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Babst Calland and our technology affiliate, Solvaire, have been performing complex due diligence, discovery, and document management projects for clients for more than 20 years. Our clients look to us for due diligence guidance in the areas of acquisitions and divestitures, as well as complex corporate, commercial and real estate transactions.
The firm has a long history of utilizing the latest technologies to enhance contract review. And, in the last few years, the firm has taken a deep look at AI-assisted review and its ability to enhance efficiency and reduce cost for clients. Saying that we have become “AI Believers” in the process is an understatement. After many AI tool evaluations, trials, and getting numerous AI projects under our belts, we have become our clients’ go-to resource in leveraging AI for their benefit.
Taking Off On an AI Journey
In today’s business climate, clients demand greater efficiency when it comes to contract review for many complex deals and transactions. We have found that the combination of deep legal expertise, coupled with embracing carefully researched and vetted technology, is the most effective means of delivering high quality and timely review in an increasingly competitive marketplace.
Over the last few years, our firm has embarked on an exhaustive search for tools that will help us deliver more value to our clients. We spent the first 36 months of our AI journey reviewing nine different well-known contract review tools. Within the last 12-18 months, we have incorporated specific tools into the firm’s due diligence and contract management processes. We are particularly excited about our selection of Diligen, which we find to be a high-performance contract review platform. In the end, we chose Diligen for its intuitive and flexible interface, robust performance, and its ability to handle large volumes of contracts.
Many of the other vendors we vetted did not consider the time constraints under which acquisitions have to take place. We found that Diligen was flexible, enabling us to implement the product quickly to meet even the most unreasonable diligence deadlines. Diligen is quickly becoming one of our core engines within our processes for driving even more effective and reliable client service delivery for contract review.
With our new intelligent tools and enhanced processes in place, we are now able to identify specific language — such as assignment, change of control, term, or termination provisions — in hundreds of thousands of contracts. This allows us to provide our clients with rapid and deep insight into their contracts, uncover potential risk, and provide informed legal advice on much shorter timelines.
While much of the return-on-investment for AI tools is measured in time and cost savings, there is also significant value in risk mitigation. AI-assisted review enables comprehensive client contract review rather than limiting the review to a smaller subset of documents due to time and budget constraints. Highly trained machine learning systems can act as an “early warning system” to ensure all contracts with potential issues are surfaced and tagged for careful human review much earlier in the project. In the M&A due diligence process, for example, being able to identify all the change of control provisions in a set of contracts early in the review (as opposed to finding them sequentially as the reviewers plow through a portfolio of documents), reduces the risk of uncovering serious red flags in contracts that otherwise may not be discovered until just before closing. It can mean having enough time earlier in a project to obtain a necessary consent, send out a notice, or otherwise comply with other deal-damaging obligations, rather than requiring a last-minute scramble that may ultimately allow issues to slip through the cracks. Being able to thoroughly review a new last-minute set of contracts provides additional peace of mind that all critical issues have been identified, even under tight timelines.
Here are some key takeaways we have after our first year of AI-powered review:
- AI due diligence triage: We are able to quickly sort documents by type and content to get a better overall sense of the scope of the review, what resources will be needed on our side, and which contracts to review first. We are then able to advise the client within the first 48-72 hours with an update on our anticipated review timelines.
- Relevancy means speed: Completing large scale contract review the old-fashioned way can be painstaking, particularly when utilizing attorneys who are inexperienced in a given subject matter. Legal teams that don’t leverage the right AI tools spend a high proportion of their time sifting through volumes of lower priority documents, looking for the most relevant language. Leveraging Diligen, for example, we were able to identify all of the assignment provisions in a set of 350,000 contracts as a starting point for our review. With the right tools and processes, we were able to produce detailed, high quality review on an aggressive timeline.
- Invisible AI: Well over a year into leveraging AI tools for our clients, we never hear “wow, we are so excited that you used AI”. Instead, we might get the occasional “I can’t believe how quickly you delivered that review, how did you do it?” For the most part, we have silently and effectively worked AI into our best practice service delivery.
- Processes and Methodologies Matter: Sound project management skills are still necessary to properly implement these types of projects. Effective setup, document intake and processing, project scheduling, employee management, and quality control are all heavily contributing factors to a successful project. Having these factors in addition to a robust AI tool are certainly the difference between an excellent and average (or below average) experience.
- (Self) Training makes perfect: Based on our evaluations and testing, only a small selection of tools on the market can be trained to recognize new types of clauses by the user. An even smaller number work well and quickly enough to be truly trustworthy and usable. This ability to train the tool to recognize new concepts extends our review capability by allowing the review team to quickly add to the library of pre-existing clause types that the tool can recognize when needed. This is especially critical when encountering varying subset types of documents within a portfolio.
- Thinking bigger with AI: Since deploying AI tools to help address our clients’ due diligence and review needs, we have been able to do thorough reviews far faster while offering pricing certainty. We can now take on bigger projects — and deliver them faster — thanks to our streamlined, best practices process.
After an extensive period of tracking the development of various contract review and other AI tools on the market we’ve selected best-in-class technology to work in tandem with our well-established processes for contract review. For law firms and legal teams, choosing the right tools — as well as having the right know-how to leverage them fully — is key to delivering high quality legal services effectively, affordably and on time.
Reprinted with permission from the January 2020 edition of Law Journal Newsletters. © 2020 ALM Media Properties, LLC. All rights reserved.
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