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How will COVID-19 impact the legal sector? Luminance Advisory Board

4 May 2020 | Luminance

For legal professionals, as with employees of all industries, current thinking around business strategy and planning is dominated by the impact of COVID-19. Remote working, travel restrictions and the wider economic slowdown have all posed challenges to the way lawyers traditionally operate. Lawyers are being called upon to handle urgent and vital projects relating to the effect of COVID-19 without compromising the quality of the review. Over the coming weeks, members of Luminance’s Advisory Board share their perspectives on the impact of Coronavirus within the legal sector and how firms across the world are responding.

Understanding risks

For Manuela Cavallo, Partner at Portolano Cavallo and a member of Luminance’s Advisory Board, a key task for all organisations during this period is identifying their contractual risks and obligations. In her view “to navigate these difficult times, companies must understand their risk profile and establish any means of mitigating them”.

To determine their risk profile, Manuela believes that organisations need to urgently find out four vital facts about each of their contracts with suppliers and customers:

1. Geography, covering where the counterparty is established and where performance or delivery is meant to take place.

2. Content: does it contain a force majeure clause and if so, how it is defined? Does the contract include a right to suspend performance and what are the consequences of delay?

3. Governing law: is there a specified governing law for the contract?

4. Forum: does the contract include a choice of forum and is court or arbitration specified?

Indeed, in a crisis that has such wide-ranging ramifications as this, risks and obligations are likely to lay across a wide variety of an organisation’s contractual provisions, some of which may be less obvious than others. For example, lawyers may wish to investigate provisions related to home-working in employment contracts, or looking at provisions relating to bonus payments to see if these can be deferred. Because the scope of the review would be so vast, manual reviews would require several weeks to complete within many organisations - time which companies simply don’t have. Businesses need to take action immediately to ensure future success. Whilst some lawyers might be tempted to rely on sampling, or extraction-based technology which achieves a similar effect, as Manuela points out, “businesses need to be certain of all their obligations, not just those in a sampled subsection.”

Delivering at pace

In Manuela’s opinion, “the challenge presented to lawyers whether in-house teams or law firms is significant. They have to map out companies’ risks, obligations and potential solutions and they have to do it fast enough for business-critical decisions to be made. Artificial intelligence can come to the rescue”.

Many law firms have been using Luminance to quickly and confidently understand an organisations’ risks and obligations. Indeed, one Global Top 100 law firm recently began a manual review which took 8 people 3 weeks to review a 10% of the data set; upon using Luminance it took 2 people 2 weeks to review the remaining 90% of the documentation. By combining a powerful blend of both supervised and unsupervised machine learning alongside pattern-recognition techniques, Luminance is able to rapidly read and form an understanding of all documents within a data set. This means that within minutes, lawyers are able to identify where their risks and obligations lie, and undertake the most comprehensive analysis possible.

To ensure the most comprehensive review possible, Luminance can go beyond finding anomalies against the data set in its entirety, and instead allows lawyers to set their own standard of clause or model against which they compare all other documents and clauses. For example, a lawyer may want to confirm that force majeure clauses in supply chain contracts include reference to a pandemic. Using Luminance, lawyers are not only shown all force majeure clauses, but also those which do and not comply with their specific ‘model’ clause.

“The Coronavirus epidemic has greatly accelerated the digital transformation. Innovative firms need to adapt to make sure their lawyers can provide crucial advice.” Indeed, using Luminance, lawyers’ time is freed up by not having to conduct a manual review; allowing them to focus their attention on the contractual provisions that need further investigation and make business assessments, confident in the knowledge that they are fully appraised of all information.