Reshaping Transactions: Findings from the Litera Technology in M&A Report

Welcome to Legal Tech Matters, a Litera podcast dedicated to creating conversations about trends, technology, and innovation for modern law firms and companies big and small.

00;00;14;19 - 00;00;48;15

Bob

Welcome, everybody, to today's webinar, Reshaping Transactions - Findings from the Litera Technology M&A report. By way of background recently, the legal technology company Litera published the Technology M&R report - a survey investigating the adoption of technology in mergers and acquisitions practices and the impacts and benefits of that technology for M&A teams and their clients based on research in the United States, the UK, and Canada.

The report shows widespread adoption of software tools specific to M&A practice, and it provides insights into the changing attitudes of M&A lawyers regarding the impact of this technology on themselves, their practices, and their clients. So today we're going to take a deep dive into the findings of this report with help from two of the domain experts who were instrumental in researching and creating the report.

We're also going to hear from a M&A practitioner who is also chair of the ABA's Subcommittee for Technology in M&A, who will share his perspectives and insights on M&A tech in the real world. Today's program is produced and sponsored by Litera together with Above the Law. I'll be serving as moderator today. I am Bob Ambrogi, a tech columnist for Above the Law and also author of my own legal blog, LawSites.

What's going to happen today is we're going to get a little bit of our go through some slides are going to give us an overview of the report and its findings. And then after that, we're going to engage in a full panel discussion about the findings and what they tell us. And of course, we will leave time at the end of the program for any questions or comments you may have.

Without further ado, what I want to do is begin by letting the panelists introduce themselves and tell you a little bit about themselves. And then we'll launch into the presentation on the findings of the survey. So here are today's panelists. Let's start by having each of you introduce yourself. Jennifer, so you want to kick us off.

00;02;41;00 - 00;03;04;12

Jennifer

Thanks, Bob. Good afternoon, everyone. I'm Jennifer Tsai and I'm the Product Marketing Manager for the Litera's Workflow kind of products. I started my career at a large law firm in New York as a private equity and M&A associate. And then I joined Kira Systems in 2015. I held a few different roles during my time at Kira and then eventually transitioned to my current role overseeing product marketing for Kira, Litigate, and Transact on our marketing team here at Litera.

00;03;04;25 - 00;03;33;00

Bob

And of course, for anybody who doesn't know, Litera acquired Kira last year, and so they are all part of the same company now. And David Curle.

David

Thanks, Bob. Yeah, my name is David Curle. I'm legal content and research lead here at Litera. I too came over from here with Jennifer after the acquisition and I've been researching and writing about legal tech and about the legal services industry for many years.

Similar role at Kira. And before that, I was with Thomson Reuters Legal Executive Institute, where I had a similar role, and it's all been following legal tech with interest for many years.

Bob

Thanks, David. And finally, today, joining us from London, Daniel Rosenberg.

00;03;54;20 - 00;04;25;21

Daniel

Thanks, Bob. And thanks for inviting me. So, my name's Daniel Rosenberg. I'm a London-based partner at the Charles Russell Speeches law firm. We're a mid-size international law firm based in London with other offices in the U.K., in Europe, in Hong Kong, and three in the Middle East. So, my day job, that is being a cross-border M&A lawyer and mostly helping U.S. clients and their U.S. lawyers as local counsel navigate M&A into the UK in Europe. But also outside my day job, I am active as a foreign lawyer in the ABA M&A committee. And for many years I chaired the ABA International M&A subcommittee, and now I chair its technology in M&A subcommittee. And more about that later, Bob.

00;04;47;14 - 00;05;12;25

Bob

Thanks a lot, Daniel. What we're going to do now is I'm going to turn the reins over to David and David and Jennifer are going to take us through the report and what they found.

David

So, I want to say a few words about why we did this. There are, as you probably know, if you're watching this, there are a number of legal tech surveys out in the marketplace.

Organizations like the ABA, like, Bloomberg, Altman Wild do various types of surveys that try to take the pulse of the legal industry and particularly track their use of technology. But the narrative that comes out of a lot of those studies is that technology adoption seems kind of slow sometimes in the industry. Lawyers are reluctant to adopt technology.

Incentives are wrong for adopting technology. And that sort of a whole the industry has been slow. But, you know, we realize that the legal industry is quite diverse. You know, some of those studies will cover responses from solo practitioners to mid-size regional firms to international and global law firms that have thousands and thousands of lawyers and many more resources.

So, we think it made sense to sort of zero in a little bit on a particular law practice area, M&A, where Litera has a lot of a lot of customers. And we wanted to sort of present a take the temperature of that particular practice area and their adoption of technology in part because we had questions from our own customers regularly about, you know, where they stand, how are they doing compared to peer firms in terms of their use and leverage of technology.

