Over the past month, I’ve shared 48 anecdotes from in-house practitioners about how they’re using AI in their practice. Now I’ve started to ask in-house folks the question of “How much do you think AI will impact disclosure practices (including all the diligence leading up to making disclosure)?”
Here are the first dozen responses that I have received:
1. “I think the impact will be enormous but mostly behind the scenes. Investors may not notice much difference in the 10-K or proxy itself. What they won’t see is that AI helped 40 people across the company identify, collect, challenge and refine the information that ultimately went into it.”
2. “Drafting is the obvious use case. Diligence is the interesting one.”
3. “I can imagine a world where AI continuously reviews information across the company and flags things that might be disclosure issues. That’s potentially much more consequential than having AI help to write a risk factor.”
4. “The blank page is going away. I’m not sure I’ll miss it. I now have too much information!”
5. “AI will absolutely accelerate disclosure. Whether it improves disclosure depends on whether lawyers remember that ‘faster’ and ‘better’ aren’t synonyms.”
6. “I’ve spent twenty years chasing people for sub-certifications and asking whether anything changed this quarter. If AI can make that process even 30% less painful, I will personally send it a fruit cake.”
7. “My concern is automation bias. Once a system tells you that it reviewed 10,000 documents and found nothing material, there’s a very human temptation to stop looking.”
8. “I think AI will change the diligence process more than the actual writing. Imagine being able to compare the draft Form 10-Q or 10-K against board materials, earnings scripts, internal forecasts, prior disclosures, risk lists and management presentations and ask, ‘Where are the inconsistencies?’ That’s powerful.”
9. “We’re going to become less dependent on institutional memory. Today, sometimes the answer to ‘Why do we disclose it this way?’ is basically, ‘Because Susan remembers a conversation with outside counsel in 2014.’ AI should be able to give us something better than that.”
10. “I’m excited about AI, but securities lawyers should maintain a healthy fear of anything that uses the word ‘automatically.'”
11. “Disclosure committees are going to have much better information. Whether that results in shorter disclosure committee meetings remains, in my experience, doubtful. That’s a pity.”
12. “The biggest opportunity is completeness. AI can look across far more information than any individual lawyer possibly can. The biggest risk is that people confuse completeness of review with quality of judgment.”
Authored by
Broc Romanek