The legal landscape is undergoing a significant transformation, thanks to the arrival of Artificial Intelligence (AI). In the realm of commercial property transactions, AI is not just a buzzword but a practical tool that is reshaping how law firms operate.
See below a summary of how AI is influencing commercial property transactions in the UK as well as some of the drawbacks individuals need to be aware of when using AI:
Enhancing due diligence
AI technologies are revolutionising due diligence processes. Some platforms have digitised property searches, turning manual tasks into data-led insights. This innovation allows for instant, accurate, and reliable data analysis, which is crucial for complex transactions involving numerous properties.
Streamlining administrative tasks
AI is proving to be an advantage for reducing administrative burdens. For instance, AI tools can cleanse address data in seconds, cross-referencing against millions of UK postal addresses to ensure accuracy. This reduces the risk of delays caused by incorrect data, which is particularly beneficial for transactions with a large number of addresses.
Improving client services
Implementing AI allows solicitors to focus on their role as expert consultants. AI and machine learning tools are being developed to support property transactions, enabling law firms to provide first-class service to their clients. By automating mundane tasks, solicitors can put more time into advising and strategising. AI is a time effective way and it’s important for firms to embrace the new technologies rather than avoiding using them as AI isn’t going anywhere and more firms will start to utilise it and if firms do not follow or get ahead of the game then they will ultimately fall behind.
Risk identification and management
AI-powered platforms are assisting property solicitors by identifying risky commercial transactions through property search data analysis. This helps flag potential issues early in the transaction process, therefore providing better risk management.
Contract review and management
AI is also transforming contract management and review. It can:
- analyse contracts
- flag risks
- suggest improvements; and
- extract obligations, ranking them by severity.
This not only makes the review process quicker but also enhances the accuracy of legal advice.
The future of AI in law firms
As AI technology continues to evolve, its applications within the legal sector will expand. Law firms that adopt AI are likely to benefit from improved efficiency, accuracy, and cost-effectiveness, ultimately leading to better client services. If firms don’t utilise AI then they will likely fall behind those that do. The future of legal practice in commercial property transactions is one where AI plays a central role, enabling solicitors to be more innovative and responsive to client needs.
What are the disadvantages of AI and commercial property transactions?
Although implementing AI is a great time and cost effective practice there are drawbacks that should be considered when implementing AI. Some of these are:
Contextual understanding
It’s important to note that AI won’t be able to understand or process every facet of property investment decision-making. Humans can look at and understand neighbourhood dynamics for an exact estate market which may not be apparent in property data, therefore although AI can influence investment decisions it may not have all the facts that a human has, humans also have experience and intuition, characteristics AI does not have.
Validation issues
Property data analysed just by AI won’t be able to give all the answers, it’s best to use AI and then have someone evaluate the data produced by AI. This shows that AI is worth implementing but also not to get rid of the human touch element.
Security and privacy
Due to the severity of information, AI would be used in commercial property transactions for example, sensitive information such as financial and personal data, companies need to ensure they have in place robust cybersecurity measures in order to ensure the data is protected.
Comment
In conclusion, AI is not a threat to the legal profession but a valuable ally. It empowers law firms to streamline their operations, improve the quality of their services, and stay competitive in a rapidly changing legal market. There are drawbacks to using AI in commercial property but nothing that can’t be solved, just factors to be aware of if businesses are to utilise AI.
As we look ahead, it’s clear that AI will continue to be a key driver of innovation in commercial property transactions.
How can Nelsons help
If you require any advice in relation to the subjects discussed in this article, please do not hesitate to contact Riaz or another member of the Commercial Property team in Derby, Leicester, or Nottingham on 0800 024 1976 or via our online enquiry form.
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