Robots, Markets, and the Value of Deal Lawyers

Authors

Heather Hughes, American University, Washington College of LawFollow

Document Type

Article

Publication Date

6-19-2024

Journal

Journal of Corporation Law

Volume

49

First Page

833

Last Page

871

Abstract

Emerging forms of automation using artificial intelligence (AI) and distributed ledgers are raising transformative questions for the practice of law. Deal lawyers are well-situated to understand the convergence of various modes of automation and their implications for their clients and the markets they facilitate. This Article contends that digesting threats and leveraging opportunities associated with new technologies calls for granular, context-specific assessment. It presents one instance of automation in one predominant market—the market for asset-backed securities (ABS)—by comparing securitization to a blockchain-based analog, tokenization. It considers how lawyers support the ABS market and how automation of lawyers’ functions could intersect with automated issuances. This context-specific inquiry yields broader questions surrounding deal lawyers’ roles in the face of evolving technologies. Asset-backed issuances often create value with legal ambiguity. Lawyers facilitate these issuances by structuring legally complex assignments and then opining on the positions of investors. Automated platforms can alter the consequences of deliberate legal ambiguity, and as such can affect risks associated with asset-backed issuances. If established forms developed for non-automated deals serve as baselines to be digitized for automated transactions, then investors’ choices about platform may adversely affect issuers and their stakeholders. Lawyers have the capacity to understand and explain these dynamics. If AI models trained on existing deal documentation generate work-products for automated transactions, what kinds of effects and concerns should lawyers identify? The value and function of business lawyers came under scrutiny after corporate scandals at the start of the millennium and after the 2007–08 financial crisis, but the scrutiny subsided when market activity re-trenched. Automation, now, revives questions around the responsibilities of deal lawyers.

Recommended Citation

Heather Hughes, Robots, Markets, and the Value of Deal Lawyers, 49 Journal of Corporation Law 833 (2024).
Available at: https://digitalcommons.wcl.american.edu/facsch_lawrev/2267