We are in the midst of a “Proptech” revolution.
We all use artificial intelligence (AI) in our everyday lives: most of us have an Alexa, many now have a Peloton in which you can cycle through the Andes without having to leave the comfort of your living room. However, the launch of ChatGPT in 2022 was the catalyst which introduced AI into the professional services industry and as it has become more widely adopted, Proptech companies are now offering more products that incorporate the technology to meet the requirements of specific industries. In 2024, we will begin to see a clearer view of how AI might influence the real estate sector, including the work of real estate lawyers, now and in the years to come.
AI is a hot topic at the moment, leading us to attend a Bisnow conference called “A Revolution Unleashed: AI in the Digital Age of Real Estate”, which brought together real estate professionals ranging from lawyers, surveyors, architects and estate agents from all over the UK, to discuss how AI is redefining the real estate landscape. This article explores some of the themes addressed at the event, and our insights into how AI has the potential to transform the real estate industry, and how law firms like Fladgate use AI day to day.
“Time is money”
The first panel discussion explored how AI technology can instantly process large amounts of data, automate and improve accuracy of tasks, and with quicker processing times and key issues being highlighted in seconds.
AI is reshaping due diligence, minimising errors, and empowering informed decision-making within the real estate sector. One of the biggest benefits of AI for the legal sector is its time saving capabilities. When used correctly, it can speed up data-driven administrative tasks to free up time for legal advisors to do more creative, bespoke work. There is no doubt about it: administrative tasks (rather than legal issues) can often slow down transactions, therefore, by automating this part of the transaction, lawyers and clients alike should reap the benefits. After all, “time is money”, and as such, it is not surprising that so many businesses are interested in utilising AI.
Virtual reality
AI can also assist surveyors by carrying out virtual surveys of a building, using a drone or just a smartphone. These tools can also provide real time information to allow surveyors to cover larger areas in less time. AI can also design new floor plans and even scan a room using a smartphone to instantly create a text inventory. All of this will have a knock-on effect on a transaction, speeding up life cycle of a matter. Again, the key takeaway here is time. If AI is assisting surveyors to do their job more efficiently, this will in turn benefit real estate transactions.
The end of lawyers?
Does this mean AI has the potential to replace lawyers or devalue the work that we do? At present, we are pleased to confirm that the answer is no (!). We’re not sure if anyone has tried to get ChatGPT to handle their transaction yet, but we don’t think it would be particularly successful. Despite this, although AI will not steal a lawyer’s job, it will probably change it (for the better). Despite technological advances in AI, it is still very much in its infancy, and it will likely be another 10 or 15 years before we see widespread and radical change to the industry.
How Fladgate uses AI
The antiquated, slow-moving legal industry has been a candidate for technological disruption for quite some time. Fladgate has wasted no time getting on board with technological advancement and has recently introduced the use of the AI legal platform, Orbital Witness.
Orbital Witness can scan, interpret and analyse vast amounts of documents such as title registers, deeds and leases, to produce an initial report on a property within seconds. It can also highlight obscure pockets of unregistered land and highlight peculiar title abnormalities, which assist to flag potential issues at the very start of a transaction. A very helpful tool indeed!
Where current AI falls short
As with all AI, it is not infallible and lawyers (of course), still have to check, review and analyse any report that has been generated by AI. However, when used correctly, these platforms can make the due diligence process on an acquisition much faster, increasing capacity and helping lawyers stay within fee quotes and, therefore, increasing client satisfaction.
It’s important to remember that AI can only do what it’s told to do by humans, and it only becomes more accurate at generating content or analysing data through further usage. It’s very much not a perfect tool and can absolutely make mistakes (just like humans!)
While ChatGPT may be able to answer some basic questions (just like Google can), the answers it gives are often incomplete, out of date, and lacking in nuance for a legal setting. Each transaction will have its own challenges, from the issues revealed in searches, to the legal structure of the ownership and negotiations with the other side.
Finally, there is no way around it, technology can be expensive, especially when in its infancy. As time moves on, and more products flood the market, the use of AI and Proptech products, will hopefully become more sustainable; however, ultimately, the market has shown that undertaking a modernisation effort and investing in AI technology now, will yield a positive return and will prepare firms (gradually) for the next generation of real estate.
Conclusion
The overall message is that we should not fear AI, we should embrace it and gradually incorporate it into our usual way of working in a targeted, mindful way.
AI should not be seen as a threat, instead, it should be seen as an opportunity to digitalise real estate professionals’ working processes, increase productivity, and bring the real estate sector into the twenty first century!
