April 20, 2018
Due Diligence: Will Artificial Intelligence Change the Game?
Listening to Alexa laugh at me while I pound away on my keyboard doesn’t make me real excited about the prospect of this – but this recent Norton Rose Fulbright blog says that the future of M&A due diligence belongs to artificial intelligence. Here’s an excerpt:
Enter artificial intelligence (AI) platforms. AI enables law firms to review a large number of contracts for standard considerations in a systematic manner, including change-of control, assignability, and term, while minimizing errors or oversights in the function that the AI program is coded to perform. An AI program for due diligence collects the pertinent documents at their source, filters agreements from non-agreements, and then identifies, analyzes, and classifies the content of the contracts.
This permits the program to organize and structure the documents in the Virtual Data Room, as well as identify and even complete, to the extent permitted and possible, the missing fields. Due to advances in machine learning, a given AI program run in successive iterations can learn and retain knowledge of key contract clauses and previously encountered due diligence issues.
Since AI processes the contracts that are relevant to the transaction, a lawyer’s review of the data output provided by AI is much more time- and cost-efficient than manually performing the review from the outset. This allows lawyers to focus their time on more sophisticated tasks, such as analysis of the data output and providing recommendations to the client. As we reported last year, Kira’s Diligence Engine, a machine learning contract search platform, claims that AI platforms can save lawyers 20-90% of time expended on contract review without sacrificing accuracy.
Maybe the best evidence of AI’s potential as a tool for lawyers is the number of providers who are already in the game – and shut up, Alexa!
– John Jenkins