So, it turns out, I think as a segment we our conclusion is that the M&A is actually maybe further along than people might think. I want it before we sort of dove into the technology here. I want to just give a nod to Daniel and his subcommittee on technology today because they have a directory of technologies that they've put together which organizes them or sorts them into a sort of taxonomy of technologies.

And we found that that was a useful way to divide the technologies that we were asking about in the survey. So, I want to give a nod and a thanks to the subcommittee for that and you'll see how that was used as we go through these slides. So, I want to take a minute and just sort of give a quick overview of the main four findings of the research and the first one is that on the whole, we think we find that the M&A teams have already adopted a wide variety of technologies in their work.

So, Jen is going to walk through some of those specific categories of technologies in which ones are adopted. And we also have some interesting data on the perceived benefits of the technology, planned spending levels and things like that. So that's one area of findings. And then a second group of findings had to do with artificial intelligence because M&A does involve large amounts of data in big deals, AI technology is sort of well adapted to that.

And we're finding that AI is becoming pretty well-established and is on its way to becoming ubiquitous. So, we have some findings about what our respondents have said about A.I. Thirdly, we found that the use of technology or the leveraging of technology is really reshaping M&A teams. New skill sets are needed, new types of colleagues are needed.

And also, even the lawyers on the teams are developing new skills and developing new career paths and experts and new levels of expertise. So, we say in the report that you can't have a technology revolution without a people revolution. And we found that there are a lot of people changes going on as a result of the influx of technology.

And then finally, we have some findings around the recognition that the technology that many teams are using is not just about themselves. It's not just about improving their workflow, improving their quality of work life, but also, it's creating opportunities to go in to build deeper relationships with their own clients and set different levels of expectations and create areas in which clients and lawyers can collaborate.

So, with that, I'm going to turn it over to Jen to sort of take the first set of a set of things there.

00;10;12;04 - 00;10;37;21

Jennifer

And so, like David just mentioned, the survey results yielded several key insights into technology usage in the M&A practice. And one of the first insights that we discovered was that the M&A technologies that we asked about are actually quite widely used by M&A practitioners. So, as you can see here, seven of the more granular subcategories of technologies are actually being used by more than 50% of the respondents.

Those top seven technologies are used to organize projects. We've got project management and knowledge management for that one at 58% and 57% respectively. Also, to streamline closing there's digital signature at 61% to negotiate deals document comparison with 50% to draft and review contracts, contract review was at 61% and document manipulation at 51%. And then also to augment diligence where we have data room at 57%.

So, shows us at what phases during a transaction the various technologies are being used and we can see that that's a broad spectrum of workflows and tasks. So that to us indicates that M&A teams have implemented technology at every stage of their workflows and that there is also room to modernize and automate currently manual processes as well.

And then as the next slide here, we can see that technologies related to the due diligence and negotiation phases of transactions are considered the most important for M&A lawyers. And since these are among the most frequently used technologies and make sense that they're considered the most important as well. I think we all know that drafting, negotiating and accessing data and data rooms for diligence purposes are great limiting processes in most transactions.

So, there are areas where technology can really give a firm a real advantage. I think there's an older survey of M&A professionals in Europe, the Middle East and Africa done by Merrill in 2019 that found that the factor slowing down due diligence the most was accessing, gathering, verifying and reviewing all the documents, information and data related to a transaction.

So, it makes sense that as a category diligence has the highest importance rankings which reflects the importance of diligence to managing client risks and central concern for M&A teams. Some other categories that rated highly under importance include technologies that help with the entire end to end workflow like project management, knowledge management and negotiation and platforms. The importance of these tools suggests an interest in bringing the deal process into a more unified and and more standardized platforms for more efficient execution of deals.

And then now getting into the benefits of technology being used in M&A. We ask whether M&A technologies help improve the respondent's M&A practices, and we wanted to find out how as well for each of the technologies that respondents said they use we asked them in what specific areas of their experience they saw improvement and so their answers provided us with some interesting insights into what motivates them to leverage technology more in their work.

And what we found was that M&A lawyers saw as top benefits of technology and M&A practices were all relating to higher accuracy and decreased risk. And those are both factors that are really important in M&A work. 73 respondents ranked one of these top four benefits of technology as the most important benefit, and they were having more accurate review, increasing the scope of review to decrease client risk, having more time for analysis and client consultation, and just generally more efficient review processes.

So, this suggests that client interests in risk management getting accurate results and improving client relations are central considerations for lawyers choosing to leverage technology in M&A deals. These are important areas in which technology can really act as an extra set of eyes and add value.

