Why General Counsel Need To Go On The AI Offensive

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Posted: 21st September 2021 by
Eleanor Weaver
Last updated 18th July 2024
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Eleanor Weaver, CEO of Luminance, explains the benefits of AI for the legal sector.

The role of General Counsel and in-house lawyers has expanded dramatically over the past few years. Whilst before, GCs were considered specialists to be consulted on specific legal issues, now they are seen as business enablers, helping to navigate complex legal and regulatory issues for their organisations. Indeed, the 2020 ACC Chief Legal Officers Survey found that 93% of GCs are now members of their company’s executive management team. To keep up with this vastly expanding mandate, many GCs and their in-house legal teams are turning to new technologies to enable them to proactively solve complex business issues.

 The explosion in enterprise data creation and storage means that we are producing data at an exponential rate. Every interaction we have online leaves a trace – on average, every human created at least 1.7MB of data per second in 2020. This explosion is having a growing impact on in-house teams, who are now required to analyse a huge variety of legal documentation to understand exactly what information is contained within their contracts. Using manual review methods, the whole review is slowed down and the risk of missing something crucial is exacerbated.

 And in an age of increasing data protection regulations such as the Global Data Protection Regulation (GDPR) in Europe and the California Consumer Privacy Act (CCPA), the financial and reputational damage for non-compliance can be crippling for companies. In October 2020, retailer H&M was fined €35.3m for breaching GDPR rules. In fact, a recent survey conducted by EY of General Counsel at 170 UK-based companies found that compliance, data privacy and cyber security are considered the biggest risks currently facing UK legal departments. But despite this, the same survey found that 70% of in-house counsel don’t have the right tools at their disposal with which to face these challenges. 

The unforeseen fallout from Covid-19 has also radically changed how legal departments approach and combat key business issues. No longer can they manage risk with manual review methods and remedial action. When the pandemic struck, organisations around the world were underprepared to deal with a situation like it and were thrust into crisis mode, trying to find answers to urgent business issues. For example, in the real estate sector, companies needed to assess their contracts to understand whether they contained force majeure clauses that specifically mentioned a pandemic. Being unable to complete this type of review with enough speed and rigour could open organisations up to potentially hazardous situations in which their tenants could terminate lease agreements early or suspend their regular payment schedule.

Artificial intelligence, which reads and forms an understanding of legal documentation and surfaces key information to the lawyer, has proved vital in helping in-house teams quickly analyse large numbers of contracts for their company, enabling them to identify key risks and areas of non-compliance at a much earlier stage. For example, lawyers can use AI to easily search their company’s data for Personally Identifiable Information (PII) during internal compliance reviews to make sure that they conform to data protection regulations, or instantly redact this PII when responding to a Data Subject Access Request. More than this, AI drastically increases the speed of review and decreases the resources required, allowing lawyers to hone in on strategic priorities and make informed business decisions.

Lawyers now need to be embracing innovative technologies to ensure their businesses remain compliant with external operating requirements. For example, manipulation of the LIBOR rate following the 2008 financial crash has resulted in its phasing out by the beginning of 2022 – a contractual nightmare for in-house teams that need to assess their organisation’s LIBOR exposure manually but made manageable with AI that can read vast datasets and identify LIBOR provisions.

 And further regulation is anticipated in the form of new sustainability rules, such as the anticipated Environment Bill in England, which will dictate new parameters for waste and resource efficiency and environmental standards for products produced, among other measures. Using AI technology that can automatically identify which clauses and documents are compliant with the new measure will be crucial for legal teams.

AI technology is therefore enabling lawyers to keep more legal work in-house, affording them more oversight of the business conducted within their organisation. This allows them to collaborate more cohesively with other parts of their business. For instance, by having a more efficient way of reviewing and managing customer agreements, in-house counsel can work with sales teams to flag which sales contracts do not contain auto-renewal clauses and when they are due to expire, in turn driving business growth.

Irwin Mitchell found that 8 in 10 in-house lawyers believe technology such as AI will be hugely influential on their organisations between now and 2025. The sheer volume of enterprise data to analyse, as well as the expanding mandate of in-house lawyers, has meant that reviewing documents without the assistance of technology is simply no longer feasible – nor desirable. And as growing volumes of corporate data are collected in an increasingly complex world, technology will emerge as a key enabler in allowing in-house lawyers to foresee risks and take an active role in advising on business strategy.

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