Consider making this a chaotic intelligent sword with the special purpose of manipulating lawful or neutral characters into becoming chaotic themselves. Therefore it will not damage characters who do not match its alignment.
If you go this route, I suggest this blade at one time was a powerful Magic User's apprentice, who decided to try to steal his master's spell book. Enraged, the master cursed his student, transforming him into this corrupted weapon.
So much time has passed the apprentice no longer remembers being human; he only seeks to deceive wielders into taking advantage of others for selfish gain.