One example on the accuracy point there, I think there's research that's been done in the field of information retrieval that found that the maximum recall of manual human review is only around 65%. So, to the extent that a product exceeds that, you're going to see that value add and benefit of using the technology. And obviously more return on investment with products that have even better accuracy.

On top of that, using technology allows legal teams to dig deeper into a set of contracts rather than just, say, the top ten or 20%. We're figuring out what's material in the first place. It takes a lot of time to sift through contracts that might be located in different places and figure out what that top 10% of contracts should even be in the first place.

So, removing the risk of missing critical issues and language, which is present in human review, can be a real game changer. And the process becomes more efficient because you don't lose time retyping information or copying and pasting things like indemnification provisions or signature blocks. And that leaves more time for thinking about the bigger picture of a transaction, analyzing the language, and providing more value to your client.

That said, the output of the technology will only be as good as the attorneys understanding of multiple factors. Software may be able to accurately find change of control or assignment provisions for you, but since products like Kira that are meant to augment and support but not replace attorneys, a human still has to put those provisions into context with things that vary with each deal.

So, things like the structure of a specific deal and individual client's appetite for risk making the call on what level of materiality those issues arise do, and so on. And now moving on to approaches to innovation. We also learned that M&A lawyers see themselves as technology innovators or early adopters. I think we can all agree that lawyers generally aren't typically seen as risk averse and resistant to change.

But a lot of things have changed that including the pandemic and how making the transition to remote work and using more technology has been critical to continued success. In practice, and to that end, most of the M&A lawyers that we surveyed for this report rated their firms as either innovators with a high tolerance for risk at 29% or early adopters with a moderate tolerance for risk at 52%.

The other 19% of firms saw themselves as early majority adopters, late majority adopters or laggards in their approaches to tech. So, we can see that there are relatively high levels of adoption of certain technologies like contract review, digital signatures and data rooms and this suggests that M&A lawyers may just well be ahead of the curve compared to other practice areas in terms of technology adoption.

M&A work is very process oriented and involves large volumes of data and documents like David mentioned and that's exactly the sort of work that lends itself to the standardization of automation that technology can support. And I'm looking forward. We also ask them questions in the hopes of looking ahead. What's down the road for technology and M&A practices? What we found was that M&A practice groups are increasing their investments in technology. A large majority of respondents - 84% expect to increase their investments in technology in the next 12 months. Another 23% expected to significantly increase their spending. And notably, none of the respondents expect spending levels to go down. So those responses really suggest that technology investments are going to continue to accelerate in the coming months and years. And so now I will hand it back to David to share what we found on technology's ubiquity and M&A.

00;17;39;21 - 00;18;15;22

David

Thanks, Jenn. Yes, we had some questions specific to the use of artificial intelligence and really, the main finding is that its use of AI in documentary view is becoming an industry standard. You see the first chart there that 83% a total of 83% think that the agree with the statement that it's that AI is very important or important in their overall practice.

And then specifically with regard to document review and due diligence. The second slide on 90% 91% strongly agree or agree with the statement that assisted document review will become standard for due diligence. And again, it's for all the some of the same reasons that Jen just mentioned about the size of datasets and the ability to process data quickly and get to the correct insights more quickly.

So, we find that this sort of, you know, reluctance or fear about AI that you might see in other parts of the industry really is not happening to that extent in M&A. And then another question sort of ask about about the future, how important is AI, how prevalent is AI today and how important will it be tomorrow?

So, this is all about sort of expectations. And even though it's fairly well rooted today, there's still room for growth. So, you know, this chart shows that today 26% of the respondents think that, you know, a high proportion or an extremely high proportion of their engagements will involve or leverage artificial intelligence. But that 76% think the same will be the case in five years.

So, I think there's this expectation that, you know, even though many may not have really gotten, going with using AI, many engagements, that it's definitely part of their future. So, we're trying to get sort of underneath what are some of the benefits that might be driving that acceptance or that interest in artificial intelligence.

And so, we asked the respondents a series of questions and asked them to sort of tell us their level of agreement with those statements. And most of these, as you can see, you got a fairly high score. The average is right around the agree stage. And, you know, some of the some of the things that they find to be benefits have to do with what you'd expect in terms of efficiency, things like freeing up time to do other higher level work, cutting costs but also things like retaining younger lawyers that were seen as a benefit, which implies that sort of that that younger lawyers have a sort of an expectation around using advanced technologies in their work.

