This week, I review a drafting assistant called Henchman and discuss when to use AI in practice.

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 might 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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M&AI Tool Review—Henchman

Henchman is an AI tool that plugs into a firm’s practice management system and allows users to easily pull contract precedents from their previous contracts. Here is a two-minute explanation of how it works. Users can easily pull contract precedents and even specific clauses by using Henchman in Word while drafting a document. This means that the days of searching through past agreements for the perfect provision are gone. Instead, Henchman pulls the relevant clauses from the contracts and displays them on the Word document.

How it Works

Henchman is not a large language model like ChatGPT (which is usually what we talk about here). Henchman has a search function with filters where users can narrow down their search results to show only relevant provisions. For example, a user can search for a provision, like a non-compete, and then Henchman finds all of the non-compete provisions in the firm’s system and puts them in the side panel of the Word document. Users can filter results in various ways and can redline the precedent provision against the provision in the current document. Additionally, Henchman uses “smart replace” and can replace defined terms throughout the contract.

The AI component of Henchman is its ability to search through a firm’s entire precedent database and pull relevant provisions. The AI “reads” all of the contracts for you.

Henchman’s website gives a great picture of how the tool works, and I would encourage you to check it out!

Impact on M&A

This tool could streamline the drafting process. Instead of searching through entire documents for the desired language, Henchman puts all of the past language right on the Word document. The user will still have to manually search and read through Henchman’s results, but Henchman makes the search much easier by pulling only the relevant provisions from the document. Henchman is basically a super advanced Word plug-in that facilitates quicker drafting. It is refreshing to see an AI tool that does not claim to be the solution to all problems and instead focuses on solving a unique problem—the slow and burdensome drafting process.

Conclusion

I got the chance to speak to some Henchman employees at the ABA Tech Show, and the one thing that really impressed me about Henchman is that they readily admitted that Henchman was not meant to take over drafting. Henchman is a tool that leaves it up to the user what clause to insert or which language is best. I think this means more people will be willing to use it in the short term. Overall, Henchman is a great tool that uses AI but defers to human expertise to make the final call on what to insert into an agreement.

When to Use and When to Lose AI in M&A Practice

In the fast-paced world of M&A, the use of AI can be a game-changer, enhancing efficiency and accuracy in certain tasks. Yet, it’s crucial to recognize the limitations of AI and understand when its application might not be appropriate.

When to Use AI

For tasks that are highly repetitive or require less human nuance, AI can be a powerful tool. Document retrieval is a prime example. In the vast sea of contracts, agreements, and legal documents, AI can swiftly identify relevant documents, saving hours of manual labor (Henchman is a great example of this!). Similarly, redlining documents, a process that involves comparing various versions of documents to identify changes, can be expedited using AI tools (like Paxton, from last week).

As I’ve talked about a few times on here, AI’s ability to process and analyze large volumes of data also makes it invaluable for due diligence. It can quickly sift through documents to flag potential issues and locate important contract provisions, allowing lawyers to focus on more strategic aspects of the deal.

Another good use of AI is brainstorming. AI can quickly come up with ideas that can inspire the user and promote productivity.

When to Lose AI

However, the application of AI is not without its pitfalls. In scenarios requiring high precision and a deep understanding of nuance, human judgment is irreplaceable. Negotiating deal terms, for instance, requires an understanding of not just the letter of the law but the strategic objectives of the parties involved. Similarly, assessing the potential legal risks of a merger requires a level of expertise and critical thinking that AI cannot replicate.

The reason to not use AI when faced with a nuanced or difficult task that requires creative problem-solving is that AI can only do one thing: predict the next word. And it does this by skimming the internet (or its training data) for the most likely word. So, if a client has a unique problem that needs outside-of-the-box thinking, and AI can only predict the most likely next word (which does not solve the client’s problem), AI will not be very helpful.

Conclusion

AI is a great time-saving tool that can be used for mundane tasks like searching a document. AI is not great at creating an agreement or advising a client. I am not a practicing M&A lawyer, so I am not certain of all of the potential applications for AI in real-life law practice. But I think the above is a good generalization of when to 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!

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!