The legal industry is renowned for its complexities, characterized by a combination of intricate regulations, nuanced language, and the need for meticulous attention to detail.

Since an in-house counsel has to deal with a ton of documents every day—drafting, reviewing, analyzing—there’s a constant risk of legal liabilities from inaccuracies, oversight errors, and non-compliance.

Outsourcing routine tasks or incorporating technology into legal workflows has been a game-changer for many legal professionals. The advent of NLP in legal practice has raised the bar in productivity by allowing legal professionals to collaborate with computers more seamlessly.

Here, we’ll dive into the details of what NLP represents in the legal domain, its application areas, pros and cons, and what to expect in the near future.

What is NLP?

NLP stands for Natural Language Processing. It is a branch of AI that focuses on how humans and computers interact using natural language.

The overarching objective of NLP is to help computers understand, interpret, and generate human-like text in a way that is both meaningful and contextually relevant. It breaks complex statements into smaller components, understands the context based on rules embedded in its training data, and provides the most human-friendly output possible.

Thanks to NLP, you can have regular conversations with a chatbot, ask open-ended questions, and get detailed answers (and even questions) in return.

The introduction of AI and NLP in the legal industry has been a game-changer for legal professionals who are not only able to outsource mundane tasks to intelligent systems but also afford more bandwidth for more strategic contributions in their organization.

Applications of NLP in legal practice

NLP is one of the most beneficial capabilities of AI in the legal domain. Its ability to understand complex legal contexts and carry out tasks autonomously has been revolutionary for legal professionals.

Here, we explore some of the most common use cases for NLP in legal practice.

#1 Contract review

“If you try to read a complex contract carefully, from front to back, and expect to understand it on just the first read-through, that’s wishful thinking (and potentially very messy).”

~Sterling Miller, CEO and Senior Counsel, Hilgers Graben PLLC
Ten Things: How to Read a Contract

Contract review is a traditionally labor-intensive process, requiring legal teams to meticulously scrutinize and analyze large volumes of legal documents. This often involves painstakingly examining clauses, obligations, and potential risks embedded in contracts to ensure legal compliance, identify potential liabilities, and safeguard the interests of the organization.

This approach is prone to oversight errors, as the sheer volume and complexity of legal documents can overwhelm even the most diligent in-house counsel.

The integration of NLP in contract review addresses these challenges by introducing a level of automation that significantly reduces the burden on legal professionals, allowing them to complete contract review processes substantially faster.

This is demonstrated by SpotDraft’s VerifAI, an AI-powered contract review tool.

Trained on an extensive collection of contract data and the collective knowledge of industry-leading legal experts, VerifAI excels at processing and understanding the intricacies of contract language, facilitating a more efficient and accurate review process.

This tool scans your documents against predefined guidelines, identifying areas of concern, offering suggestions, and providing detailed answers to open-ended, free-form questions.

This not only expedites the contract review process but also empowers legal teams to focus on more valuable aspects of their work.

Also read: How AI Contract Review Tools are Transforming Legal Workflows

#2 Legal research

“In-house lawyers generally short-change the research process because they don’t want to spend the time or money to do a complete job, or they overpay either in terms of the time they spend on a relatively mundane task or by paying a law firm to flail away on the question.”

~Sterling Miller, CEO and Senior Counsel for Hilgers Graben PLLC
Artificial Intelligence – What Every Legal Department Really Needs To Know

In legal research, NLP facilitates the extraction of relevant information from extensive databases, legal documents, and case law.

By comprehending the nuances of legal language, AI-powered tools can quickly analyze and summarize complex texts, substantially reducing the effort and time traditionally required for exhaustive legal research.

This empowers legal practitioners to make informed decisions rooted in an in-depth understanding of the legal landscape.

#3 Legal drafting assistance

Drafting documents like contracts, policies, and legal correspondence remains a core part of the in-house counsel’s responsibilities. This process is often laden with manual labor, requiring careful integration of legal provisions and effective coordination of stakeholders.

By automating the labor-intensive aspects of document drafting, NLP tools enable in-house counsel to streamline their workflow and enhance overall efficiency. These tools analyze vast amounts of legal text, understand contextual nuances, and assist in the formulation of precise and contextually relevant legal language.