Another statement that they agree with was that, you know, they would recommend it to two colleagues. There's a lot of positivity around the accuracy. Those last two lines of the chart referred to the accuracy of contract review and automated contract review. And trust in the results of AI. Agreement with those statements is a little less so, which I think is a sign that there's still a little bit that AI is still new, people are still feeling their way through it and making it want to make sure that the accuracy is there, want to make sure that they're confident in the results of what AI does and can do for their clients

And then again, with regard to their own careers, most of our respondents do think that AI is helping to create new career paths in the sense that the technology is bringing with it a need for some people who specialize in using the technology, whether it's, you know, AI or some of the other technologies we've adopted here, and that there are career paths for not only lawyers who want to take on new skills and new functions, but also new other types of professionals, data analysts and project managers and that sort of thing.

Another positive impact is that, you know, that AI can kind of free up time and attention for higher level work and spend more time discussing strategy with your clients rather than just doing document reviews on a granular level. The one sort of negative-ish finding here was that there is some concern that the automation of document review can make it more difficult to train younger lawyers.

And I think that's a debate that I've heard in a number of different contexts. And I think, you know, I think one can argue that maybe, you know, a manual review of thousands and thousands of documents is not necessarily the best way to train younger lawyers. But I think the use of automation in some of this work does create a gap on bridging the gap between experience levels of younger lawyers and older lawyers.

And I think firms will need to adjust to that, so I'll turn it back to Jen for the next set of topics.

00;23;51;13 - 00;24;19;08

Jennifer

Thanks. So, like David mentioned, there is new skill sets and are emerging from the growth of technology and M&A. So, we'll take a look at what those roles are to help manage technology and processes. So, we found that on average, survey respondents said that their firms are increasing their investment in several types of allied professionals. The most common role mentioned was I think, where there are a few of them, were pricing and budgeting managers along with product managers.

And that said, similar amounts of investment are being put toward legal knowledge engineers, knowledge management professionals, data analysts, and also project managers. And then for another angle on how many teams are changing, we found that 90% of respondents thought that younger lawyers coming into the profession are very prepared at 33% or generally prepared at 57% for using technology and legal practice.

This is partly because younger generations are seen as more technologically savvy and are engaged and interested in the use of technology and in their practice. So, we think that this indicates that firms that are lagging in purchasing and implementing technology are going to really start feeling increasing pressure to build up their capacity to evaluate technology, purchase it, and encourage its adoption across their firms as part of their overall efforts to recruit and retain younger lawyers.

We've been seeing that turnover has really increased in recent years. And to come back that the technology that's available to firms' lawyer is growing part of increasingly consideration in building a culture where attorneys feel supported in their work rather than just being an interchangeable cog. And so now I'm going to turn it back over to David for how technology is changing service delivery in M&A.

00;25;42;03 - 00;26;06;23

David

Thanks. Yes, this is, I think, maybe one of the more important takeaways here, and that is that as I mentioned before, you know, the technology is not just there for the lawyers using it. It's there to improve service delivery for in general for the team and that's really, you know, the biggest bang that firms, I think, will get from the use of technology.

We do see signs, for example, that the clients are asking specifically about A.I. technologies or technology news in general when they're when they're engaging with law firms. As you can see, their 30% report that the clients are always asking about A.I. when they turn on engagement. And another 51% sometimes ask about it. So, from the client side, there's an interest but also from the law firms themselves are starting to see that the use of technology is providing new opportunities to work in new and different ways with their clients.

So, for example the 88% figure there is that 80% of clients find that leveraging technology gives an opportunity to talk to clients about what should be the scope of the use of technology on a particular engagement. What are that what's the risk level that would dictate, you know, use or not use of a particular technology?

Other data shows that the use of technology and AI is providing more marketing and business development opportunities to firms so that again, 88% of use information about their capabilities in AI in RFPs or in pitches to clients end up in the upper right hand corner and 91% see their technological capabilities as a competitive advantage that they want to talk about when they engage with clients.

And in the lower right - 91% say that they've developed some special expertise in some aspect of the use of technology in their work that they find is useful when talking with clients about the matter. So overall. What's interesting here is that, you know, it paints a picture of the technology as being valuable, not just because it speeds things up and gets things done faster and makes you more efficient, but also, because it can actually be a springboard to better relationships with clients, sort of an opportunity to have deeper conversations with clients about their work, about their matters and how to leverage technology in them. So those were kind of the main findings. I'll turn it back to you, Bob. The lead us out from here.

Bob

Thanks, David. Really, really fascinating survey and report. And just before we go on to talking about it a little bit more, I just want to for anybody who came in late to the webinar, a couple of things. One is if you've got a question go ahead and drop it in there. We'll be monitoring that for any questions or comments you may have, and I'll present them to the panelists.

And second, you will get a copy of this report, not the slides you just saw about the report that has all of the charts and all of the information after today's webinar. So, you'll have that available to you. So, Daniel, let's turn to you here. You're out there in the trenches so to speak, of M&A practice.

