AI is disrupting the delivery of legal services – but to what extent and how?

Corporate transactions

A major area in which law firms are deploying AI today is in the arena of corporate transactions, particularly in relation to due diligence. In days gone by, the due diligence process on a large corporate transaction could involve a veritable army of junior lawyers trawling through boxes of documents containing the various contracts which ultimately underpinned the value of a business. With the advent of electronic document storage, the process moved from a document storage facility to the electronic data room, but largely remained the same – a manual and labour intensive process.

The introduction of sophisticated AI tools able to trawl thousands of contracts in a matter of hours, largely unsupervised, to identify the key commercial components and any anomalies present, has changed the game.

Instead of needing to review each contract from start to finish, AI tools (such as RAVN or Kira) scour the contract universe allowing lawyers to immediately hone in on the clauses which are most important to understand for the deal. This allows the quick identification of anything which might prove problematic or which needs further investigation. For example, the rapid identification and summarising of all change of control clauses allows them to be reviewed quickly to determine which contracts might be at risk.

AI does not eliminate the need for legal advisers, but it enables them to better deploy their legal training to resolve the legal and commercial issues for their clients.

The power of AI in corporate transactions lies in allowing due diligence to be conducted more quickly, more cheaply and more precisely. It enables clients to get a deeper understanding of the target business from day one, while also providing a material saving in legal spend. The further bonus is that it frees up the legal advisers to focus on the areas of the transaction where they can add most value.

Contract management

Keeping on top of your contract landscape is a headache for most businesses large or small. Regardless of whether those contracts are with suppliers or customers, standard or bespoke, the terms, prices and renewal are all things which need to be monitored.

In circumstances where a business has a large number of individually negotiated bespoke contracts, being able to access and analyse that information at the touch of a button can help drive an increase in revenue or reduce the risk of loss.

The natural language processing capability of AI has driven the development of software tools which automatically extract and summarise the key terms of existing contracts allowing for the immediate analysis and global overview of a business' contract universe. The ability to extract and add structure to the information contained in contracts allows the instant analysis of, for example, the potential revenue earned from contracts expiring in the next 12 months, or which contracts have unfavourable terms which need to be renegotiated on a renewal.

Not only does AI allow for management of historic contracts, it also allows a more streamlined and automated process for negotiating new contracts by standardising repetitive processes. The technology also offers the potential for legal teams to have light touch, remote oversight of a sales team to automatically escalate any contract which has been amended such that it falls outside pre-agreed parameters and therefore poses a potential risk to the business in the future.

The opportunity exists for businesses to tailor existing AI offerings in this arena to offer bespoke contract management solutions in whatever industry they operate. Leveraging the available technology can decrease legal spend, free up resource and reduce contract churn by speeding up renewal processes and removing bottlenecks.

Trademark administration

Historically trademark administration, both clearance and protection, has been a very hands-on process. Anything which requires large amounts of manual input introduces the potential for human error, delay and missed opportunities. AI offers the opportunity to remove a number of those potential issues, thereby allowing brands to really capitalise on their trademarks.

Using the power of AI enables quicker and broader searches to be conducted, across many more jurisdictions. Leveraging the learning ability of AI also significantly reduces the number of false positives, and can prioritise the highest risk conflicts. In this way, AI has the ability to free up trademark lawyers from more routine tasks so they can apply themselves to valuable advisory work using their real-world knowledge and experience to add value to the client's brand.

Dispute resolution

Dispute resolution has not been immune from the rise of AI. The last few years have seen the rise of AI solutions which offer the possibility of automating basic legal analysis of the most simple legal disputes (such as DoNotPay – the parking ticket appeal bot) to more sophisticated forms of legal triage to more identify areas of risk in a potential dispute rapidly.

An area where AI has the promise of providing the enormous assistance to the dispute resolution lawyer is in the field of legal research. One such company is LitiGate which has partnered with a number of UK law firms (including Taylor Wessing) to develop an AI algorithm which can be used to analyse legal arguments arising in interim applications in order to suggest potential counter-arguments or highlight the areas of weakness in your own or the opponent's arguments.

Various forms of AI are already used routinely to assist in the mass review of documents, including audio records, in litigation and regulatory investigations. Careful deployment of the suite of AI tools available allows the swift identification of the most crucial documents and those which get to the crux of the issue at hand. In this way, the key legal issues or risks are identified at the very beginning of a potential dispute or investigation, which will often influence the course of action to take next with the benefit of a more complete understanding of the situation.

As these tools develop, the time and cost of becoming involved in litigation or regulatory investigations will continue to fall. Clients will better understand the risk and potential benefit of litigation from the beginning in order to make informed decisions about what is the most appropriate course of action for the business.

What this means for clients

The continued development of AI in all areas of the delivery of legal services can only be good news for clients. AI offers the potential to free up lawyers from the more mundane and often time consuming aspects of their jobs, allowing them to focus on the areas in which they can bring the most value to the client relationship, all for a lower overall spend.

It will be exciting to see how the technology develops over the coming years as the legal tech sector continues to expand, and innovative AI solutions continue to materialise in order to automate day-to-day legal service provision.

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