#5 Law Firm ChatGPT
M&AImpact
This week, I share a video demonstration of an AI model built to assist lawyers working in a large firm, an article about M&A lawyers’ sentiment on AI, and a podcast episode about AI search.
AI will change the world, but how will it change M&A? I want to focus on AI’s impact on M&A in this newsletter. I am not an expert on either M&A or AI, but I want to learn about both topics and how they intersect. I thought there may be others in my situation (or people who are experts in one field or the other) who would find information on M&A and AI helpful in their careers, so I created this newsletter to track and share what I learn.
Law Firm ChatGPT
Below is a video review of Denton’s AI tool that uses ChatGPT to assist Denton’s lawyers.
The AI model can answer lawyer’s questions about the law, client issues, and specific documents uploaded to the model.
The video does a good job of demonstrating the model’s capabilities. The presenter uploaded the EU’s proposed AI rules to the model and asked the model questions about the rules. The model (I think) gets the questions correct, despite a couple of bumps in the road.
Here are some of the capabilities of the model:
Lawyers can input client information into the model without the model training itself on the information. This is important for law firms, as lawyers must keep client information confidential. Somewhat confusingly, Dentons does not allow lawyers to upload agreements into the model. This discredits the model’s ability to maintain confidentiality.
The model answered questions about a document that was uploaded to it by the presenter. When prompted with “What questions do you have about this document.” The model came up with several good questions, which impressed me. I think one potential use case for this function would be to prepare for potential questions during client meetings or negotiations. The model would analyze a document and be a good sounding board to develop strategies.
Here are the problems the presenter finds with using the model in law practice:
Troughing/vectoring is where LLMs compartmentalize text into sections and analyze the text one section at a time. The problem is that the model may “vector” at an important part of a document and may miss certain parts.1 In law practice, that could be disastrous. This is a problem with all LLMs, not just the one reviewed here.
The model does not generate full contracts. The presenter stated that the model is not good at generating full contracts.
Overall, a very interesting video and a reminder that AI is already used in M&A, so might as well learn now!
M&A Lawyer’s Sentiment on AI
Speaking of AI already being used in M&A, here is a Bloomberg Law article about a survey of M&A lawyers asking them whether they would use AI on a deal. 70% of respondents said they were willing to use AI on a deal, with a majority (56%) of the 70% indicating that they would use AI during due diligence.
Less practitioners would use AI during other stages of a deal, like drafting (40%), deal planning (10%), and negotiations (6%).
The author states that the hesitancy to adopt AI in the negotiation stage of deals is due to the lawyer’s belief that negotiation is more of an art than something AI can handle.2 While it might not be useful during a negotiation, I think it would be great to prepare for one! Asking the model questions about the strength of negotiating positions or the documents to be negotiated (especially the prompt, “What questions do you have about this document/position/point?”) could help solidify strategy.
This is an interesting read on the state of AI in M&A, and I would encourage you to take a look!
https://www.bloomberglaw.com/product/blaw/bloomberglawnews/bloomberg-law-news/XECUNLS8000000?bc=W1siQmxvb21iZXJnIExhdyIsIi9wcm9kdWN0L2JsYXcvcGFnZS9pbmZvY3VzX2FydGlmaWNpYWxfaW50ZWxsaWdlbmNlL2NvbnRhaW5lci9ibGF3X2FuYWx5c2lzNi5qc29uIl1d--516e9ae5479d7350614bc2cfeffd06cbb2a326c9&criteria_id=82bfd80e018c225d66b3b9ff69898338
AI Search
A subscriber recently sent me a podcast episode about AI’s impact on search. Instead of searching Google and looking through the results, AI has the potential to make skimming through Google results a thing of the past. The host of the podcast says that instead of searching through 50 results, AI can give you one answer that is 80% likely to be correct in a few seconds. I agree with the host—taking the choice out of search will make people’s internet searches way more efficient (and certainly threatens to disrupt Google’s search business, as the host mentions in the podcasts).
This AI search concept has also made its way into law practice via LexisNexis’ new AI search. I remember learning boolean searches during my first-year legal research class. The different combinations of symbols and words were confusing and not user-friendly. Now, instead of searching something like “Material adverse change /5 ‘pandemic’ & ‘den!’,” students (hopefully) now learn how to prompt an AI model to give them an answer. A prompt like, “I am interested in Delaware cases about the Material adverse change provision that mentions pandemics. Only give me cases where the motion to dismiss was denied. For each case, give a 50-word summary that includes the facts of the case, the issue of the case, and the outcome of the case. Each case and the accompanying summary should be its own bullet point” might get the same results as the boolean search above.
Check out the podcast below!
About me
My name is Parker Lawter, and I am a law student pursuing a career as an M&A lawyer. I am in my last semester of law school, and with some extra time on my hands, I decided to create this newsletter. I hope it is informative and helpful to anyone who reads it! I am not an expert at either M&A or AI, but I am actively pursuing knowledge in both areas, and this newsletter is a part of that pursuit. I hope you’ll join me!
Follow me on LinkedIn: www.linkedin.com/in/parker-w-lawter-58a6a41b
All views expressed are my own!
There is a solution to the vectoring problem, but it takes some technical knowledge. I plan on covering it soon.
This may not be entirely true. The article cites this article by NBC: https://www.cnbc.com/2023/11/07/ai-negotiates-legal-contract-without-humans-involved-for-first-time.html