Can AI Lower Your Corporate Legal Bill?
With the emergence of artificial intelligence (“AI”) transforming many aspects of modern society, many are wondering how this technology can reduce their corporate legal bills. While AI is still in its infancy and cannot replace legal counsel, it can offer a practical solution by serving as an initial filter for legal considerations.
In preparing legal transactional documents (operating agreements, purchase agreements, etc.), much of the legal time is spent with lawyers working to help clients understand the relevant issues and decide what deals, structures, and dynamics the clients want. For example, in the sale of a business, lawyers will counsel sellers to consider “will there be seller financing,” “are you comfortable with an earnout,” and/or “what representations and warranties are you willing to make.” Often an entire attorney-client meeting is spent explaining these questions and the implications of different directions.
This is where AI can come in – as a pre-attorney primer. For example, before meeting with an attorney, when approaching the sale of a business, the client can discuss and “chat” with AI systems like ChatGPT or Grok to discuss dynamics of the sale. This will allow the client to approach their respective attorneys much more prepared. A lawyer can work through a deal much quicker with parties that have already considered many legal dimensions and have a greater knowledge of the dynamics of the deal. The bill for a deal where the attorneys are told clear terms that are understood and agreed by the parties will be a fraction of the cost of a deal in which the parties approach their attorneys with only a roughly sketched concept. However, be warned, an attorney should be consulted before discussing hard terms with other parties as attorneys may have insights, unseen by AI, that will change the overall structure of the deal.
How AI is approached can make all the difference to how helpful it can be. AI will be less helpful in drafting documents or when asked questions that require higher-level planning and judgment. As such, questions like “how should I sell my business” or “draft me a purchase agreement” should be avoided. However, AI does have a depth of knowledge that can be helpful in processing and preparing. As such, a party approaching a transaction should, instead, ask questions like “what legal dimensions should I consider when selling my business” or “what are the implications of a non-compete in an operating agreement.” The goal of AI should not be getting to finish line in a legal transaction, but rather, preparing a party to engage with a lawyer more effectively and with more direction.
Rather than seeing AI as competition, lawyers and clients alike are well-served when effective tools are utilized to aid in the goal of good legal planning. While AI performs poorly in drafting and cannot replace the judgment of corporate counsel, it is a valuable tool that can result in large savings for parties interested in utilizing it.
