7 www.loubar.org October 2024 Serving your practice as our own For more information call us at 502-568-6100 or Submit for a quick quote at www.LMICK.com practices, I am sure many of us have come across documents provided by clients as a first draft and immediately recognized that the document would need to be entirely rewritten. In my practice it comes in the form of a two-page commercial purchase agreement. More advanced and sometimes a better alternative for the situation, lender clients often utilize loan document software pack- ages as a cost-effective and expedient way to paper a loan, rather than requiring an attorney to prepare the relevant promissory note, mortgage, loan agreement and ancillary documents. This software is often integrated with other loan origination and bank records systems. For certain purposes, such as con- sumer lending, there is heavy regulation of language, lender-borrower communications, fee disclosures and other details, and it makes sense to use document preparation software that allows for limited editing and a high level of efficiency in order to prevent these features from being edited into a lawsuit. Newer laws regarding electronic signatures and online notaries and increasing comfort with the use and security of these features also provide avenues for these products to become more useful. Uniformity of these loan document packages ensures compliance with federal lending laws and allows loans to be sold. However, where commercial loans are con- cerned, increasingly complicated borrower structures and stiff competition often mean that sophisticated commercial borrowers and complex loans may not fit neatly into these document packages. Commercial bor- rowers may have their own requirements for terms that must be included in their loan documents. Borrowers may need to require revisions to the definition of an “event of de- fault” to match the reality of their structure or succession planning, or they may have plans for business expansion or change that their lender is comfortable with, but the boilerplate production software often is not capable of allowing for many types of modifications. Furthermore, document preparation software is often inflexible and difficult to modify, with attempted modification potentially having the unintended consequence of voiding indemni- fication or creating copyright infringement claims. Often, lenders may be comfortable with their non-attorney-prepared documents up to a certain threshold loan amount, and beyond that require the assistance of an at- torney to prepare loan documents. Contracts and transaction documents are often dense, and loan documents are no exception. Document preparation software still relies on data entry, which is still subject to human error, and while it might be more adept at making a change uniform across all documents, there is always opportu- nity for mistakes. Inclusion or exclusion of a particular clause may involve only the check of a box. With boilerplate docu- ments, often only the insertion points are being reviewed, and irrelevant language elsewhere in the document may be more likely to be missed. When loan documents are not closely reviewed by the lender or the borrower, or attorneys on behalf of the lender or borrower, it becomes more likely that important terms, such as prepayment penalties, representations and warranties or certifications regarding organizational structure, may be inaccurate in the final (and often only) version of the document, to be discovered only if and when the documents are later enforced. Finally, the biggest threat to the real estate attorney way of life appears to be artificial intelligence. It is increasingly available, both to generate entire documents and to comple- ment our current practices as an assistant of sorts. We pay to use it, it can potentially save time and make our work product more efficient, and we are then ethically obligated to pass the savings on to our clients. Some would suggest that we are training our own replacements and paying to do so. The Kentucky Bar Association issued Ethics Opinion KBA E-457 on March 15, 2024, providing guidance on our ethical duties regarding artificial intelligence. In short, we are obligated to keep abreast of its use in the practice of law as we strive to deliver ef- ficient representation of clients. Further we are obligated to employ this and other tech- nological advances that make the practice of law more efficient, more accurate and more cost-effective. But artificial intelligence, at least as it exists today, may struggle to grasp and interpret complex legal concepts, may be trained on biased data and by its nature lacks transparency. We have all heard the cautionary tales of (continued from previous page) litigators submitting AI-derived briefs cit- ing phantom cases. The quality of artificial intelligence tools varies depending on the source material used to train the artificial intelligence, and poor-quality input based on inaccurate data renders many artificial intelligence products insufficient to be relied upon for legal drafting. In short, artificial intelligence is, at least for now, a tool for improving efficiency in the practice of law, but not one that can operate without attor- ney supervision. Although there are now many inexpensive resources for obtaining legal templates, software that allows mass production of loan documents utilizing minimal data entry fields, and a burgeoning crop of artificial intelligence products to assist in document production, real estate and other trans- actional attorneys are able to compete by providing value and utilizing these potential alternatives as tools for improving efficiency in the practice of law. By taking note of some of the pros and cons of these tools, we can form a better understanding of our own strengths and better serve clients as we seek to continue to provide added value to clients. Abbey Fargen Riley is a Member of Stoll Keenon Ogden PLLC in its Louisville and Jeffersonville offices. She is part of the firm’s Real Estate and Corpo- rate Finance & Lending practice groups. She is the chair of the LBA Real Estate Section. n Elizabeth Monarch MBA, CAI, CRI Auctioneer/Realtor 2023 KYR Realtor State President Lonnie Gann GRI, CAI Auctioneer/Realtor 502.551.1286 auctionsolutionsllc.com Real Estate & Auction Specialist Providing Real Estate & Auction Services: • Estate Liquidation • Senior Living Transitions • Divorce Property Settlements • Business Liquidation • Real and Personal Property Evaluation Serving all of Kentucky and Indiana