AI-Powered Clause Extraction for Loan Facility Letters and Terms & Conditions

“Sometimes hard work does not pay but smart work does” – Unkown.

Here at Johnson Hana, we are pragmatic, and solutions focused. We look for solutions to laborious tasks that are draining company time and resources.

Claire Davern; Senior Project Manager, Managed Legal Services

At Johnson Hana, we don’t just talk about Artificial Intelligence (AI), we bring the advantages of AI to our clients. So how do we do this and what can it mean for your organisation? Let’s get into it, focusing specifically on the extraction of clauses from loan facility letters and terms & conditions and comparing it to a manual review.  We will delve into some of the challenges faced in traditional manual methods and how AI can overcome these.

Loan facility letters and terms & conditions are critical documents in the financial world, often containing complex legal language and varied clauses. Companies review clauses in facility letters and terms and conditions to mitigate risks, ensure legal compliance and make informed decisions impacting their financial and operational strategies.

Traditional methods rely heavily on human scrutiny, leading to various challenges:

  • Time-Intensive Processes: Manual assessment of lengthy documents consumes significant time and resources.
  • Error-Prone Nature: Human oversight may result in missing or misinterpreting crucial clauses, leading to legal and financial implications.
  • Irregularities: Interpretation discrepancies can arise among reviewers, causing inconsistencies in identifying and extracting clauses.
  • Scalability Constraints: As the volume of documents grows, manual review becomes increasingly impractical and prone to errors.

AI technologies, specifically Natural Language Processing (NLP) and Machine Learning (ML), offer a robust alternative for efficient and accurate clause extraction. The adoption of AI-powered clause extraction generates several advantages:

  • Time and Cost Efficiency: Reduced manual effort leads to significant time savings and cost reductions in document review processes.
  • Improved Accuracy: AI-driven extraction minimizes errors, ensuring comprehensive clause coverage and regulatory compliance.
  • Enhanced Decision-Making: Access to accurately extracted clauses empowers stakeholders to make informed decisions promptly.
  • Scalability and Flexibility: AI solutions adapt seamlessly to increasing document volumes and diverse document structures.

Johnson Hana was recently engaged by a client that faced intolerably lengthy timelines in extracting clauses from loan facility letters and terms and conditions. With the delays threatening to significantly impact our client by hindering timely access to critical information, disrupting operational efficiency by deploying resources to undertake this exercise internally that was a drain that could not be afforded. The client turned to Johnson Hana to complete the clause review on their behalf. We completed one tranche using manual review with our skilled consultants and for the remainder of the project we integrated an AI powered clause extraction tool. The initial phase showed that the manual review of a contract took an average of 15 minutes per document using consultants. After the implementation of AI into the workflow, effort reduced to a mere 5 mins for QC by our quality control consultant. This ensured that we had full confidence in the quality of the AI outputs while delivering an 67% reduction in time spent.

The utilisation of AI in extracting clauses from Loan facility letters and terms & conditions marks a paradigm shift in the efficiency, accuracy, and scalability of document review processes. Johnson Hana leverages AI technologies in this domain that benefit our clients immensely by not only optimizing resources and saving costs but reducing risks, fortifying compliance measures, and expediting decision making.

We don’t just leverage AI to complete these projects in an efficient way, we also have specialist project managers and technologists that ensure our clients are briefed every step of the way. While AI is a powerful tool, the role of our project delivery team is pivotal in leveraging its capabilities to drive efficiency and maintain project cohesion. Human oversight and strategic planning are essential in ensuring clients unlock the value of AI in their business. We can empower delivery with tailored solutions, culminating in an enriching client experience and fostering stronger streamlined processes for our clients. By leveraging AI for clause extractions, we give our clients enhanced transparency with quicker insights. With AI-powered clause extraction, businesses and financial institutions can navigate the complexities of legal documentation adeptly with Johnson Hana.

About Johnson Hana

Johnson Hana is Ireland’s leading alternative legal solutions provider. That means we disaggregate legal advisory and legal process work and focus on the latter.

We offer:

Legal Process Outsourcing – whereby a specific legal process is carved out and outsourced to us

Legal Process Secondments – to augment a busy legal team or fulfil a temporary requirement for an experienced legal professional.

Historically, legal advisory and legal process work were tackled and billed in the same way. This means that all legal work has been as costly and time consuming as legal advice.

It doesn’t need to be.

We deliver legal process work through a combination of innovative legal technologies, robust project management methodologies, and expert lawyers. This approach reduces client legal spend by over 50%, while also providing totally transparent reporting and billing. This leaves our clients free to focus on the strategic, advisory work that really adds value.

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