Due Diligence “rivers of gold”

Based on what I have just seen at a client, the Due Diligence “rivers of gold” for law firms are going to dry up – quite soon.

The client is a large fund which buys a lot of a particular sort of asset. They would normally use a law firm to do the DD on the asset and it would cost around $400,000 and take the law firm 3-4 weeks for each DD exercise. They decided to build their own AI to do the DD. It cost them around $50,000 to build.

They have used their AI for the DD on two recent acquisitions. They believe the accuracy is equivalent to the law firm and the cost to do each DD – $800 in compute costs.

I have long said that what will prompt a massive increase in AI investment by legal teams and law firms (far more than current levels) will be when we hit a “Yikes! Moment”.

I define a Yikes! Moment as when we see AI able to do a significant legal task more than 10X faster and 10X cheaper than human lawyers.

I have seen a lot of legal AI tools and there are some interesting use cases but none of them were a Yikes! Moment.

After today, I think there is only one thing left to say:

YIKES!