Time for More AI and Automation in Legal Services

Automation and software technology has advanced leaps and bounds since the late 1990’s. This is most evident in the widespread use of software in the workplace and automation in the manufacturing process. However, professional service providers including law firms, accounting firms, banks and health care providers have been slow to innovate. In the past several years however, there has been a greater push for the use of advanced technology such as artificial intelligence (machine learning in particular) to assist with tasks normally handled by a professional service provider.

Automation through the use of AI is slowing becoming widespread in the accounting field. Robotic Process Automation (RPA) is now being used to complete repeated high volume tasks, allowing accountants more time for analysis and interpretation. AI is also being used as a tool for automatic auditing. A user can set items that need to be flagged, and the system will review large amounts of financial records and highlight areas of concern. As AI becomes more accurate and accountants become more accustomed to their use, we can expect greater use of AI and machine learning in the near future.

In the finance industry, AI technology is gradually being introduced to create predictive modelling which can, for example, automatically measure profitability and risk. As the technology advances, AI will be used to create more complex models, with less requirement for user feedback and greater accuracy.

The potential for the use of AI in medicine is immense. From early detection of diseases to managing patient data, AI can be implemented in a versatile manner, for use by different treatment providers or administrators. Currently, AI is being used to great effect in the field of diagnostic radiology, where AI is particularly suited for recognizing visual patterns. More hospitals are now using AI to aid in the interpretation of MRI and CAT scans, to detect tumors that could be missed by humans. For example, AI can be used to review mammography scans, reducing false positives which would otherwise require unnecessary biopsies. Algorithms can also be used to detect potentially fatal abdominal aneurisms, with enough accuracy for use in clinical practice. AI will only get smarter, faster and more accurate in the coming years. While not a replacement for radiologists who are trained medical doctors, AI will simply be a tool for more efficient analysis.

Automation in the legal field is long overdue. AI and machine learning can readily assist with high volume tasks, such as transactional due diligence, in a more accurate and efficient manner. A culture shift is coming, where law firms will need to innovate to offer greater value to clients and manage costs. As more clients become accustomed to the use of AI in transactions, there will be greater pressure on law firms to provide these services to their corporate clients.

AI & Due Diligence, the Perfect Match

Being asked to “do more with less” is now a common feature of the modern workplace. This has become especially true for attorneys in private practice, where efficiency is now a top priority. A 2019 survey by the management consulting firm Altman Weil highlights that 96% of 362 responding law firms reported a focus on improved practice efficiency as a permanent industry trend. This heavy emphasis on efficiency has motivated lawyers to turn to sophisticated artificial intelligence (AI) tools to reduce duplicative work and cut hours off the time they must devote to contract review and monitoring. Cleary Gottlieb, and more specifically it’s recently founded legal tech incubator ClearyX, are similarly ahead of the curve.

These AI review tools use patented machine learning to identify, extract, and analyze content in commercial contracts, often increasing accuracy and efficiency and allowing attorneys to more easily find trusted information and uncover risks. The benefits are often most evident during M&A transactions, one of the many work streams that ClearyX supports. On the sell side, when the target company prepares to share its contracts with the buyer, these tools can automatically identify potentially problematic provisions so the target company has a better understanding of the risks of entering into an M&A transaction in its own contracts (for example, the target company’s customers may have an option to terminate their contracts if there is a change of control of the target company). And on the buyer side, it can help eliminate the major pain point of manually downloading documents from a virtual data room since users can connect directly and securely log in to import documents.

Where these tools can be most impactful though, is when identifying potentially problematic provisions within the typical tight timeframes. Accurate provision identification is essential throughout the due diligence process. For example, most attorneys know that the change of control and assignment provisions are not always heavily negotiated, but the importance of reviewing and analyzing them carefully during due diligence cannot be overstated. Early identification of critical target company contracts and careful analysis of these clauses are essential so that the parties can develop effective strategies for addressing any issues that could put at risk the intended value or timing of a transaction. It is through the use of AI driven contract analysis tool that the reviewers can uncover these provisions and determine the implications in a fraction of time, relaying the relevant information to clients in an actionable manner and reducing their overall risk exposure. In the world of M&A, where hundreds of thousands of contracts are at play, relying on manual review is asking for trouble.

That is why at ClearyX we deploy a full suite of cutting edge legal technologies to drive our alternative legal services, with AI powered contact review software being central to our due diligence offering. Our goals and those of our client are made all the more achievable through the use of these tools, increasing efficiency and costs savings, producing high quality work product, and mitigating client risk. We hope you’ll let us show you how it’s done…