Artificial Intelligence and contract review - have you prepared for the future?
While I was reading the latest report by Wolters Kluwer, the topic, which has brought my attention was the response of lawyers regarding the foreseen impact of artificial intelligence on their work. According to the respondents, 59% of law firms expect a significant impact of this technology from over the next 3 years, while 22% of lawyers believe they understand it well. Read the report here
Artificial Intelligence is neither a magic nor only a future in our profession. In fact it is a rapidly growing part of the current legal tech market, with companies, which has already turned into renowned players as well as dozens of startups. The application of AI in the legal tech industry may be various, from predictive analysis, through document automation to contract review.
Personally I became enthusiastic about legal tech tools, which are designed for contract review. For the last months in Bridgestone we have been searching the market, liaised with vendors of such tools and tested many of them. There are advanced tools provided by key players on this market: Legal Sifter, eBrevia, Luminance and Kira, as well as several new ones, developed by start ups, however finding a tool, which would perfectly fit to the needs of a corporate legal department, which operates in different jurisdictions is still a challenge.
For those, who are not very familiar with this kind of tools: most contract review software utilizes machine learning algorithms to extract key provisions, red flag unacceptable clauses or risks or identify concepts within the set of contracts. Many contract review tools use pre-build playbooks, which are pre-defined by the user to ensure compliance with internal policies and standards. The other ones require the user to import a set of already accepted contracts, then the software recognizes key patterns to read, understand and review contracts.
There has already been a lot of media coverage about success cases of the use of artificial intelligence for the review of contracts. One of the most spectacular examples may be of JP Morgan, which implemented an AI based tool to automatically review commercial-loan agreements that, until the project started, consumed 360,000 hours of lawyers’ time annually and after the AI has been implemented, the review of documents takes seconds, with less errors than in case of a human review. You can find more about that here
Currently AI is being widely used by financial institutions for the identification of LIBOR clauses, due to the cancellation of this rate in 2021. AI based software has also became very helpful to quickly locate provisions regarding force majeure clauses during the current pandemic. Find out more here
Although our journey with legal tech in Bridgestone has already started months ago, we are still constantly learning. Therefore I am very curious about your opinion regarding the implementation of contract review tools in your legal department or law firm. Do you think, that contract review software may be already utilized for contract review automation on a daily basis and have you already considered implementation of such tools?
The views and opinions expressed in this article are those of the author's and shall not be deemed as an official position of any company or organization with which the author is associated with.