Published On : 02/27/2024

Here are Five Ways Legal Tech is Impacting Finance

The integration of legal tech and finance is creating transformative changes across the sector, enhancing efficiency, reducing costs, and improving compliance. Here are five specific ways in which legal tech is making a significant impact on the finance industry:

Automating Legal Document Creation

One of the most notable impacts of legal tech in finance is its role in simplifying the creation of legal documents.In fact, AI, large language models (LLMs), and GPT can now enhance financial operations, including the direct creation of legal agreements from scratch. Given the right prompts, internal counsel can create legal contracts with the push of a button and not have to source or pay for a vast trove of legal templates to accomplish their goals.This capability not only saves time but also significantly reduces the expenses associated with drafting legal documents. By automating these processes, companies can allocate their resources more efficiently, focusing on strategic growth and development.

Enhancing Compliance and Risk Management

Legal tech also plays a crucial role in compliance and risk management within the finance sector. With regulations constantly evolving, staying compliant can be a daunting task for businesses. Legal tech solutions offer automated tools that can monitor changes in legislation and ensure that companies adhere to the latest regulatory requirements. This proactive approach to compliance helps prevent costly legal issues and penalties, promoting a more stable and secure financial environment.

Moreover, risk management is enhanced through the use of sophisticated algorithms and data analytics. These technologies can analyze vast amounts of data to identify potential legal risks before they become problematic. By predicting and mitigating these risks, businesses can protect themselves against financial losses and reputational damage.

Accelerating Transaction Speeds

Legal tech also contributes to accelerating transaction speeds in finance. Through the automation of legal processes and the use of smart contracts, transactions that once took days or weeks can now be completed in a matter of hours. Smart contracts, which are self-executing contracts with the terms of the agreement directly written into code, eliminate the need for intermediaries, making transactions more efficient and reducing the potential for errors.

This speed and efficiency are vital in the fast-paced world of finance, where timing can significantly impact the success of a transaction. By reducing the time required to complete legal procedures, businesses can capitalize on opportunities more quickly and effectively.

Facilitating Mergers and Acquisitions

Legal tech, GPT, and AI are even assisting in some of the more complex security transactions, like mergers and acquisitions. David Lopez, Managing Director of MergersandAcquisitions.net claims, “GPT is making our jobs easier and massively cutting down the $750/hour cost of outside counsel in complex M&A deals.” The cost-efficiency and convenience that legal tech brings to the table in high-stakes financial operations is valuable to the sector. The use of AI and machine learning algorithms can help streamline due diligence processes, analyze contracts, and assess the legal implications of mergers and acquisitions, making these transactions smoother and faster.

Democratizing Legal Services

Another significant impact of legal tech on finance is the democratization of legal services. By making legal tools and services more accessible, small and medium-sized enterprises (SMEs) can now afford legal resources that were previously only available to larger corporations. This leveling of the playing field allows SMEs to compete more effectively, fostering innovation and growth within the financial sector.

Embracing the Future

As technology continues to evolve, we can expect to see even more innovative applications of legal tech in finance, further enhancing the efficiency and effectiveness of financial services. The integration of AI, LLMs, and GPT into legal processes is not just a trend but a transformative force that is setting a new standard for how business is done in the finance sector.

Jessica Weisman-Pitts

Jesse Pitts has been with the Global Banking & Finance Review since 2016, serving in various capacities, including Graphic Designer, Content Publisher, and Editorial Assistant. As the sole graphic designer for the company, Jesse plays a crucial role in shaping the visual identity of Global Banking & Finance Review. Additionally, Jesse manages the publishing of content across multiple platforms, including Global Banking & Finance Review, Asset Digest, Biz Dispatch, Blockchain Tribune, Business Express, Brands Journal, Companies Digest, Economy Standard, Entrepreneur Tribune, Finance Digest, Fintech Herald, Global Islamic Finance Magazine, International Releases, Online World News, Luxury Adviser, Palmbay Herald, Startup Observer, Technology Dispatch, Trading Herald, and Wealth Tribune.