A new survey of legal professionals by legal technology solutions firm Litera has found that law firms are embracing artificial intelligence (AI) within their dealmaking processes and that most professionals expect that AI-based technologies will be used to complete the majority of M&A processes in the sector within 10 years.
Litera partnered with Wakefield Research for the survey, which polled 300 legal professionals at law firms operating M&A practices across the UK, US and Canada.
With law firm leaders contending with an increasingly competitive M&A landscape, amid a broader global slowdown in dealmaking activity, innovative technologies such as AI provide the scope for M&A lawyers to increase their productivity.
As a result, AI-based tools are already relatively widely used within the sector, with legal professionals reporting that, on average, their firms utilise AI to complete approximately half (51 per cent) of M&A engagements.
As tools develop and become more widely adopted, the reliance on AI is expected to grow further, with 91 per cent of respondents stating that they anticipate that the majority of legal M&A engagements will be carried out using AI-based technologies within the next ten years. 71 per cent forecast that AI will be highly important to the future of their M&A practices.
In certain areas of the M&A process, AI adoption is already extremely high. 97 per cent of respondents revealed that their practice uses tech-assisted contract review during M&A due diligence, highlighting the pressure to ensure staff are fully trained on the latest technology.
There are also ethical considerations, including the issue of whether firms should inform clients about their use of AI. 99 per cent stated that they include specifics of the AI-technology used in contract review when pitching for M&A work. However, just 52 per cent always include this information, which Litera says indicates “varying degrees of sentiment about AI usage amongst prospective clients.”
Despite this, the survey demonstrated that some clients ask lawyers to use specific AI technologies. 59 per cent of legal professionals say that clients have asked them about using specific AI technologies or products during M&A due diligence. This trend was particularly pronounced in the UK, where 70 per cent say this is a frequent occurrence, compared to 55 per cent in the US and 51 per cent in Canada.
Quoted in the report Charles Russell Speechlys LLP partner Daniel Rosenberg, a leading cross-border M&A lawyer, said that “it is no surprise that clients are increasingly asking lawyers to deploy AI in their transactions in order to leverage the significant efficiencies AI can generate.”
He continued: “Those efficiencies are potentially so significant that lawyers should be more worried when their clients are not asking these questions—those clients are potentially going to be talking to lawyers who can offer these efficiencies on their own initiative.”
While there remain significant concerns around training and ethical considerations when using AI in M&A processes, the survey also highlighted the upsides, with legal professionals reporting a 33 per cent improvement in realisation rates when using the technology in M&A deals.
Reflecting the desire to incorporate more AI tools into M&A processes going forward, 84 per cent of respondents stated that they planned to start using or make greater use of generative AI (GenAI) solutions in their M&A practice over the next 1 – 2 years.
Regarding the most common uses of technology, 49 per cent use technology for due diligence, 32 per cent for data rooms and 30 per cent for diligence automation. Looking forward, over the next 1 – 3 years, 43 per cent expect their firms to look into purchasing tools for due diligence assistance, including 48 per cent of UK professionals.
Despite growing use and forecasts that AI will become a vital part of most M&A processes, the survey also demonstrated some degree of mixed feelings among legal professionals about the technology’s impact on the careers of young lawyers.
While 64 per cent stated that AI was good for young lawyers as it enables them to focus on developing their analytical and advisory skills rather than on carrying out routine work, 36 per cent stated that AI would make it harder for young lawyers to learn the profession as they will miss out on the experience of looking for and analysing critical contract terms.
Read more about how dealmakers can incorporate AI into their M&A processes
Amid the growing use of AI in M&A, the majority of global dealmakers want the technology to be regulated.
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