From dabbling to investing: Deal lawyers prepare for GenAI

Do you trust the tech yet? Do your clients? That’s what lawyers across the industry are trying to figure out a year after OpenAI launched ChatGPT and brought Generative AI firmly into our lives. In a roundtable session held by The Lawyer and software provider Litera, corporate partners gathered to discuss this topic. While artificial intelligence technology has been around for many years, take-up of generative AI among delegates was mixed, with just over 50 per cent experimenting with genAI-based products. For the firms willing to make the investment – and with millions to spare – trialling many different products to see which is best is a popular route to take.

But human psychology means we’re still not sure what to make of genAI’s potential, especially as it pertains to corporate legal work. Some of the delegates brought to mind societal distrust of email when it promised to transform the way we do business, or how the world took time to decide that Apple’s iPhone worked better than Nokia’s 3310. “When it comes to genAI, the market is still finding the answer,” said one participant. That said, Litera also found that 91 per cent of UK-based M&A lawyers agreed that the usage of AI will either increase or significantly increase in importance in the future of M&A transactional work, according to the company’s 2023 Technology in M&A Report: AI, Tech Adoption, and Talent Management in the UK.

Client acceptance

The distrust that continues to permeate the industry means no delegates said they were using genAI tech on active cases with clients. Major financial institutions continue to be wary of taking the leap before detailed reviews, while start-ups are much more willing to try it out. However, this doesn’t mean that firms shouldn’t be discussing AI with their clients. Whether it’s a FTSE 100 corporate or budding fintech, all want to hear from their lawyers about the adoption of technology and its potential risks. The Lawyer reported just last week how BT has promised to automatically reappoint the firm to its panel that demonstrates the best tech efficiencies over the next three years.

But deal lawyers around the table agreed that genAI tools work best when there are thousands of documents to review. “A big M&A deal is very different to working with a sole owner on a company sale,” observed one. They added that genAI technology can be very expensive, meaning that firms have to consider if the work they have merits the financial cost. “You must have the deal volume to get a return on your investment.”

If big M&A transactions for corporates work best with genAI, but those big corporates are unwilling to let their lawyers use it on active deals, then how can the tech be properly tested? “It’s not clear at what point clients will accept that genAI tools can help with reports,” asked one delegate.

That’s likely a matter of time, with one deal lawyer observing that they frequently make use of AI tech, like Litera’s Kira, on due diligence matters. Kira, which recently added a genAI-powered clause summarisation feature to the platform, charted the course for the use of AI in contract review and analysis starting a decade ago. Due to its ability to enhance the accuracy and efficiency of deal lawyers’ work, and being designed with data privacy in mind, it has been taken up by droves of firms since then, giving clients plenty of time to adapt to, and accept, its usage on deals. A participant in the discussion highlighted that the technology is best used when advisers have to comb through thousands of documents. Given the industry’s acceptance of this AI tool, it might be just a few more years before general counsel start to trust genAI in the same way, provided that it is implemented in ways that solve challenges that corporate lawyers face, provides reliable results, and meets data security requirements.

Efficiency in teams

With some firms assembling innovation-specific teams and others leaving it up to partners, legal outfits are certainly at different stages of the genAI journey. This may relate to the type of work that is carried out, with larger firms typically having the infrastructure and finances to explore genAI’s benefits. “Requirements have to be there that allow you to stop dabbling and start investing,” said one participant in the discussion.

As well as tech experts, firms must also consider the risks that new products relying on genAI could pose. Such products may pose data privacy and protection risks, for example, by inadvertently disseminating sensitive information. Accordingly, it is critical to ensure that safeguards, including data anonymisation techniques and advanced security protocols, are leveraged in order to to balance the benefits of AI with responsible data management and privacy considerations.

In addition, there are well-documented cases of the mistakes that new technologies can make, meaning that genAI will not replace a lawyer’s eye for now. But if usage accelerates, then who is responsible for any errors that may occur in due diligence, whether that be the law firm, tech provider or client? Delegates pointed out that a law firm’s professional indemnity cover could be on the line if something goes wrong. “How do you share that risk?” asked one corporate partner at the table.

For all the concerns over risk, there were plenty of benefits put forward for investing in new tech. Partners recalled how the role of junior lawyers has changed massively as a result, with one delegate joking that you could never ask a trainee to photocopy anything now. “Tech means that junior lawyers have moved up the curve in terms of what they do,” they said. “Junior staff are more efficient. What’s intellectually expected from lawyers will change.”

As genAI moves through the experiment phase, the legal industry is testing and assessing its merits. All they need is a client’s seal of approval.