Maybe trenches isn't the right word for that, that area of practice. But you get the gist of what I'm saying. So, what as you've listened to Jen and David talk today, what's your takeaway? And in particular, do anything surprise you about these findings?

00;30;02;02 - 00;30;24;07

Daniel

Yeah. Okay. Yeah, well, sure. So first a little background. So, the trenches, I mean, I'm actually in two different sets of trenches because I've got two hats on. So, the first is my day job as an M&A lawyer and an English one at that. But the other one is as chair of this ABA technology and M&A subcommittee and maybe just a moment about what that is.

So, our main ABA M&A committee has more than 5000 lawyers in it. So, it's by far the world's biggest forum for M&A lawyers. And we have numerous specialist subgroups like public companies, Private Equity International and my tech in M&A subcommittee. People may be familiar with us from our very famous Deal Point studies and the Model SPA we put out in the APA a merger agreement, and we have fabulous women in M&A group as well.

So, what is this tech in M&A subcommittee do? Well, we inform our members on the growing use of tech, and we produce the directory that David talked about before, which generated the taxonomy that has been used in this study. And by the way, it's a pretty comprehensive directory if anybody wants a copy of it. Please feel free just to ask me.

You can either look me up on the web or I think the organizers will put my email address in the in the chat. So we have all of these demonstrations of technologies because our members so our members of our group range from real tech specialists right through to M&A lawyers that just want to know a bit a bit more about how the tech works in their in their day job.

And for all these demos and we have detailed assessments of the tech in the directory, we have a good idea of what's out there. But what we don't really get, and the information is very, very rare is what's actually being used in the practice of M&A. There might be 200 technologies out there, but how widely used are they?

And that's why this report is so valuable, because it's really a very, very rich source of information on what's actually being used. And I suppose my first comment is that what I see in the report confirms a lot of what we thought in terms of what tech is getting used, how useful it is and why. I think I'd say that when you look at the report, you have to remember that the market is actually pretty segmented in a number of ways.

So obviously the report aggregates results from right across the market. But for example, geographically, I would say the UK market is a little different from the US market because for example, we've had know how manage us for many, many years in many of our law firms doing things which in the US traditionally the lawyers themselves were doing.

So, I think that's one distinction. And then secondly, in terms of the type of work that all your different U.S. law firms are doing. So, I know at one of my meetings I asked people who was familiar with cap table capitalization table software, and there was a very, very clear segregation in the room between the lawyers that work for firms doing a lot of PE work, a lot of V.C. work, and they were all familiar with it.

And many of the others had never come across it at all. So again, I think that's relevant when you look at a report like this and of course, the type of firm there are increasing numbers of these disaggregated law firms where people are all in different places. And I think those were clearly early adopters of a lot of this technology particularly the technology that helps people collaborate with each other.

I'd say that in terms of one of the takeaways, it's clear that the ability to be more efficient in what you do is driving adoption of these technologies. And if we take the automation, there are some things that you just couldn't do efficiently at all without it. And I would say in other cases, even if you could do it, if you don't use the technology, your competitors will use the technology.

They'll be that much more efficient, and they will eat your lunch, basically. They'll take your clients from you. To take an example we had recently, we were working on a matter with the multinational and there were 4000 contracts to review, and we figured that they would basically cost if we were to read them all, it was going to cost about $1,000 a contract. So that's 4 million bucks and it would take 8000-10000 hours of work.

We used an A.I. tool, and one of the things we did was we scoped it right down to 1800 contracts using the technology, and we figured it would probably cost more like $100 to look at the outlying each outlying contract because we were only really interested in the outliers and we could get through about 50 an hour using, you know, overall this, this, this methodology.

So, if we hadn't been able to offer that, somebody else would have done and we would not have had that work. Simple as that. The other point I wanted to pull out was this a very interesting section on staffing and talent, talent management in M&A practice in the report. And what the report says really rings very true to me as an English lawyer because again, I think we've had more specialization in the English law firms than the U.S. counterparts traditionally have had.

So, the report talks about pricing and budgeting managers. And yes, we've had those for a while, product managers, by which we take that to mean specialists within the firm who are not themselves lawyers but help us work with various different types of technology that we use every day. So, for example, we have a couple of project managers that only work with this only AI tools, and we have a couple of others that work with its own document assembly, and they're experts in that, and they really help us get more value from it.

We have, as I said before, knowledge management professionals who help us with our knowhow when we've had those in the UK market for many, many years. And what we're starting to see in the UK market and to some extent in the US market. But I think it's I think it's a little bit slower there, are project managers and by that I mean when working with some of the collaboration tools and the document and the deal platforms, there is no particular reason to have a highly paid legal associate project managing the work that comes out of those platforms, checking whether the tasks have been done, checking even whether people have loaded their time on the file.

