As part of Litera’s new survey, ‘M&A in the AI Era: Future Trends in Deal-Making Tech’, the data reveals law firm leaders are navigating an increasingly competitive landscape for deal-making amid a slowdown in global M&A activity.

Eight in 10 (80%) UK law firms indicate that AI is highly important for their overall M&A practice. With legal professionals seeing a 27% improvement in the realisation rates for their M&A deals from the use of technology, it reiterates why the vast majority (81%) have plans to make use of Generative AI solutions for their M&A practice in the next one-two year, and the reason 94% anticipate that the majority of M&A engagements in the legal industry will be completed using AI-based technologies within the next 10 years.

Seven in 10 legal professionals in the UK report that clients proactively ask their firm about using specific AI technologies or products in their M&A due diligence projects regularly, compared to around half of those in Canada (51%) and the US (55%). Despite the potential AI offers, firms globally recognise that not all clients are comfortable with it just yet, and they’re tailoring their pitches to prospective clients based on their perceived comfort with AI. More than half (52%) of firms in the UK, US and Canada always include specifics on their use of AI-based technologies for contract review when they pitch for new M&A work.

“It is no surprise that clients are increasingly asking lawyers to deploy AI in their transactions in order to leverage the significant efficiencies AI can generate,” said Daniel Rosenberg, Partner, Charles Russell Speechlys LLP. “Those efficiencies are potentially so significant that lawyers should be more worried when their clients are not asking these questions – those clients are potentially going to be talking to lawyers who can offer these efficiencies on their own initiative.”

AI is not only benefiting M&A activity in large law firms, and given the investment by larger law firms in the deployment of these AI technologies, there are significant potential benefits for smaller and medium sized firms. When deploying AI on their deals, they can efficiently generate outputs that previously would have required larger teams, giving them the potential to increase their competitiveness opposite the larger firms.

As new technology is introduced, training must follow and 39% of UK firms have allotted non-billable hours that can be used for technology training as an added incentive. As firms seek to ensure their lawyers have the skills they need to meet the demands of embracing new AI tools and other technologies, almost half (44%) of UK firms are budgeting resources for lawyers to attend external technology conferences or training to enhance their skills.

There is also a debate on the impact of AI on young lawyers in the UK, with some three in 10 (32%) worrying AI tools make it harder for young lawyers to learn the craft because they do not get the experience of looking for and analysing critical contract terms. The majority (68%) of legal professionals in the UK believe AI will benefit younger lawyers by freeing them from routine work and giving them time to focus on their analytical and advisory skills.

Litera worked with Wakefield Research to survey 300 legal professionals at law firms with M&A practices in the US, UK, and Canada, in association with the ABA’s Technology in M&A Subcommittee.

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