Today, I summarize and give my takeaways on two great AI related presentations that I attended on the second day of the ABA Tech Show. One presentation highlighted a solution to the hallucination problem and both discussed the impact of AI on the legal profession.

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.

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The Solution to the Hallucination Problem: RAG

The first presentation that I attended was a talk with Judge Herbert Dixon and Pablo Arredondo, VP at CaseText and a former Kirkland & Ellis lawyer.

One of the challenges of LLMs that we discuss here is that they can sometimes produce hallucinations, or outputs that are not based on facts or evidence. This can be problematic for legal applications, where accuracy and reliability are crucial. One thing I learned is why LLMs hallucinate. LLMs do one thing—predict. When fed a prompt that the model is sufficiently trained on, the model can easily predict an answer. However, when the model is not sufficiently trained on the prompt, the model—which only predicts—will make a prediction, whether it is right or wrong.

A solution to hallucinations (that we have not talked about here) is retrieval-augmented generation (RAG), which is a technique that minimizes hallucinations. Basically, the user prompts the chat bot, the chat bot does an internet search (like google search) that searches for all of relevant information on the web, the chat bot analyzes the data from the web search and uses it to inform the text output. Using a RAG means LLMs can say “I don’t know” when the web search does not bring up relevant results, rather than making up something.

CaseText

Co-counsel is a tool developed by CaseText that can summarize documents, answer questions, and perform substantive tasks based on the documents fed into the model. The presenters did a demo of the tool, and it was impressive. It has the above mentioned capabilities, plus has a RAG system that minimizes errors.

State of AI

According to the presenters, the current atmosphere surrounding AI has two extremes. On one end, some believe that AI will be a glorified assistant, incapable of doing real legal work. On the other end, some believe that AI will replace lawyers. Pablo Arredondo takes the middle ground on this issue. He believes that AI is not meant to replace lawyers, but rather to assist them and complement their skills as a tool. Time will tell what AI’s effect actually is, but as it stands now, it seems like AI will certainly play a role in the future of lawyering.

We have talked some about AI’s effect on M&A and I think Casetext’s Co-Counsel is a great example of a tool that could be used by M&A lawyers to improve efficiency and accuracy. Hopefully a tool review on Co-Counsel will be coming soon.

How AI is Transforming the Legal Industry and M&A

I want to share some insights from an ABA Tech Show presentation by Tom Martin, founder and CEO of LawDroid and Jack Newton, CEO of Clio, two experts in the field of AI and law.

AI Legal Tech Companies

The presenters showcased some of the AI legal tech companies that are using AI to provide various solutions and services to lawyers and clients, such as chatbots, document automation, contract analysis, legal research, litigation analytics, and more. These companies are attracting serious venture capital funding and disrupting the legal industry. I plan to talk about some of them in a later post.

Application of AI in Contract Analysis

The presenters also focused on one of the most important and relevant applications of AI for M&A: contract analysis. They explained how AI can help lawyers read, understand, and review contracts faster and better, and how this can have a significant impact on the M&A process and outcome. They demonstrated how AI can perform various tasks related to contract analysis, such as clause identification, classification, comparison, and evaluation. They also explained how AI can help lawyers with contract analysis in different stages of the M&A process.

Several tools (like LawDroid) have a question and answer feature where documents can be uploaded to an AI the user can ask the AI questions about the document. For example, a lawyer can upload a contract and ask the AI “where is the non-solicitation clause,” and the AI should be able to pull the non-solicitation clause from the contract. I do not think that this technology will replace actually reading a document—lawyers will become clever and try to hide different provisions from AI detection.1

Lawyers that Leverage AI

The presenters also discussed the impact of AI on the legal profession and the role of lawyers in the age of AI. They cited a study by Goldman Sachs that estimated that 44% of the tasks performed by lawyers may be automated by AI in the future. That is obviously a frightening thought that almost half of what lawyers do can be done by an AI system.

They compared the impact of AI on the legal profession to the impact of Excel on the accounting and financial services profession in the early 1990s. They argued that Excel did not kill accountancy as a profession, but rather enabled accountants to do more and better work, and to advance their profession beyond what it was before the use of Excel. They suggested that AI can have a similar effect on the legal profession, and that lawyers who embrace AI can become more creative, innovative, and valuable.

Their takeaway—AI won’t replace lawyers. Lawyers using AI will replace lawyers who do not use AI.

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!

1

This is a prediction, of course. I have talked to several people who think their AI system can detect “hidden” clauses, but I am not sure I believe them.

Photo of Parker Lawter Parker Lawter

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 blog. I hope…

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 blog. 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!