In recent years, there’s been increasing pressure on lawyers to deliver more with less. In-house legal teams have been stripped back yet are expected to continue to deliver exceptional service to the wider business.
The net result is that lawyer time – even at relatively senior levels – is monopolised on delivering basic essentials. This means less time for these highly educated and capable individuals to:
Exercise genuine legal judgement to support the strategic imperative of the business
Offer counsel to executives on commercial issues
Provide insight into the opportunities and risk that reside within legal documents
Exploring tech opportunities
While other sectors have been quick to embrace the potential of innovative technology, the legal profession’s traditional aversion to risk has meant it has been much slower to respond. However, new technology is beginning to have an impact in two key areas:
Pre-screening: Lawyers can now automate the fairly basic but time consuming task of an initial review of incoming contracts for risks and sections to focus on
Insight Generation: Technology can provide powerful insights into future performance by reviewing and reporting on a portfolio of contracts
AI is a game changer for legal activities because it generates structured information from unstructured information at superhuman speeds.
A business is the sum of all contractual obligations to suppliers and customers. Once lawyers have used AI tools to obtain, analyse, and organise data from contractual documents, that data can be queried to obtain legal and commercial insights.
A legal counsel could utilise an AI tool that understands accounts payable and accounts receivable as a set of relationships between payment terms, rights to terminate, break fees etc. to determine precisely how liquid their contracts are.
Legal data also allows for better governance by offering visibility into what is being contracted and how. Legal teams can flag up risks and anomalies to their CEO for them to meet their governance obligations.
The holy grail of AI?
AI is not just about efficiency – it’s also about intelligence. Businesses are built on contracts. By definition, the terms of unexpired contracts are forward indicators of corporate value. A typical large organisation can have more than 100,000 live contracts across its shareholders, debtors, creditors, employees, suppliers, contractors, and partner networks.
But few truly understand the contractual estate with ease, to identify risk, ensure consistency, or perhaps to set a benchmark against which to compare the contractual basis of a possible acquisition target. For the first time, AI makes that feasible because it’s commercially viable for an AI tool to go through thousands of documents again and again, each time the lawyer wants to find certain custom information.
Taken in combination, these productivity and insight gains can power highly valuable legal risk management solutions that will give the innovative collaborators genuine competitive edge.