A client used AI to create a tax step chart for a reorganization, but the AI incorrectly assumed the target was an S-corp. This fundamental error, which could have cost millions, was caught only by a human lawyer's judgment, underscoring the necessity of expert oversight.

Initial AI products for PE focused on high-level tasks like summarizing deal memos. However, analysts and associates need to perform this work manually to gain the molecular-level understanding required for investment committee discussions, rendering the automation counterproductive.

The creator of 'PE Guy' streamlined his early brand deal process by pasting contracts into ChatGPT and asking it to identify red flags. This represents a scrappy, low-cost tactic for independent creators to get initial legal analysis without immediate access to lawyers.

After a document is drafted, lawyers ask an AI tool to review it for missed points or alternative angles. The tool acts like an impartial third party with vast analytical recall, offering suggestions that refine and improve the final work product at a minimal cost.

Senior lawyers use AI for a quick first pass, but their deep experience allows them to instantly spot inaccuracies or weaknesses in the output. This accelerates their high-level strategic work, providing a greater productivity boost than what junior lawyers get from automating basic tasks.

Executives are highly skilled at detecting superficial, low-context arguments ('slop'). Presenting them with AI-generated outputs to drive alignment will backfire. They will either ignore the work or feign agreement, resulting in the worst kind of misalignment where issues aren't truly resolved.

AI performs best when given a focused task, such as revising a single purchase price adjustment section. It gets confused and produces lower-quality work when asked to mark up an entire complex agreement, highlighting the need for targeted application in M&A legal work.

Messy AI-generated code ("slop") can still result in a functional product, hiding imperfections from the end user. In knowledge work, a slightly "off" AI-generated contract or memo creates immediate legal or business risk, as there is no interface to abstract away the sloppiness.

While AI "hallucinations" grab headlines, the more systemic risk is lawyers becoming overly reliant on AI and failing to perform due diligence. The LexisNexis CEO predicts an attorney will eventually lose their license not because the AI failed, but because the human failed to properly review the work.