DUBAI, UNITED ARAB EMIRATES, May, 2023
For at least ten years, “legal tech” is one of the hot topics when it comes to VC investments and fundraisings. To be honest, being a lawyer myself and active in the M&A industry for more than 20 years, I have been looking at these solutions very criticaly.. until now.
Many of the technical solutions offered to law firms or legal departments have in the past been rather ineffective. Some were meant to speed up due diligence (DD), some to speed up the drafting of legal documents. To the extend DDs cope with a large volume of standardized documents (like land register excerpts), such solutions proved to be of some help early on. The more complex the business model of the targets was and the more diversified the legal documents, the less helpful they however proved to be, because the necessary input was to high. The same applies to solutions which are meant to accelerate the drafting. Such may help to present a first draft share purchase agreement faster, in particular if inexperienced juniors are working on them. The solutions however quickly run out of potential once a transaction becomes complex and many different interests and stakeholders need to be considered.
Lately however, the invention of KI based algorithms seem to really make a difference. In particular solutions integrating Chat GPT or similar techniques made me wonder how this will go on and can effectively be utilized in the daily advisory business. Saving tremendous resources in research or business analytics certainly comes to mind first. In this regard I just lately came across some highly interesting startups that have developed engines for specialized data crawling in specific legal areas like regulatory law or Intellectual Property. Even though such business models will still need to prove sustainability, it is clear already that such inventions can save tremendous hours of research time and thereby help advisors in all professional service areas to streamline the business, while focusing on its high net worth elements.
In one of my latest discussions with Corporate Finance Advisors I got a first impression on how this will look like. I was told they will be able to lay off up to 70% of the junior analysts by having Chat GPT solutions do the research for them. Analysis delivered by the bots for the most part are more to the point and focused than initial work products by their juniors.
In the legal area, the development is similar. Data research engines and community platforms like LEXAI will revolutionize the way young lawyers will research the law and most certainly increase the quality of output while reducing the need for large numbers of junior associates in big law firms. Such solutions will increase the speed of the business and its quality while substantially reducing manpower and costs on the other side of the P&L.
It will be a great pleasure helping such promising young firms to grow and disrupt our industry!
Holger Scheer
Saxum Global Consulting FZCO
+971 54 578 5620
hs@saxumglobal.com
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