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How artificial intelligence is changing the legal tech game

Conducting due diligence can be a study of frustration. The complexity of a deal is compounded by tight timelines, high stakes, and, in some cases, disaggregated deal teams. When the client outsources the “grunt work” of document review to a lower-cost regional firm or alternative legal service provider (ALSP), then hands over these reviews to their primary law firm to complete due diligence, it can be difficult to control quality and deliver superior services.

Given the client’s tight deadlines and cost restrictions, document review needs to move at a fast clip, so lawyers may only review a subset of documents. Consequently, potential landmines may remain unnoticed. As a result of an incomplete and incomprehensive document review, the client may be exposed to hidden risks. This no longer needs to be the case.

Technology can provide a competitive advantage

By making artificial intelligence (AI) central to due diligence reviews, clients and their law firms no longer have to make a high-risk, difficult choice as to what to prioritize. Document Intelligence, a powerful due diligence review tool, changes the legal tech game by using pre-built AI models that work for your business on day one. They’re expertly developed by Practical Law attorney-editors, domain specific, and continuously maintained — with no upkeep required from you.

“Whenever you can uncover the most important details in a matter of seconds, that’s very powerful,” one user of Document Intelligence says. “We don’t know if we’ve really, truly been able to quantify it.”

Using the power of AI within Document Intelligence, lawyers can classify, extract information from, and analyze documents in more innovative ways. They can then use this knowledge to provide value-added services to their clients. In turn, a client gets greater speed, heightened levels of accuracy, and more cost savings — making trade-offs a thing of the past.

Greater speed: Get the deal done faster for your client

Clients need answers fast. Using the power of AI, Document Intelligence rapidly analyzes, categorizes, extracts, and delivers pertinent information from documents, even if the total volume is in the thousands. Artificial intelligence software scans a document and immediately breaks it down into searchable information, all the while extracting critical clauses and key obligations.

Intensive document review is a slow, arduous process, which is doubly painful when you consider “time kills all deals.” With Document Intelligence, document review can be conducted faster and more efficiently. On average, AI may reduce due diligence document review time by up to 70%, while uncovering critical provisions across thousands of documents in minutes. This has the potential to radically alter review timescales, allowing firms to win more business by not passing as many document review costs to the client.

Greater accuracy

As AI speeds up the pace of due diligence and document review, it also gives users a deeper insight into documents. It’s a level of discovery that can be strenuous for lawyers to achieve, even via a labor-intensive physical document review. Humans were not built to read hundreds of documents line after line, searching for a needle in a haystack when the needle may not even be there.

Artificial intelligence makes it far easier to organize and assess documents, automatically doing so upon uploading. A user can upload stacks of leases, contracts, spreadsheets, and license forms in a single batch and the system will classify them at once, even if there are multiple documents within a single PDF file.

Having a more sophisticated ability to access and explore documents in turn heightens a lawyer’s ability to find landmines. In the past, they may have missed something buried in a “non-essential” document that, in truth, held a serious potential risk — such as an expired patent, a non-compete clause, or a potential labor violation. Artificial intelligence analysis has a far better chance of detecting this.

One Document Intelligence user says that, concerning diligence review, “We hit a grand slam with a $4 million find: searching for a needle in a haystack when we didn’t even know the needle was there. This would not have been possible before we had Document Intelligence technology.”

An executive customer said, “Prior to adopting Document Intelligence technology, by missing one obligation it cost us six figures for something that should have been so simple.”

See how other Document Intelligence customers are finding success.

Law firms: Capturing a greater share of business

By providing greater speed, sophistication, and cost-effective options, AI also enables law firms to capture more of a client’s external spend. According to a recent study by Thomson Reuters, Document Review was noted in the top five tasks outsourced to ALSPs. With Document Intelligence as a tool in the firm’s toolkit, law firms can join ALSPs in addressing a gap in the market for more cost-effective, technology-driven legal work.

Law firms with AI systems can now offer competitively priced document review services that cost-conscious clients would normally outsource to an ALSP to save on costs. These clients are seeking transparency and certainty about prices and given that AI-assisted document review is more efficient, they will gravitate toward innovative firms that provide this service.

According to the same research noted above, some law firms recognize the potential of new business models to transform the industry and have established their own in-house ALSPs to win more document review business.

Not only is capturing a higher share of external spend great for a firm’s bottom line but keeping the entire diligence process under one roof may improve overall accuracy and quality. When one segment of the diligence process is done by an external ALSP and another by the client’s primary law firm, the process can be disaggregated and heightens the potential for something critical to slip through the cracks.

A law firm using artificial intelligence also gains greater knowledge about a transaction. Running due diligence for an acquisition, the law firm has substantive insight into the target company — where its greatest vulnerabilities and strengths lie. This means the firm can offer its clients more valuable and precise strategic advice.

As one user notes, “The Document Intelligence platform opened the door to numerous possibilities and opportunities for critical research projects, process improvements, and front-end automation."

A new era for due diligence reviews

With the advent of AI technology, the due diligence process is transforming. Law firms that are adept at AI can win on several fronts; they can win more of a client’s business. They can reduce their labor costs and get projects and reviews done at a pace unforeseen even a few years ago.

Document Intelligence provides powerful document intelligence and contract analytics capabilities to empower legal teams to access, understand, and activate the critical information in their documents quickly and efficiently.

Re-imagine the M&A due diligence process

Manage complexity and close deals faster with Thomson Reuters Document Intelligence