New legal AI tools target partners, dealmakers

“All of that is going to continue to be valued, but what tools like these do is enhance the effectiveness of that partner by giving them the tools and the data to more effectively negotiate.”

Litera’s tool scrapes clauses from previous deals to create a searchable database of deal terms and data points that can inform future negotiations.

Firms already collect deal points to various degrees, but the best-resourced firms invariably hold the most data.

Elena Tsalanidis and Justin Hansky, co-founders of Deeligence, say that targeted use of artificial intelligence can help close the resource gap between smaller firms and large global outfits.

“Deal points used to be available only to the world’s largest firms because they could afford to pay a junior lawyer to create a huge spreadsheet.

“Now, with artificial intelligence, firms can unlock this data incredibly easily. For partners at smaller firms, they’re going to have access to tools that might have only been available to very top firms,” Mr Hansky said.

Deeligence, which is being used by local firms including Lander & Rogers, summarises and extracts key points from the due diligence process, which involves lawyers pouring over often thousands of documents for important contractual terms and clauses.

Ms Tsalanidis described traditional due diligence as “nightmarish” for lawyers, with the tedium of endless document review discouraging many young talented lawyers from staying on at big firms.

“It’s really a grind, and it’s something that is pretty miserable for junior lawyers,” she said.

The latest tools join an increasingly crowded legal AI market.

LexisNexis launched its own AI search and drafting tool in Australia in February, following rival Thomson Reuters’ CoCounsel Core.

This month alone in the UK, Google Ventures took a stake in start-up Lawhive, leading a £9.5 million ($18.4 million) raise, while rival legal AI outfit Luminance secured £30 million in its latest funding round.

Moving beyond talk

Michael Legg, director of UNSW’s Centre for the Future of the Legal Profession, said law firms were reluctantly moving beyond talking about AI and were beginning to train lawyers on the use and dangers of the technology amid pressure from in-house counsel.

Locally, AI trials have produced efficiency dividends of up to 80 per cent at top law firms when applied to everyday tasks such as client briefings and document review.

“Law firms’ preference would be to stay with the tried and true billable hour, but they can see that’s not going to be the case forever,” Professor Legg said.

“They are getting some pressure from in-house counsel, who are seeing all the statements about how AI is able to do tasks more quickly. For them, that should equal cost savings.”

Professor Legg predicted that, while AI would allow smaller firms to access new and deeper data, market differentiations would remain.

“In future what we will see is AI that can draw on top-quality proprietary information that only some firms will have, and that may give them an advantage over other firms that have less intensive AI tools,” he said.