Three partner led deal teams all work on complex loan transactions that involve the same degree of complexity.  Which is the most efficient, which lawyers are happiest and who will have the best business model in 5 years as new technology and AI tools become more prevalent?

Traditional Big Law Deal Team

Traditional Big Law Team with Less Junior Associates

Legal Team of the Future

Traditional Big Law Team

• High leverage.  Uses junior associates to complete non-legal / quasi legal tasks instead of paralegals and admins wherever possible.
• Senior associates are also staffed on most deals.
• Not inclined to leverage technology to reduce any billable hours.
• Compensation and billing is all tied to the billable hour and this model generates high fees for the firm and each team member.

Traditional Big Law Team with Less Junior Associates

• Partner or a senior associate does a lot of the complex work and uses a paralegal or admin to do as much of the time consuming non-legal / quasi legal tasks as possible.
• Paralegals and admins are perceived as “free” to the partner because their time does not show up on the invoice and does not need to be written off.  
• Often no junior associate is staffed on the deal to keep control of costs.
• Partner compensation and statistics look good because they have high hours and high realization rates (despite the fact the admin and paralegals are being paid out of firm overhead).

Legal Team of the Future

• Partner works with associates, paralegals and admins as needed to efficiently complete the matter and teach junior lawyers how to be better lawyers.  
• Deal team may increasingly include more non-lawyers that are tech savvy and familiar with leveraging AI tools and prompt engineering.
• Billing is fixed fee (except where hour based is appropriate) and associate compensation is strictly merit based to promote efficiency.
• Leverages technology to automate all simple tasks that would normally be performed by a junior associate, paralegal or admin.
• Technology costs are included in a well thought out fixed fee budget (with some guardrails for unexpected work) that easily equates to less time than the partner and associate would have billed the client for the work the technology automates.
• Need less support staff (and firm staff overhead) and they involve associates at all levels and spend the extra time to teach them the practice of law.
• The client is happy to have consistent billing and the associates don't spend time on soul crushing tasks.
• This team can do more work with the same resources so overall revenue to the firm is good and compensation is tied performance of the team as a whole and not hours of individuals.

In a four part blog post, I will break down how each team handles specific tasks in the context of some of the more time consuming parts of a typical real estate loan transaction (drafting loan documents, due diligence, negotiating documents and closing process).  In the final post, I will also discuss how each staffing model impacts efficiency, lawyer well-being and the long term business model as more technology becomes available.  

Drafting Loan Documents

Drafting loan documents is often one of the first tasks performed by the legal team on a loan transaction (other than creating the deal checklist).  Usually the client has a set of form documents with hundreds of blanks (for party names, property info, etc.) and bracketed provisions (many of which come out in a mechanical fashion based on deal terms).  We used to joke it was like completing mad libs (but less fun).

Traditional Big Law Team

• Drafting loan documents usually takes the deal team 10-20 hours (or more depending on the complexity of the documents) and a few days or weeks but it gets done. The junior associate will manually save out the documents on the DMS, type in the deal terms manually and take a first pass at removing brackets and drafting the deal terms.  A senior associate will then go in and fix any mistakes (which happen when the junior does not understand some concepts yet) and layer in more complex terms.  Then the partner will make the final pass and fix some of the more nuanced mistakes the senior associate made or did not catch.
• The process takes too long and often the entire team is scrambling to get loan documents out if a transaction has a short time line as there are too many manual steps and parties involved.   It can become a problem when deal flow is high, but at the end of the day they can involve more junior associates and bill them out to get the work done if necessary.
• Everyone on this deal team benefits from a compensation standpoint from this process.  No easy billable hours are lost to automation and everyone on the team has a good chuck of hours into the overall deal budget for what is always perceived to be a time consuming process by clients.

Traditional Big Law Team with Less Junior Associates

• Drafting loan documents can be done more efficiently by this deal team as they will usually have a paralegal or admin take the term sheet and type in the simple deal terms into the document.  The partner or senior associate (who usually knows the documents well) will go in and delete bracketed provisions and type in other deal terms as needed.  It probably isn't the best use of their time but it gets done reasonably fast and gets done correctly the first time for a reasonable amount of billable time.
• This does however break down when the partner gets very busy and there are not enough hours in the day to do this for all the deals.  They then need to pick and choose which deals are most important or time sensitive and might rush or make mistakes.  Even worse, they might need to turn away work.
• Partners sometimes like this model because they know the work will be done right the first time if they draft the documents.  Any time spent by admins and paralegals in not shown on the budget so their realization rates look very good and not too much time is written off.

Legal Team of the Future

• This team relies heavily on document automation to draft loan documents.  They will have an admin or paralegal enter the deal into the document automation platform and then hit a button to generate all the documents with information merged in to the blanks and logic will be applied to determine which bracketed provisions apply.  Mistakes are minimal as the document automation rules are always right.
• Drafting documents may eventually be helped by new AI tools that can take a first shot at generating language that is not part of the form but is deal specific.
• The associate will take time to review blacklines of the loan documents for accuracy and to complete any items that are not automated or deal specific.  This will give them time to learn concepts and take a shot at drafting deal specific items.  The partner can then jump in to do any clean-up to the deal specific provisions drafted by the associate and then take the extra time to provide thoughtful feedback to the associate and answer questions.
• First drafts will always go out very quickly to the client and the team will have the capacity to take on as much work as they can attract and always look ahead of the game.
• Both partners and associates are not buried in mundane work that becomes stressful when deal flow picks up.  They don't miss the easy billable hours because compensation is merit based for the associates and the partners compensation is based on the money they bring in (most on a fixed fee so they can do more while hopefully working smarter not harder).

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