Lawyers tend to be sceptical – a character trait which comes in handy when assessing risk, but which is not so handy in the context of innovation. Given our natural bias towards the status quo, it is hardly surprising that, pre-pandemic, lawyers were not at the forefront of technological change.
However, lockdowns and work-from-home orders changed all that.
Progress that might have taken months, or even years, took mere weeks as law firms were forced, almost overnight, to embrace existing technology and start thinking about new ways in which computers could aid us in our work.
This is evidenced by the boom in the Legaltech industry which had an estimated market value of $17.18 billion in 2020 and which was expected to grow at a compound annual growth rate of 20.6% from 2021 to 2028.
And, just as we caught our breath, the landscape shifted yet again. Towards the end of 2022, OpenAI launched ChatGPT which, in its own words, is “a large language model (LLM)… trained on a massive amount of text data, allowing it to generate natural language responses to a wide variety of questions and prompts”.
It seems certain that LLMs are going to impact how lawyers do their work. But, before considering the future, it is useful to consider how Legaltech is already altering more traditional ways of doing business.
It is particularly interesting to think about the way in which technology can impact the legal profession in the context of another by-product of the pandemic – an increased focus on employee wellness and strategies to avoid burnout. Ideally, technology should be able to eliminate the more time-consuming and mundane aspects of work (not just in the legal sphere) which should, in turn, free up time to undertake more satisfying and meaningful work.
In the M&A context, there are three obvious areas in which technology is already assisting lawyers. These are:
• Due diligence
• Drafting transaction documents
• Transaction management
“Technology should be able to eliminate the more time-consuming and mundane aspects of work and free up time to undertake more satisfying and meaningful work.”
Due Diligence
Machine learning algorithms are available to assist lawyers in performing due diligence – an often time-consuming and labour-intensive part of a transaction. After all, what is DD other than data analysis?
Historically, the bulk of due diligence work was data gathering, in the sense that lawyers would manually comb through documents to identify a repetitive set of clauses (like Change of Control provisions). Machine learning programmes which have been trained on jurisdiction-specific data sets can now assist lawyers in gathering the data by running a review of the documents in a VDR and identifying pre-selected and specific clauses.
This frees up lawyers’ time for data analysis, which has two benefits for a transaction: the work is more satisfying for lawyers, and it adds more value for the client.
Drafting transaction documents
Preparing the first draft of a suite of transaction documents is time-consuming and it ranges from preparing the bespoke drafting that may be required in the SPA to the more mundane job of filling out party details across the ancillary documents.
As things stand, there are automated drafting programmes that can assist lawyers in preparing a standardised set of transaction documents in significantly less time than it would take to prepare a pack from scratch. While computer programmes cannot prepare bespoke drafting just yet, they can certainly take the pain out of preparing the stock standard provisions and replicating information across the documents.
It does seem inevitable that LLMs will improve this offering significantly in the future.
“At the risk of drawing back the curtain, a lot of non-legal work goes into managing a transaction.”
Transaction Management
At the risk of drawing back the curtain, a lot of non-legal work goes into managing a transaction. Depending on the size and complexity of a deal, it can sometimes be a job in and of itself.
The traditional low-tech solution to this problem is a checklist in a Word document which is continually updated. There are now numerous transaction management software options available to lawyers which automate much of the mundane and administrative aspects of transaction management. There are platforms in which the checklist is managed online and can be updated continually. Documents can be uploaded to a central repository, so version control is managed via the platform. Depending on how you configure the particular programme, these kinds of platforms can also offer transparency to a client – they can simply log on and view the status of the matter.
Transaction management programmes can also streamline the execution and completion process. Electronic signatures are now ubiquitous allowing documents to easily be executed virtually from a signatory’s home, office or holiday destination! On an exit, there is no longer any need to lock founders in a room with a trainee, a pen and 200 documents.
Conclusion
The Law of Accelerating Returns posits that the rate of change in, amongst other things, the growth of technology tends to increase exponentially. Practically, this means that there is no solid ground – there is no comfort zone. ChatGPT and other generative AIs are just the most recent example of this.
As such, the culture of innovation in law firms ushered in by the pandemic must be nurtured and developed to allow lawyers to continue to embrace technological innovation. This helps to improve the service we offer to our clients and the environment we cultivate for our employees.
