Legal AI’s impact on your M&A lawyer (not written by AI...)

This is just one lawyer’s perspective, but I have a somewhat unique perspective in that I have experience with deals of all sizes and I work at a tech-forward firm, Scale LLP, that has leaned into AI, and we have a number of attorneys with deep experience in the tech industry and we all skew towards being early adopters. I won’t address the obviously hyperbolic extremes on both sides of this equation, which are, on one side, “Can’t Chat GPT just draft my APA”, and on the other side, “Nothing will ever replace my lawyer brain and AI is just word salad.” It’s not worth spending time on either of these. If you’re wondering whether AI is reshaping how deal practitioners in the LMM M&A space are engaging with their deal lawyers, here are some thoughts on the current state of play: 1) Focused on Big Deals: The most popular legal AI products I've seen such as Harvey AI, Spellbook, Marveri (others?) are sensibly targeting the low-hanging fruit of the work junior associates perform at big law firms for middle market and larger deals. Diligence memos summarizing corporate documents, change of control provisions, charts summarizing merger agreement changes, cross-checking agreements for consistency, etc. The work of junior associates has always been predominantly clerical and it’s being replaced real time. Sure, someone will need to check the work of the LLM’s, but the need for spending hundred of hours clicking on each pdf in a data room and reading every page is gone. If you're working with a big law firm using junior associates and they're not utilizing these tools you're officially being ripped off. 2) Solo and Smaller Firms at a Disadvantage: For LMM deals, though, the benefits for M&A deals is more based on your own firm’s ability to leverage their forms and templates. In my experience, a sub $50mm enterprise value deal really doesn’t requires tons of hours on diligence. AI is best at working with all of your library of purchase agreements, board resolutions, certificates, agreements etc. and tailoring them to your new deal. I think this is a disadvantage for smaller firms who don’t have the volume or resources to leverage this potential. The more different types of deals you have precedent for, the more likely you’ll be able to generate solid drafts using AI with less time spent. 3) Better Lawyering: A lot of the benefits of AI for your lawyer will be stuff you don’t necessarily notice. The ability to prepare for negotiations by leveraging AI to do dress rehersals of purchase agreement negotiations, the ability to develop narrowly tailored reps and warranties, the ability to incorporate market terms into documents without tons of research. All of these things make your lawyer better, but you may not be aware that AI is driving this performance. 4) Cost Savings: Again, for larger deals, there should be significant cost savings resulting from fewer hours billed to achieve the same results. For LMM deals, where the drafting and diligence were never huge parts of deal expenses, there should be some savings, though I don’t think this is that significant yet. Personally, most of my time spent on LMM deals is spent on structuring up front, dealing with the seller’s lawyer’s, going back and forth on subsequent drafts, and closing items. There are some AI options to assist with the closing process but I haven’t used them and haven’t heard that they are indispensable as of yet. I’m sure I left out a bunch of other topics, but this post is already long enough, interested to hear others’ thoughts!