Some of the larger firms in London certainly are starting to hire project managers who are doing that work and in doing so becoming much more efficient, driving greater profitability for the firm and a greater satisfaction for the client as well.

00;37;49;18 - 00;38;18;03

Bob

Daniel, you said that one of the principal factors driving adoption of this technology is efficiency. You said if firms aren't using it, the other firms are going to eat their lunch. But a couple of the other factors that I heard Jen and David talking about were enhancing accuracy, were enhancing collaboration. And I'm just wondering what your take is or feedback is on those aspects of this technology.

And to the extent that which those factors may be driving adoption as well.

00;38;23;18 - 00;38;47;07

Daniel

Well, certainly when you have teams across multiple offices, it could be a cross-border deal where you have teams in multiple jurisdictions that you have to find an efficient way to collaborate. Again, otherwise someone else will. I think if you're all in the same office, there is still a need for collaboration. I mean, I'm in a London office.

We're actually in two buildings you know, we might as well be on two separate continents at times. It doesn't really make any difference because we are using all sorts of things to collaborate with each other anyway. I think on accuracy, I think that we've never really seen it as a problem. If you have lawyers spending 1000 hours reading contracts, okay, so maybe in the middle of the night they might get less accurate.

But so, I don't think that we've ever had a problem with accuracy, but I think the fact is that it's just not worth spending 1000 hours doing something that a computer technology can do very quickly. Just to give you an example, from the start of my career, so early on in my career, we would read share purchase agreements when they came into junior lawyers, would read the other sides, contract over to each other to check that the other side didn't sneak something in or leave something out that had been agreed.

And it would take hours and hours and it was brutal and boring. And of course, now we have compareRite software. We all are using that for years and years. Funnily enough, David mentioned a comment about the training gap and of course, when you're reading over documents by rote, you get to know those documents pretty well. And so, sure, we have to find ways to make sure that our lawyers know those documents equally well, even though they're not spending 3 hours a day reading documents over to each other when they can redline them on a computer so that training gap is there.

But those days are not coming back because no one's going to pay us to do that.

Bob

Yeah. I on this point of any surprises in the report of David, just want to touch base or do I know you've both been immersed in this. And so, the surprises may not be as obvious, but were there points that really stood out to you here? That you found unexpected? David, maybe throw it to you first.

00;40;52;13 - 00;41;23;12

David

Yeah, it was a surprise. Exactly. But I think there's the last slide I showed which talked about the ways that firms are learning to leverage the technology, not just to work more efficiently, but to actually create better relationships with their clients is really important. You know, Daniel mentioned the use of automated review to sort of come to to take a first pass at a set of documents to cut down the size and scope of the more manual part of the review.

That's something you can go to a client with and say, look, there are some trade-offs here. There's you know, there's cost, there's time, there's accuracy. But, you know, where do we want to sit? And that becomes more of a strategic discussion rather than just the client coming to them and saying, you know, here, here, are the material contracts through to review.

It becomes more of a partnership in an engagement that way. So, I think a lot of those things plus the point about, you know, firms starting to recognize that they can firms have always sort of bragged about their technology, I suppose. But I think the ones that are really adopting the level of technology that we're talking about here really do have things that they can take to a pitch with the potential client and talk about some specifics of how they can work on a particular matter in a more efficient cost-effective way.

Bob

Yeah. Jenn, how about you?

00;42;20;29 - 00;42;46;13

Jennifer

Yeah, I think it's the same. And I think just generally the adoption levels being so high overall was something that was a little bit more surprising to me. I've only been away from that landscape for about ten years. And it seems like it's a completely different world now. We were still doing diligence without any sort of AI, and now there's like different products to it.

Like there's a lot of competition in that area. So, I think seeing that and then like David mentioned to you, the ubiquity of that technology and how law firms are really leveraging it, like in pitches for prospective firm clients and how much is being used to compute to complete transactions as has really changed a lot.

00;43;07;13 - 00;43;40;18

Bob

So yeah. Well, to the point of the idea that the world has changed a lot in ten years, here, and I think the report really paints this picture of the of the impact of this technology, not just on the efficiency point but really on in some ways redefining the entire landscape of how M&A practice is conducted. So, what are you seeing kind of on a practical level in your own firm or among those on the subcommittee on which would you say?

00;43;41;11 - 00;44;04;13

Daniel

Well, we're certainly seeing a rapid increase in the adoption of these technologies. And as I said before, the creation of these new roles. Somebody once told me, you shouldn't ask a five-year-old these days what do they want to be when they grow up? Because the job they're probably going to do hasn't been invented yet. And I think that's one of the things we're seeing very rapidly here.

