Applications of artificial intelligence are turning lawyers into technologists
17. March 2017 | Drooms
If artificial intelligence is already streamlined within the financial industry, law firms are just starting to invest in disruptive technologies. The first item on the agenda is speeding up processes, namely by replacing long hours of document reviewing with automated and smart workflows. AI is about to change the way we execute due diligence forever.
The Legal Profession’s Farewell to Outdated Models
Many law firms are already outsourcing low cost and low specialised tasks to outside services that are able to deliver high quality results. Accordingly, traditional fee arrangements such as the billable hour are becoming outdated.
Over the past decade, renowned technology consultant and Oxford Professor Richard Susskind has been claiming that the legal profession should confront the changes technology is bringing: “Legal technologists will become vital, genuinely dual qualified people who can build computer systems for use in law.” Artificial intelligence is already having a massive impact on the industry.
Artificial Intelligence in the Legal Profession
According to a recent article which appeared in the Financial Times, legal start-ups are using machine learning to revolutionise the traditional ways of doing business. Artificial intelligence is slowly replacing the most time-consuming tasks performed manually up to now, such as reading and classifying documents in cases of litigation.
US law firm Cooley leveraged predictive algorithms to process meanings, synonyms and clusters of words within 29m documents for a dispute. Several law firms embracing technology are exploring the options offered by artificial intelligence and its potential to disrupt well-rehearsed business processes and optimise processes.
Generating Business Value with Artificial Intelligence
Structured data is highly organised, and constitutes approximately 20% of the overall knowledge of a company. The remaining 80% is made up of images, email, social media posts, Word documents, audio and PDF files. Not being formalised, this information – known as unstructured data - is difficult to read for computers and therefore cannot be understood.
This is interesting, for instance, for companies aiming at measuring the public sentiment around their products and services via the analysis of social media content or call-logs. Also, companies ranging from retail to banking are investing in technological innovation with the goal of generating business value from this data.
Structuring non-formalised data means making it quickly readable and accessible for analysis, as in the case of legal due diligence. This might allow for significant savings of time and money for law firms that need to process large volumes of data uploaded in data rooms, for instance, in real estate.
Increasingly interested in the potential disclosure of this data, companies across industries are turning to Natural Language Processing (NLP), the sub-field of AI aiming to make this mine of information readable. NLP is a technology allowing computers to explore, analyse and understand patterns of human language, both written and spoken.
Natural Language Processing in Due Diligence Data Rooms
Most of the documentation uploaded into a data room for due diligence is technically unstructured. The analysis and the categorisation of such information are done effectively with Natural Language Processing. The more sophisticated the technology, the more specific the categorisation of the information.
Natural language processing is integrated into Drooms NXG’s AI technology, as the smart search function allows for detecting words, word patterns and synonyms in the entire data room’s documentation no matter the format, thereby enabling a more qualified exploration of the data room material. Similarly, the translation feature permits the rendering of the content of documents from a foreign language in real time.
If one thinks that everything is about language, grasping the immense potential of NLP applications for data analysis is almost self-explanatory: “It is already providing a competitive advantage to businesses in the fields of digital ad services, legal, and media.”
Data Room’s Algorithms Will Perform Critical Due Diligence Tasks
Drooms is moving toward a fully intelligent and automated due diligence experience, namely by bringing NLP and AI algorithms into the process. Months of research and collaboration with international legal experts resulted in setting the ground for a fully automated and self-learning data room, permitting for instance the assessment of risks and opportunities inherent to a deal.
Red flag reports are at the core of an informed legal due diligence process. In most cases, they require hundreds of hours of analysis performed by legal consultants and end up generating high costs. With the Findings Manager feature, Drooms NXG is substituting the manual work behind red flag reporting with AI technology. AI technology implemented in the data room will analyse the content of documents and will be able to assess autonomously risks and opportunities within a transaction, as well as its potential financial value.
With Drooms NXG, we are working on replacing time-demanding manual work with AI technology that allows analysts, sellers and buyers to focus on executing more strategical tasks. We are working every day at providing a data room that the technologists of the future will love.