This not only accelerates the drafting process but also minimizes the risk of human error, contributing to the production of legally sound and consistent documents.

‍Also read: NLP for Contracts: How It’s Transforming Legal Work

#4 Chatbots for legal assistance

“It may be possible to use AI as a “talking” FAQ service (chatbot) that can answer basic legal, HR, and compliance questions from your in-house clients, yet be “smart” enough to know when to defer the answer to a live attorney.”

~Sterling Miller, CEO and Senior Counsel for Hilgers Graben PLLC
Artificial Intelligence – What Every Legal Department Really Needs To Know

The integration of NLP-powered chatbots in the legal domain has transformed the way clients seek information and guidance.

These chatbots, equipped with natural language understanding capabilities, can engage in thought-provoking conversations, answer queries, and provide preliminary legal advice.

This improves client accessibility while allowing legal professionals to focus on more complex tasks, leaving routine inquiries to be handled by intelligent systems.

#5 Predictive legal analytics

NLP's capabilities extend into predictive legal analytics, offering in-house counsel a powerful tool for informed decision-making. By analyzing historical legal data, NLP-driven analytics tools can identify patterns, trends, and potential outcomes.

In-house counsel can leverage this information to assess risks, anticipate legal challenges, and develop proactive legal strategies. This data-driven approach enhances the overall resilience of legal departments, particularly in anticipating and mitigating potential legal issues.

‍Also read: Legal Analytics: Definition, Tools, and Applications

Benefits of NLP in legal practice

NLP technology benefits legal professionals in myriad ways, doing the heavy lifting with document analysis and task automation. Here, we’ll discuss the various perks associated with integrating NLP-driven systems into your workflow:

#1 Enhanced time and cost savings

Traditionally, legal tasks like contract review and legal research often demand extensive hours of manual labor. But by automating these processes through NLP-powered tools, legal teams can expedite their workflow, fostering quicker turnaround times without compromising accuracy.

This translates into cost savings for organizations as it reduces the need for extensive human resources and accelerates the pace at which legal services can be delivered.

#2 Less uninspiring work for the legal team

NLP technology plays a crucial role in alleviating legal professionals from mundane and repetitive tasks, allowing them to focus on more intellectually stimulating aspects of their work.

This not only enhances job satisfaction but also allows professionals to channel their expertise into more strategic and creative endeavors, ultimately adding greater value to their organizations.

#3 Improved decision-making

The application of NLP in legal practice facilitates improved decision-making by providing legal professionals with quick access to relevant and comprehensive information. Through efficient extraction and summarization of legal data, NLP tools empower legal practitioners to make well-informed decisions hinging on a robust understanding of the legal landscape.

This data-driven approach enhances the quality of legal advice, strategy development, and overall decision-making processes, contributing to the success and resilience of legal departments.

#4 Fewer errors in drafting and review processes

Traditional manual drafting and review are susceptible to human errors, oversights, and inconsistencies due to the intricate nature of legal language and the exhaustive volume of documents involved.

NLP tools excel in their ability to analyze vast amounts of legal text, understanding contextual nuances and intricacies that human reviewers might overlook.

By automating the labor-intensive aspects of document drafting and review, these tools significantly minimize the risk of human error. They ensure consistency in language, adherence to legal standards, and the inclusion of necessary provisions, contributing to the production of legally sound and error-free documents.

#5 Lower risk of non-compliance

Non-compliance with legal regulations poses a significant risk to organizations, potentially leading to legal repercussions and financial penalties. NLP technology acts as a safeguard against such risks by ensuring a comprehensive and accurate understanding of legal requirements.

NLP-powered tools can systematically analyze legal documents, contracts, and policies, flagging potential areas of non-compliance with predefined guidelines. This enables legal professionals to address and rectify concerns before they escalate.

Additionally, with constant updates from the backend, the NLP’s ability to keep abreast of evolving legal landscapes and regulatory changes ensures that legal practitioners stay informed and can adapt their practices accordingly. This proactive approach contributes to the development of robust compliance strategies, further mitigating the risk of legal complications for organizations.

