In the first of two articles on the applications of AI  in construction law, Simon Tolson and Stacy Sinclair discuss risk management

Simon Tolson Stacy Sinclair BW 2019

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Some claim we are amid an AI armageddon, with every level of humanity set to be massively disrupted by artificial intelligence (AI). While much of this is hype, the reality within the practice of law is that AI is indeed beginning to have a substantial impact, especially in two key areas. The first, risk and contract management, will be discussed in this article, while a later article will consider the use of AI in predicting the outcome of disputes.

With greater collaboration between lawyers and clients, AI can bring superior efficiencies and efficacies to contract generation, review, analysis and management. Risk and contract management may sound boring and dull to some, but when it comes to keeping on top of your construction contracts, nothing could be more important. Any tool that assists in this respect and increases the chances for a project’s success is therefore essential and its use inevitable. It is only a matter of time before AI becomes part and parcel of daily contract and project management routines.

Assuming for the moment risk and obligation management is paramount: do you review all contracts before signing, regardless of the value? Do you have an efficient and automated means of monitoring all obligations and risks within all your contracts and an understanding of the differences or anomalies between each one?

Risk management may sound boring and dull, but Any tool that assists in this respect is essential and its use inevitable

While there is not any one piece of software that will solve all your problems, there are platforms and technologies available now that utilise AI and machine learning to address some of the questions posed above. Here we look at a few of the solutions available, particularly in the context of contract review/analysis and document automation.

The first step is to identify the issue you want to solve. What is the outcome you need or work stream you want to make more efficient? What is the risk you want to manage? In other words, identify the “use case”. Only once we identify the outcome required or problem to be solved can we set off shopping for and harnessing the various platforms/technologies to realise these objectives. It is a mistake to put the cart before the horse.

Contract review/analysis

There are a number of technologies that go some way to assist with contract review and analysis. For example, technologies that read documents for the analysis and extraction of data.

One such technology is an AI platform for document review, which provides insight into data and contracts. It utilises pattern recognition algorithms to understand text by context and content, not just by key-word searches.

Another example goes beyond simple contract clause searching and extraction and generates a detailed party-specific summary of obligations, liabilities and other meta-data from the contracts analysed. Each agreement, and its component issues, is assigned a risk rating based on the organisation’s specific risk policies.

In the context of construction, infrastructure and energy projects it is relatively easy to see how these types of technologies can be instrumental in contract review and analysis. The possibilities are endless: for example, a review of a vast number of contracts to highlight and categorise possible clauses/issues that require a lawyer then to analyse. This could be helpful in the situations where the majority of the agreements are nearly similar (but not quite) or where the agreements normally would not have been reviewed at all given their perceived risk or value position.

A second example would be extraction of key data and obligations from contracts across the project(s), or indeed the company, into spreadsheets, reports or other software to manage and monitor risk and liability. Perhaps if needed, these obligations/data can then even be linked to programming software to monitor key dates and milestones.

With greater collaboration and innovation between lawyers, their clients and emerging technology, greater efficiency and efficacy is possible. Development of tailored solutions and services will, we suggest, minimise risks and improve the management of contract obligations, at a lower cost.

Document automation

This is the second key area in which AI can help with risk management in construction. Also known as “contracting platforms”, it refers to technologies that aim to speed up the generation, negotiation and completion of contract documents between contracting parties.

One such platform automates the generation of the contract and provides live negotiation and analytics tools. It enables the user to create contract drafts that can then be negotiated with the other contracting party in real time. Contracts can also be analysed during the negotiation process to see how they have evolved.

Again, collaboration between lawyers and their clients to establish contract templates and workflows for contract negotiations and completion, with the use of AI-enabled technologies, will minimise risks where possible and enhance efficiencies. In the construction industry where standard forms and standard terms and conditions are regularly used, and in an era of the rise of the smart contract, it is only a matter time before the automation of contract generation and completion becomes the norm.

Simon Tolson is a senior partner and Dr Stacy Sinclair a senior associate at Fenwick Elliott