The advent of Artificial Intelligence (AI) has revolutionized several industries, generating both excitement and concerns. Many discussions have arisen regarding the associated benefits and risks, and experts in the field have developed different ideologies on the topic. On one hand, there is what I call the skeptical ideology of AI, formed by the ideas of a group of experts who believe that the future of humanity may be threatened by artificial intelligence.
On the other hand, there is what I dare to call the positive ideology behind the development and use of AI, a line of thought to which I lean more. Firstly, I believe that since humanity is the creative source of AI, we should also be capable of creating the means to prevent or mitigate any risks it may pose to humanity. Secondly, I understand that AI is already an unstoppable phenomenon, and therefore humanity is called upon to immediately harness its power for its own benefit and the planet Earth. In fact, I am convinced that AI will provide many solutions to the great challenges that affect humanity and the environment, as well as the necessary controls to combat threats and challenges related to the optimal development of AI.
Considering that AI is an undeniable reality, I intend to write a series of articles in which I invite embracing the power of AI in law and business. With this series, I aim to propose that leveraging AI in both the legal and business contexts is essential to staying ahead in a rapidly evolving landscape. I also present ways to implement the use of artificial intelligence to drive innovation and success in law and business.
In this first entry of the series, I will specifically address ways to leverage AI tools to enhance due diligence and legal research. One of the most important steps in a business transaction, such as a merger or acquisition, is the need to conduct due diligence. In these processes, the challenge lies in completing the review of a large number of documents, data, and information within a short timeframe and identifying any red flags that may impact the transaction or its terms and conditions. This process is often laborious, requiring significant investment of time and resources.
Similarly, it is common in these transactions to conduct research on the legal or jurisprudential treatment of a sensitive or strategic issue to understand the context or projection of any identified risk.
Another challenge when conducting due diligence and investigations is achieving proper coordination and synergy of the gathered information among the different team members involved in the investigation or data collection. Additionally, there is the margin of error resulting from human manual review. The lack of uniformity and synchronization in the type and format of target documents as well as information collected in reports can also be problematic.
Considering these setbacks, the use of AI tools can not only accelerate and optimize the review of large amounts of data but also contribute to a more uniform and thorough data collection. The tools and applications that accomplish these tasks do so through the use of natural language processing (NLP) algorithms. Through AI, relevant information can be analyzed, extracted, and organized from legal documents, contracts, financial statements, or other relevant documents. This reduces the time and cost invested in conducting comprehensive investigations and data collection, enabling the completion of M&A transactions in shorter timeframes. It also yields more efficient results by allowing the identification of patterns in a unified manner across the universe of reviewed documentation, which often proves challenging when done manually by teams.
Another important use of AI is the ability to automate repetitive and tedious tasks associated with research and due diligence, freeing up time for professionals to focus on more valuable tasks. The use of these tools also significantly reduces the margin of error that may result from manual review. For example, automated processing of legal documents can help organize and classify contracts or relevant documents, streamlining the review and analysis process.
Furthermore, there are search and analysis tools specifically designed for legal research and due diligence. These tools utilize machine-learning algorithms to track legal databases, case law, regulations, and other relevant information. By applying machine learning techniques, these tools can provide more precise and relevant search results, significantly reducing the time invested and optimizing the depth and quality of research.
AI's ability to analyze historical data using machine learning algorithms also allows for the identification of patterns, standards, and trends that may influence future outcomes. This can be very useful for legal or business consultants in risk prediction and assessing the likelihood of success in litigation.
By applying machine learning algorithms, AI can also analyze data and documents, as well as perform comparisons to detect unusual patterns, unusual differences, suspicious deviations, or possible legal risks.
Undoubtedly, the use of AI applications as a support tool for due diligence and investigations promises greater efficiency and optimization of these tasks, allowing consultants to dedicate time to more challenging and complex activities.
While many may argue that the cost of these types of tools is high, it is my understanding that investing in adequate AI technologies represents a significant competitive advantage, and the benefits outweigh the investment. However, it should be noted that the use of these tools depends largely on appropriate human programming and direction in accordance with the intended purposes and objectives. Also, each due diligence process responds to specific needs, strategic objectives, and a unique environment, which is why human input and supervision will continue to be necessary.
There are several legal-tech and AI solutions in the market that can be used for the aforementioned purposes. It is very important that when choosing to invest in a product of this nature, you research the different developments available in the market and evaluate their features and functionalities, to identify which one meets your specific needs. It also important to understand the costs associated with assistance and updates, as well as the availability of the provider for support and information purposes. If deemed necessary, also consider consulting a technology specialist to help you navigate the user interface and to confirm that the evaluated solution is effective for the required purposes and meets industry-standard data security protocols.
As I mentioned in a previous entry, AI does not necessarily replace the judgment, intuition and experience of legal and business professionals and advisors, as well as other human factors that are still incompatible with AI. However, these tools undoubtedly represent the possibility for humans to expand their capacity to process and analyze data and achieve greater uniformity and depth in results.