Both in our firm and outside. You asked me earlier about things that surprised me. I think one of the things that stood out and did surprise me was how low the survey showed the level of adoption of data rooms. I can't remember having done a deal with a live data room for many, many years. I think it was the ash cloud in 2010 that started to change very, very rapidly because people couldn't travel.

And there was the technology around the early versions of some of these Merrill type data rooms. And so, I think I, I was surprised it wasn't higher than 95% because I think everyone is using those technologies. But in my firm, we are not first adopters. We've taken a policy not to be first adopters. We, we like to see technologies that are tried and tested and then we roll them out.

I don't think we lose too much we gain a little bit of sleep, and we find technologies that we think will work. That's our approach to it.

Bob

Thanks, one of the suggestions in the thread just goes, did I just cut somebody off. Now, one of the suggestions of the survey is the law firms will be investing more over time in M&A technology. How do they know how to prioritize those investment investments? Where do they start? Where do they move on from there?

David, do you want to take that a little bit?

David

Well, sure. I mean, I think, you know, an easy starting point is find that find the pain points. Find the parts of the process that don't seem to be working very well where people are frustrated and identify them. But just as and then try to find a solution. But just looking around for a solution isn't really enough for you.

It helps to you know, if you've got a pain point around a certain part of your process, whether it's that you're sort of the you know, the number of documents you can process in a certain amount of time or whatever it might be, it helps to do some measurement - take a baseline measurement so that when you when you do start testing particular solutions, you have a baseline.

You can actually see the improvement. And if you have to make the case to make further investments in technology, you have some data to back it up. So, I mean, I guess that's sort of the simplest way to put it is find the pain points and measure the effects to measure the process today. And then and then try to find solutions that move the needle on those pain points.

Bob

Jen, anything to add to that?

Jennifer

Yeah, I think adding on to that, it feels like we've passed the question of whether technology should be purchased and implemented or it's now more of a question of how to get the most out of that technology, how to bridge the different functions and what the technologies do. So, like in the survey, we followed the ABA Technology and M&A subcommittees directory and the structure for various workflows, but things become more of it.

How do you tie them together to achieve the best results? There is an interesting case study that Goddard recently did in which they used four completely separate legal technology solutions, including Kira in a library, paper, and project. And I was really interesting just to see that they were able to get even more efficient results by integrating all the technologies together into an overarching workflow.

Bob

So interesting. And how about you? Did you have any thoughts on that question of how a law firm got started down this road?

Daniel

Yeah, sure. I mean, we go by the pain points approach as well. So, I mean, to give you one random example, we took the view at some point that we were actually writing off more money than we wanted to in terms of costs that we couldn't recover through our estimation process for the deals not being as good as we wanted it to be.

I mean, we are able to compare with other firms because there are surveys that the accountants do. We weren't too far behind the game at all, but we thought it wasn't good enough. So that caused us to invest in budgeting solutions. So that would be a good example of that.

Bob

So, does that. Again, I think another finding of this report is that some of these technologies are used more than others. And does that again, come back to the pain point issue or why do you think that is? Or does the survey offer us any clues as to why that is?

Daniel

And just to finish off on the other point.

Bob

I'm sorry. Well, I'm sorry. No, no.

Daniel

No, you didn't. I just remember that Jenn said something about people using more than one technology. So, our directory forces people to pigeonhole their technology where it used to anyway. And that's the point into one or another of our multiple taxonomy pigeonholes. And we then discovered that's not possible because there is a growth of companies like Litera, but it's not the only one that are creating these integrated solutions.

And our thought is that going forward, our firm, we believe that some of these integrated solutions are going to lead the way. And the individual one off to little bitty solutions to a little bitty pain point end up getting swallowed up, hopefully into the bigger platforms that could do things in a more integrated way. So, for example, Kira was a great solution, but it's now part of another organization.

To take another example with you guys is Doxly where the founder of Doxly, who's been very involved in our subcommittee, but of course, her company is now again part of the same wider group. And there's no way you can ask someone to pigeonhole that kind of range of products. We think that's the way the market's going.

Bob

Yeah, that's increasingly a challenge with a lot of practice, a lot of products out there, although often the products, the owner is less capable of being pigeonholed. But the products themselves in some ways can still be classified in some way.

The So, yeah, I was asking before the question of following up on the survey, finding that some products are seeing greater use than others in this area. And I wondered if there's any insights from the reporter from your own experience as to why that is.

David

Well, we were talking about this before. I think one thing we know, like in any other segment where technology is used, there's certain technologies that are at a different stage of development than others.

