You're right in that smart contracts won't help with the qualitative aspects of our legal system but they will still help to organize the paper trail and will definitely improve how fuzzy conditions and exceptions are managed.

Smart contract systems are based on cryptographic signatures and chains of transactions (Merkle Directed Acyclic Graph). Instead of contracts being spread across many different databases with many different kinds of authentication mechanisms, they would all be in one format and they would all link to each other in a provable way. This could be an entirely centralized system and still have the same benefits.

However, using a Bitcoin-like system with decentralized trust removes even more of the legal overhead as many contracts can be entered in to and settled without the participants even needing to know who they're dealing with.

At the very least we should at least be moving to a Merkle DAG based system of contracts, centralized or not!