mar, Rivindu Perera

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Abstract:This paper evaluates whether a domain trained Small Language Model (SLM) can outperform frontier Large Language Models on structured contract extraction at radically lower cost. We test Olava Extract, a self hosted legal domain Mixture of Experts model, against five frontier models.

Olava Extract achieved the strongest aggregate performance in the study, with a macro F1 of 0.812 and a micro F1 of 0.842, while reducing inference cost by 78% to 97% compared with the frontier models tested. It also achieved the highest precision scores, producing fewer hallucinated and unsupported extractions, an important distinction in legal workflows where hallucinations create operational risk and downstream review burden.

The findings shows that high performing, human comparable legal AI no longer requires the largest externally hosted models. More broadly, they challenge the assumption that commercially valuable enterprise AI capability must remain tied to ever larger models, massive infrastructure expenditure, and centrally hosted providers.

Subjects:

Computation and Language (cs.CL); Computers and Society (cs.CY)

Cite as: arXiv:2605.05532 [cs.CL]

(or arXiv:2605.05532v1 [cs.CL] for this version)

https://doi.org/10.48550/arXiv.2605.05532

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arXiv-issued DOI via DataCite (pending registration)

Submission history

From: Rivindu Perera [view email] [v1] Thu, 7 May 2026 00:20:13 UTC (364 KB)

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