What it means for a UK law firm
A due diligence review in a corporate or property transaction usually covers areas such as material contracts, title, employment, disputes, regulation and data protection, and produces a report of the issues that matter to the client. The scope is agreed with the client at the start.
A due diligence review can use AI to extract key provisions from large sets of documents, such as change of control, assignment and termination clauses. The review team still decides what is material, and every reported issue should be traceable to the document it came from.
A due diligence report is relied on by the client and sometimes by lenders. If AI was used in a due diligence review, the firm should be able to show how the output was checked.
Example
Illustrative scenario
On a share acquisition, a team asks AI to list every customer contract in the data room that needs consent on a change of control. A trainee checks each listed clause, and also reviews a sample of the contracts that were not listed, to test whether any were missed.