A few months ago, I shared a dozen anecdotes from in-house practitioners about “How much do you think AI will impact disclosure practices (including all the diligence leading up to making disclosure)?”
Here is another dozen responses that I received:
- “Unfortunately, I don’t expect AI to decide what’s material. Or I guess fortunately because otherwise I might be out of a job. Having said that, I expect AI to make it much harder for us to say we didn’t know the information existed. And that is unfortunate. Bad News Bears!”
- “There are things buried inside a company that sometimes don’t make it to the disclosure lawyers because nobody realizes they’re relevant. AI could become an effective early-warning system.”
- “I have mixed feelings. For years, part of being a good securities lawyer was knowing the company – knowing which executive to call, which business unit tends to surface issues late, which disclosure changed three years ago and why. Some of that institutional knowledge may eventually live in AI systems instead of people’s heads.
That’s probably progress. But there’s something slightly wistful about watching craftsmanship become infrastructure.” - “I think we’ll eventually look back at today’s disclosure diligence process and wonder why so much of it depended on emails, questionnaires, spreadsheets and lawyers remembering whom to call.”
- “My nightmare isn’t that AI misses something. Humans already miss things. My nightmare is that AI misses something and everyone assumes it couldn’t have.”
- “Risk factors are an obvious area. AI can already tell you how your language differs from peers, what changed in the industry and where your disclosure may have become stale.
That should make the annual ‘Does anyone have any changes?’ note to everyone considerably less important. You might just be asking AI that question.” - “AI should make it much easier to find inconsistencies between what companies say in different places. That’s good news for disclosure lawyers. It is also good news for plaintiffs’ lawyers, regulators, activists and short sellers.
Buckle up or retire if you can. I should have been a jewelry store owner like my parents wanted me to be.” - “I suspect the biggest effect will be on expectations. Once technology makes comprehensive diligence possible, people eventually start asking why you didn’t do it.”
- “I refuse to answer any question that is AI- related. Sorry but it’s true.”
- “I don’t think the 10-K of 2030 will look radically different. I think the process that produces it could look radically different. It’s already starting to change.”
- “I’ve always said disclosure is a process, not a document. AI is going to prove that point. I may be some sort of prescient genius that no one knows about.”
- “There is a romantic version of securities law where seasoned lawyers sit around a conference table exercising exquisite judgment.
There is also the actual version where somebody is frantically searching Outlook at 10:30 p.m. for an email from the controller or someone else on the finance team. AI will probably help more with the second one.”
Authored by
Broc Romanek