‍“You are not going to be rewarded for making smart business decisions that no one will ever see. When you mitigate risk, when you avoid a problem, no one is ever going to say, ‘good job,’ for avoiding that problem because the problem never came to fruition. But that's doing a good job. You're making good, ethical, smart decisions.”‍

~Charlotte Morgan, CLO & CAO, Adore Me
Leveraging Entrepreneurial Experience as a CLO

Limitations of NLP in legal practice

While NLP brings transformative benefits to the legal industry, it is essential to acknowledge its limitations. Understanding these constraints is crucial for legal professionals to make adequate decisions about its implementation.

#1 Risks of misinterpretation

NLP systems operate based on patterns and rules learned from vast amounts of training data. However, the risk of misinterpretation remains.

Legal documents often contain intricate language and subtle distinctions that may be challenging for NLP systems to accurately decipher. Ambiguities, metaphors, or complex legal jargon can lead to misinterpretations, potentially resulting in errors in contract review, legal research, or other critical tasks.

While using NLP tools, you must exercise caution and manually verify outputs.

#2 Ethical concerns

The integration of NLP in the legal industry raises ethical considerations, particularly concerning the reliance on automated systems for decision-making. Legal professionals are bound by ethical standards that require a comprehensive understanding of context, empathy, and moral judgment.

While NLP systems can analyze data and provide insights, they may lack the ethical reasoning and emotional intelligence necessary for certain legal situations. This highlights the importance of professional oversight in all areas of NLP application.

‍“ChatGPT has no ethics. Seriously, it’s just a machine. It has no ability to discern, apply context, recognize when it is making things up, or deal with or express emotion. It’s just a (potentially) really useful tool. Always keep this top of mind.”

~Sterling Miller, CEO and Senior Counsel for Hilgers Graben PLLC
ChatGPT and Generative AI (What In-House Counsel Need To Know)

#3 Limited to existing legal precedents

NLP systems operate based on patterns and information present in their training data. Consequently, their understanding is limited to existing legal precedents and may not adapt well to emerging legal concepts or rapidly evolving areas of law.

Legal practitioners often encounter novel situations where established precedents may not directly apply, requiring creative legal thinking and adaptability. Continuous human oversight and updates are crucial in addressing this situation.

#4 Potential biases in training data

NLP models learn from vast datasets, and if these datasets contain biases, they may inadvertently perpetuate or even exacerbate those biases. In legal practice, biases can manifest in different ways, encompassing race, gender, socioeconomic status, and more.

Biased NLP systems can foster unfair outcomes, affecting decisions related to contract reviews, legal advice, and more.

Legal professionals must remain vigilant in identifying and mitigating these biases. Ask questions about the training data and beta-test your tools before rolling them out on a full scale.

#5 Security and privacy

The use of NLP in legal practice involves processing sensitive and confidential information. Security and privacy concerns arise as legal documents often contain highly confidential details about individuals, organizations, and legal matters.

Legal professionals must be cautious about the storage, transmission, and handling of sensitive information within NLP-powered tools to prevent unauthorized access or data leaks.

What does the future hold for NLP in legal practice?

With the pace at which legal tech is advancing, the industry is set to experience one of its most transformative eras.

NLP technology has revolutionized a significant portion of legal work, blowing traditional processes out of the water. Yet, we’re only scratching the surface.

In the near future, we might witness the rollout of NLP-powered legal tools with multilingual and cross-jurisdictional capabilities, facilitating the analysis of legal documents in different languages and varying jurisdictional contexts.

With more legal data and computational resources becoming easily available, we expect the collaboration between NLP-driven tools and humans to become more seamless. Legal practitioners will increasingly rely on NLP as a valuable assistant, allowing them to focus on high-level strategic thinking and creative problem-solving activities.

Furthermore, there is a growing awareness of the need for adequate policies addressing the risks and ethical considerations associated with the use of AI and NLP-driven tools in legal practice. This will force legal teams to enforce governance frameworks, fostering more productive and responsible use of these tools.

‍VerifAI is at the forefront of NLP-driven productivity, empowering legal teams to review contracts fifteen times faster without compromising accuracy and depth.

If you’d like to take it for a test run, feel free to sign up for our 14-day free trial. Click here to begin.