Artificial Intelligence And Crowdfunding Law - Crowdfunding & FinTech Law Blog

Republished By Plato

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Like everyone else, I was shocked by the launch of ChatGPT. And like everyone else, I believed lawyers would be first on the chopping block. But I now have a far more optimistic view. I think AI will have a far more nuanced and ultimately beneficial effect for lawyers and their clients, including but not limited to Crowdfunding clients.

At first, I thought lawyers (or non-lawyers, gasp!) could type a question into ChatGPT and get a fully-formed legal product, whether a brief, a memo, a contract, or an obnoxious letter. But it turned out that neither ChatGPT nor its imitators is close to that, and I doubt they ever will be.

Rather than crashing down the walls, AI is entering the legal profession through the front door. Lawyers are not interfacing with AI directly, by typing prompts into ChatGPT. Instead, the AI is being intermediated by existing legal resources. Through subscription, lawyers have access to extremely powerful online resources like the research tools at Westlaw and the high-quality legal forms at Practical Law. These services are themselves incorporating AI into their products, the same way Microsoft is incorporating AI into Office.

Today, for example, I can upload an Asset Purchase Agreement and get back all sorts of comments – what provisions are missing, as compared to a complete Asset Purchase Agreement, what provisions I should consider adding or deleting depending on whether I represent the buyer or seller, what’s “normal” for a given issue, correcting cross-references, letting me know which capitalized terms haven’t been defined, lots of other things. And I know that these comments and suggestions are coming, ultimately, from some of the best M&A lawyers in the country.

The AI is being intermediated by experts, who are using their experience and brains. In this way AI is not so much revolutionary as another step, if a large step, in the continuing evolution of legal resources.

Lawyers are using AI without even knowing it’s AI. And that’s perfectly normal. How many of us, flipping a light switch, think about electrons?

The result should be to make it easier for lawyers to produce a better product. Or to put it differently, to make high-quality legal work cheaper per hour.

I remember when lawyers thought email and fax machines would give them more leisure time and were shocked when they had the opposite effect. Email and fax machines allowed – actually, forced – lawyers to do more work. Rather than send a document overnight (itself an innovation) and wait for a response, the response was immediate.

The same will be true for AI, in my opinion. AI isn’t going to make lawyers redundant. Instead, with AI driving down the cost of a high-quality contract, existing clients will have more of their work done by lawyers, rather than trying to piece something together themselves, and people who have never used a lawyer will be able to afford one. The overall quality of legal work will rise, benefiting everyone.

Ever seen Apple’s original license agreement with Microsoft? The agreement was so awful, it basically allowed Microsoft to steal the GUI and launch Windows. And I am 100% sure the contract was so awful because a business guy at Apple wasn’t allowed to spend money on a lawyer.

You can see how this will translate to Crowdfunding. Upload a Form C and the AI will tell you what’s missing and suggest corrections and replacements. Upload the Y Combinator SAFE and the AI will tell you “Please read Mark Roderick’s blog post explaining why the Y Combinator form has to be changed for Reg CF.” Unfortunately, the Form Cs and other legal documents used for most Reg CF campaigns today are awful, like the Apple license agreement. I think AI will improve the quality of those documents and at the same time make Reg CF more accessible to more people.

That’s a huge win.

Questions? Let me know.