So, some of the some of the some of the things we asked about have been around for a long time, you know, so, you know, digital signature products are quite different animal than AI-based contract review. And they've come along in different phases, and they just buy the complexity, the varying levels of complexity. You know, they may have been maybe on different curves for adoption.

I think that may account for some of the differences in the adoption rates of the various technologies.

Bob

You know, I guess continuing that thought a little bit. One of the findings, you know, for example, in the survey was that many saw a contract review technology as the most important technology. But several of the respondents also put it in the middle of the pack in terms of their satisfaction with the technology.

What are your thoughts on that? Why? How is it that you can see something as the most important, but they're not all that satisfied with it?

Jennifer

Yeah, sure. Well, my first answer is kind of is because they're not Kira customers, but in all seriousness, there's a lot of variation in the different contract review technologies. You're talking about things like rules-based versus natural language, natural language processing and free machine learning. And then there's also AI making, the ability to make subjective interpretations like in a world of software platform detecting legal language that might be drafted in hundreds of different ways, it's just a completely different thing. So, it could be one of the reasons why the satisfaction with that more objective type of technology being higher for not because there's there's just so many different products and everyone's going to have a different experience with each one. And then it comes down to things like how easy is it to use?

Like how intuitive is it? What supports provided So, you know, there's a bunch of different factors, I think, that can go into practitioners' satisfaction with the technology or the specific technology that they're using.

Bob

Yeah. Yeah.

Daniel

And of course, there are different types of contracts with, you know, we use that term, but there are various different types of contracts with new products out there. I mean, the one I think you're talking about is obviously the diligence review. But one of the products I trialed recently, and I thought it was amazing was a product that reviews draft merger agreements and draft share purchase agreements, stock purchase agreements and well, it checks whether they're robust references, it checks whether there are clause definitions that appear to be defined but the never used and the other way round, it can go out to Edgar and tell you whether the indemnification provision in this market or not market for the particular type of deal, the particular type of industry. So, it's comparing with other sample clauses out there and I think these are really, really exciting technologies that are not used that much now.

But I think we'll see them use a lot more in the coming years.

Bob

And soon we'll have the ones that will do the drafting for you, let alone the review.

Daniel

Yeah, yeah, yeah. Listen, the one thing they can't do is have to have the closing dinner that that's about.

Bob

Of a dinner, a dinner with bots. That would be a lot of fun. We only have a couple of minutes here and I thought maybe we should just kind of go around with the panelists and I'd ask each of you for any kind of, you know, takeaways, closing thoughts, summary thoughts you want to share. Before we wrap up.

David

I'd go back to the very first section of my bit, which was talking about why we did this survey. And I think one thing I'd ask the audience to do is to sort of think about any data you see about it, about technology, adoption, technology use in the industry, and make sure it's relevant to your particular practice you're concerned about. So, I think the data here shows us that M&A is a little different than the industry as a whole, and it's worthwhile to sort of consider those unique aspects of each type of practice when you're thinking about the technologies that might be used and adopted in them.

Bob

Thanks, David. Jennifer, how about you?

Jennifer

Yeah, I mean, I think overall it's the point that I mentioned before about how we're past the point of like, is technology relevant? Yes, it clearly is. But it's now like, how do you get everything out of it that it's supposed to do? Can the technology be adapted to different use cases? Like what can you do with that information?

And just to improve how you're practicing and to make things more efficient, So I think it's just I think it's that point for me. It's just what you do with all this information out and making sure that the various products aren't siloed and the results and the output that you get from it don't just get bucketed somewhere, but that you can actually use it to to build something different.

Bob

And Daniel, you get the final word today.

Daniel

Well, I would say as an in the trenches M&A lawyer, I think the thing that we all need to do is just keep informed. It's a very, very fast-moving market. And I'm not a professional in my firm on the tech side, we have professionals that review these things and keep an eye out. But it's the role of all of us that I am and lawyers to stay informed on what's going on in this market.

And whether you do it by, you know, looking at websites and blogs like Above the Law or whether you join a committee like our technology and M&A committee, I think you just have to keep your finger on the pulse because it's all changing very quickly. You don't want to be the only one in the room that doesn't understand it and keep up with it.

Bob

And say you want to get the final word. But just a this just popped up a comment from somebody in the audience saying, and let's not forget, users need to push vendors to make relevant changes. So, on that note, we can wrap it up. But thanks very much to all three of you for participating today. And a big thanks to Litera for doing this research.

And report and to Above the Law for presenting today's webinar. As I said, you will all or all of you attending today will get an email with a link to the full report. I hope you'll read. It is really interesting. Thanks to everybody for attending.

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