Artificial intelligence (AI) is poised to revolutionize the Legal and Compliance industries.
Thomson Reuters Institute’s 2024 Generative AI in Professional Services study indicates that in corporate legal, 41% of teams say their company was considering whether to use GenAI, compared with 30% in 2023.
Goldman Sachs estimates that up to 44% of legal tasks could be automated.
The same can be said for Compliance, with 84% of “very mature” compliance professionals stating that machine learning and AI are important to their compliance strategy.
This technological leap promises to enhance efficiency and productivity across both Legal and Compliance practices.
Simon Ball from Law Firm MinterEllison, quoted in the Financial Times (FT), suggests that it will “free junior lawyers to operate higher up the value chain and spend more time solving clients’ problems.”
A DLA Piper report is similarly effusive about its potential in Compliance, stating that “AI-powered solutions can help compliance officers to automate tasks, identify risks, and investigate potential misconduct.”
But while the momentum is there, and the predictions are effusive, what actual challenges are Legal and Compliance teams solving with AI today?
Here are five.
1. Too much time is spent answering standard, recurring questions
Legal and Compliance teams both have one incredibly frustrating challenge in common.
Too many repetitive, distracting questions from the business in their inbox. Too little time to answer them.
No matter how many training sessions organizations set up, or how many e-learning platforms they invest in, the same standard, recurring questions hit inboxes each week.
Because these questions are so repetitive and often have the same or similar answers, forward-thinking Legal and Compliance teams have realized that AI can help solve this problem.
With the latest generation of AI tools, Legal and Compliance teams can upload their policies, SOPs, and other documents to a single location where business users can ask any question and retrieve an immediate, accurate answer.
A challenge Legal and Compliance departments sometimes face with AI is ensuring answers are referenceable. Quality and accuracy are critical, after all. While generic tools like ChatGPT don’t offer this, the latest Legal and Compliance-specific AI tools enable this.
Using such AIs enables a substantial reduction in the volume of repetitive and easily addressable Legal and Compliance questions.
Applying AI to the hundreds, if not thousands of repetitive questions that Legal and Compliance teams need to answer every week makes for serious time savings.
Not to mention that it confirms Simon Ball’s prediction, freeing up lawyers and compliance professionals to work on tasks that are more important to organizational success.
Read: 5 Key Considerations When Evaluating Legal and Compliance AI Solutions
2. Creating a culture of compliance by enabling employees to access knowledge
Creating a culture of compliance is one thing all compliance professionals strive for.
In Thomson Reuter’s 2023 Cost of Compliance report, “the implementation of a demonstrably compliant culture (58%)” was cited as the area where compliance leaders are focusing most of their efforts. But achieving a culture of compliance is no simple feat.
The truth is, it’s hard to create a culture of compliance when employees find it so difficult to access the relevant information they need, and are forced to wait hours, sometimes days, to hear back from the compliance team.
To be clear, this isn’t the fault of the compliance team. It’s just that until the advent of AI, it’s been incredibly difficult to effectively enable a culture of compliance among employees. Training and attestations just aren’t effective on their own.
But with AI, enabling employees to access compliance knowledge is much easier.
What AI can enable is the ability to give fully referenced answers to any questions on internal policies, guidelines, and handbooks.
No more searching SharePoint for policies for employees. Or emailing someone to ask them where you can find the relevant document to then search for an answer.
Thanks to AI, employees can now have more confidence, more control, and can get Legal and Compliance information faster than they’ve ever done before.
3. Reviewing contracts
A huge challenge facing legal teams is the sheer volume of contracts that come across their desk.
These range from the simple – low-value contracts on their paper, to the complex – high-value, multi-party agreements on third-party paper. It is essential that some of these contracts are reviewed by the legal team, but not every single one has to be.
The role of in-house counsel is not to eliminate risk, but to manage risk. Nowhere in the job description does it say, “You must review every single contract”, rather it says, “You must effectively and efficiently manage company risk.”
This means that Legal teams are now looking to AI to help them review contracts more efficiently by doing the initial data extraction and risk analysis of contracts.
Combining GenAI with workflows, legal teams use AI-powered solutions to review thousands of contracts to apply a risk score or extract data into forms and/or workflows.
An AI solution can read and understand the contract, identifying key problematic clauses (like a unilateral right of termination), or certain monetary thresholds, or extract information you require.
Take this solution and apply it to thousands of contracts every year, and the time savings are enormous. It can drive faster business transactions. It can enable faster documentation completion. And it can facilitate more proactive risk prevention within businesses.
4. Keeping documents accurate and up to date with changing regulations
Regulations are changing more than ever before. 69% of organizations expect regulators to publish even more regulatory updates in the year ahead.
61% of corporate risk and compliance professionals say their top strategic priority over the next 12 to 18 months was keeping abreast of upcoming regulatory and legislative changes.
It’s clear, then, that keeping documents accurate and up to date with changing regulations is a critical challenge for compliance professionals.
This is yet another area where leading Legal and Compliance functions are utilizing AI.
Using AI, lawyers and compliance professionals can use AI to spot gaps and inconsistencies between documented information.
This enables both Legal and Compliance teams to then quickly and accurately update their policies in line with new regulations.
AI can also help to find contradictions between an organization’s documents and policies so that it’s easy to know what needs updating to ensure an aligned, compliant regulatory environment.
While these abilities may not seem revolutionary on the surface, they enable Legal and Compliance teams to massively speed up their approach to regulatory compliance.
With regulators updating their documents and guidance more than ever before, AI enables Legal and Compliance teams to more easily stay on top of regulatory change.
5. Completing due diligence, procurement and vendor questionnaires
Completing due diligence, procurement and vendor questionnaires is laborious work. Though it’s an important task for every organization, it’s also time-consuming, repetitive, and can cause a great deal of unnecessary stress for Legal and Compliance teams.
How long does it take you to fill in an infosec questionnaire when your sales team is signing a deal with a new customer?
How long does it take for your team to complete due diligence when your organization wants to bring on a new supplier in Asia Pacific?
Though the answers to the questions within these questionnaires are often simple, the time it takes you and your organization is significant.
But precisely because this work is so repeatable, logical, and information is already stored in company guidelines and handbooks, it’s also a task where AI can be used effectively.
With AI you can automatically input answers to hundreds of due diligence, procurement, and vendor questions in seconds — with answers all pulled from your organization’s handbooks and policies.
Those questionnaires that take half a day to complete, now take seconds.
When you apply that time and associated cost savings over a year, the case for using AI to solve this challenge becomes compelling.
Conclusion: AI is already solving today’s legal and compliance challenges
Legal and Compliance teams globally are being set the business objective of how they can be more efficient.
Up until AI, the levers to pull weren’t big enough – that has all changed. Finally, Legal and Compliance teams have a real way to incorporate the latest advancements in technology to benefit business-wide objectives.
From answering repetitive questions and fostering a culture of compliance to streamlining contract reviews, keeping documents updated with changing regulations, and completing due diligence efficiently, AI is providing tangible solutions to significant challenges in the Legal and Compliance sectors.
The efficiency gains, cost savings, and enhanced productivity afforded by AI are not just theoretical but are being realized by forward-thinking teams today.
As businesses continue to navigate economic uncertainties, the adoption of AI will be a crucial factor in driving efficiency and achieving broader business objectives.
