AI-Powered Tools in Improving Compliance in Legal Firms

• Blockchain Council
• October 24, 2024

The rising adoption of artificial intelligence (AI) in law firms is significantly changing how compliance and regulatory oversight are managed. These tools help legal teams handle the growing complexity of industry regulations, automate time-consuming tasks, and boost accuracy. 

AI-driven systems are increasingly important for improving efficiency, minimizing the chances of non-compliance, and helping legal professionals keep up with the constant changes in regulations.

How AI Tools Help with Compliance and Monitoring

AI tools offer a valuable advantage in keeping track of the ever-shifting regulatory environment. The ability to swiftly scan vast amounts of legal information, pinpoint relevant rules, and highlight potential concerns is becoming essential for legal teams. These tools don’t just track regulations; they also assess how those regulations might affect a firm’s current practices, providing practical insights that allow legal teams to make adjustments quickly.

One widely-used tool is Compliance.ai, which helps businesses stay current with regulatory shifts in real-time. The platform uses machine learning to detect new regulations, evaluate their importance, and link them to a company’s internal rules. This process simplifies compliance for firms, making it easier to stay aligned with regulations and lowering the risk of penalties due to non-compliance.

In addition, SAS Viya offers a comparable solution in industries like healthcare and banking, where compliance is vital. By incorporating AI into its compliance functions, SAS helps with monitoring updates, detecting fraud, and managing risks, all of which streamline decision-making and regulatory reporting.

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Document Review and Legal Analysis

AI tools, such as Luminance and Eigen, are now essential for reviewing contracts and other legal documents. These systems use natural language processing (NLP) to scan documents, looking for any compliance-related issues. They can quickly identify crucial sections, spot risks, and ensure alignment with laws. Automating these reviews reduces the chance of missing critical compliance details and saves both time and resources. For example, a large organization implemented AI tools to automate checks for data privacy regulations, ensuring it met guidelines like the GDPR without needing manual reviews.

Crafting accurate instructions is key when using AI for legal monitoring. The Certified Prompt Engineer™ certification can help you enhance the way law firms handle compliance tasks.

Real-Life Examples of AI in Compliance

AI-powered tools are already changing compliance processes in areas like healthcare and finance, where regulations are complex and change often. For instance, Kount, part of Equifax, uses AI to improve fraud detection and regulatory compliance. The platform relies on machine learning to screen against international watchlists and monitor compliance in sectors such as finance, reducing the manual effort of checking for sanctions or politically exposed individuals.

In the legal space, another tool called Ayfie assists with regulatory monitoring and reporting. Ayfie enables legal teams to stay ahead by analyzing large sets of data and identifying irregularities that could signal compliance concerns.

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Automating Documentation and E-Discovery

AI also plays a key role in automating document creation and e-discovery, both crucial tasks in legal work. Tools like Everlaw and Relativity use AI for e-discovery processes, sorting through huge amounts of data to find relevant documents, predict decisions, and streamline reviews. This speeds up legal discovery while reducing costs and the time involved.

Kira Systems stands out for its role in contract management. This AI tool reviews contracts, identifies key clauses, and ensures compliance with current laws, all while cutting down on the time needed for manual reviews and improving accuracy.

Predictive Analytics and Compliance

Some AI platforms offer predictive capabilities that help legal teams foresee regulatory changes or the likely outcomes of compliance-related actions. Lex Machina is one such tool that uses predictive analytics to project the outcomes of litigation. By analyzing past data and trends, it assists legal teams in making smarter decisions, lowering the chances of breaching regulations.

Predictive tools like these are becoming more common in sectors where the cost of non-compliance can be severe. For example, AuditBoard incorporates machine learning to offer insightful compliance suggestions and automate workflows, saving legal professionals considerable time and effort.

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Challenges in Using AI for Compliance

While AI offers many benefits, there are some challenges in its application to compliance tasks. One of the key concerns is ensuring AI tools remain transparent and accountable, particularly in highly regulated fields like finance and healthcare. Law firms must balance the automation that AI provides with the need for human oversight, as errors in AI judgments could lead to serious legal consequences.

Training legal professionals to use these tools effectively is another important factor. Although AI systems can handle routine work, legal professionals still need to interpret the results and apply them to real-life cases. Law firms investing in AI should ensure their teams are equipped with the skills to make the most of these tools.

The Future of AI in Compliance

As AI continues to advance, its role in regulatory compliance will likely expand further. Government agencies and regulatory bodies, like the U.S. Securities and Exchange Commission (SEC), are already using AI to support enforcement and detect rule violations. For instance, the SEC is looking into using AI to strengthen its ability to monitor compliance in financial markets, especially in areas like market manipulation and insider trading.

Looking ahead, law firms may see increased collaboration between AI developers and regulatory authorities, with these tools becoming better at identifying potential compliance issues. As AI tools improve, they will allow legal professionals to focus more on strategic tasks while making sure regulatory obligations are met efficiently and precisely.

Conclusion

AI-powered systems are transforming how law firms handle compliance and regulatory monitoring. From tracking regulations and handling large data sets to automating document reviews and offering predictive insights, these technologies are changing how legal teams manage compliance. 

As these systems get more refined, their use will grow, helping law firms deal with modern legal challenges, cut costs, and improve accuracy. Legal professionals must stay informed about new AI tools and understand how to integrate them properly into their work to keep up with compliance demands and manage legal risks effectively.

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