As lawyers, we often think of Artificial Intelligence as a risk — maybe one not worth taking.
This is probably because the very term artificial intelligence still carries (for some of us) that subtle dystopian sci-fi flair, oscillating between Isaac Asimov and 2001: A Space Odyssey.
But what if AI was instead, a risk mitigator?
Take due diligence for instance. Carrying out an M&A due diligence project is not only costly and time-consuming, it also involves a substantial amount of risk.
First, the risk of human error. In M&A due diligence projects, associates are asked to review a sheer number of contracts, under time constraints, looking for potential criticalities. A process that is tiring, tedious and error-prone.
Second, the risk of availability bias. It’s a well-established practice, in due diligence, to examine only a sample of all the contracts available – typically only 10% or 20% of the total contract pool. Not rarely, critical pieces of information are missed in this phase, and only after the M&A process is concluded, do potentially unfavourable clauses come to light.
How can AI help mitigate risks?
An AI-powered software like Cognitiv+ helps cut the time they spend on repetitive activities and substantially reduce the risk associated with any M&A due diligence process.
Cognitiv+ can review thousands of contracts in one fraction of the time. The software automatically scans your documents and identifies key pieces of information, extracting the most important terms in the contracts and providing you with a clear summary. Force-majeure, change of control, indemnity – all the clauses that associates have to go through when dealing with the deadly process of due diligence, can be extracted for an easy review, saving an incredible amount of time. Cognitiv+ automatically exports all outlined clauses in a word or excel documents, detailing the level of severity of each clause.
In contract review, it’s important to compare your documents to other approved contracts, to see what changes have been made and underline potentially unfavourable differences.
Cognitiv+ can do this automatically. The AI-enabled software can compare your new contracts against your previous, approved contracts, point out the differences and highlight them with an intuitive, traffic light system.
Reviewing contracts is not only extremely tedious – so much for job satisfaction – it also carries a high potential of error, in turn, increases the stress. Our comparison tool reduces the risk of mistakes, and gives you the peace of mind of an added pair of eyes.
AI tools like Cognitiv+ can reduce the amount of time spent on tedious reviewing process, reduce error rates and leave associates and senior lawyers more time to focus on more rewarding activities.