The Impact of AI on Real Estate Lawyers

By Juliana Hakakian

Juliana Hakakian is a student at the Schack Institute of Real Estate at New York University.

As technology continues to evolve, artificial intelligence (AI) has emerged as a transformative force across multiple sectors, including the legal industry. Real estate law, in particular, is undergoing significant changes as lawyers begin to incorporate AI into their daily practices. Although concerns about AI replacing legal professionals persist, AI is best viewed as an assistant rather than a substitute. By streamlining processes, enhancing data analysis, and supporting decision-making, AI has the potential to improve the efficiency and effectiveness of real estate lawyers. This claim sets the stage for a deeper exploration of AI’s capabilities, its effect on the legal profession, and the challenges that arise as AI technologies become more prevalent in real estate law.

Understanding AI in Real Estate Law

Definition and Scope of AI

AI is a field of computer science aimed at creating systems capable of performing tasks that would typically require human intelligence. These systems include functions such as learning, reasoning, problem-solving, perception, and language understanding. AI technology encompasses various forms, including machine learning, natural language processing, and computer vision, each designed to process large volumes of data and recognize complex patterns. Across different industries, AI applications serve specific functions tailored to the demands of each field. In health care, AI assists in diagnosing medical conditions and predicting patient outcomes. In finance, AI systems help with fraud detection and to automate trading processes. Meanwhile, in retail, AI is used for personalized recommendations and inventory management. The adaptability of AI technology allows it to be customized for a wide range of tasks, making it a transformative tool in fields like education, manufacturing, and legal services, where it can automate routine tasks and provide data-driven insights.

In real estate law, AI applications can help manage complex workflows and optimize time-consuming processes, which are critical in handling extensive documentation and regulatory compliance. AI-powered tools streamline document review by automating the extraction of essential information from contracts, lease agreements, and other legal documents. For instance, AI can quickly identify clauses, flag compliance risks, and detect discrepancies that would otherwise require hours of manual review, allowing lawyers to focus on more strategic tasks. Moreover, AI enhances due diligence by rapidly analyzing property data, market trends, and historical records to assess potential risks and inform investment decisions. By automating these processes, AI not only improves accuracy but also expedites transaction timelines. Such expedition is invaluable in the fast-paced real estate industry. Chris O’Leary, Revolutionize Your Commercial Real Estate Document Workflow with AI, Thomson Reuters (Aug. 23, 2023), https:// tinyurl.com/2p8vuwbv.

The Role of AI in Enhancing Legal Practice

AI’s role in enhancing legal practice goes beyond just streamlining routine tasks; it empowers lawyers with the capacity to handle vast datasets and extract valuable insights, reshaping how legal firms approach case management and advising clients. By automating document review and contract drafting, AI reduces the time historically required for labor-intensive tasks, freeing up legal professionals to focus on higher-level decision-making. AI-driven platforms can process enormous amounts of property data, identify trends, and provide predictive insights, helping real estate lawyers make more informed recommendations and strategic decisions. For instance, case studies from law firms using AI tools like Kira Systems show a marked increase in productivity, with some reporting a 50% reduction in time spent on lease reviews. Kira for Audit, Accounting & Advisory Firms, Kira Sys. (2024), https://tinyurl. com/5n6hy2z7. By integrating AI solutions, these firms are not only able to handle more cases but also offer clients faster turnaround and enhanced accuracy. Brent Horak, Kristi Gibson & Kirstie Tiernan, AI in Real Estate, BDO USA (Oct. 21, 2024), https://tinyurl.com/wpjd2975.

Benefits of AI for Real Estate Lawyers

Increased Efficiency

The benefits of AI in real estate law are evident particularly in its ability to increase efficiency. By automating tasks such as document analysis, contract drafting, and title searches, AI significantly reduces the time lawyers spend on repetitive and administrative duties. This efficiency boost allows legal professionals to devote more time to complex tasks that require human judgment and creativity. AI tools can process vast amounts of real estate data quickly and accurately, providing lawyers with valuable insights that inform their decision-making. For example, AI can predict market trends, assess property values, and highlight potential legal risks, enabling real estate lawyers to make more informed, strategic recommendations for their clients. As highlighted by Anna Prozherina, AI applications in property transactions allow law firms to not only accelerate workflows but also enhance the accuracy of their work, ultimately improving client satisfaction and strengthening competitive advantage in the market. Anna Prozherina, Using AI in Property Transactions, Law Soc’y (Sept. 3, 2024), https://tinyurl.com/5t425m6y.

AI’s ability to increase efficiency in real estate law is beneficial particularly for law firms looking to streamline their operations. With AI tools handling time-consuming tasks such as document review, legal research, and contract drafting, lawyers can significantly reduce the time spent on these routine duties. By using AI’s capabilities to process large volumes of data quickly, law firms can expedite the completion of tasks that would otherwise take days or even weeks. For example, AI can quickly search through thousands of documents to identify key clauses or potential legal issues, ensuring a faster turnaround for clients. This increased efficiency not only saves time but also reduces the likelihood of human error, leading to more accurate and reliable work. As noted by Mary Harriet Moore, implementing AI tools allows law firms to improve workflow productivity, automate administrative processes, and focus their human resources on highvalue tasks such as client relationships and strategy development, enhancing overall practice performance. Mary Harriet Moore, 5 Ways Law Firms Can Use AI to Improve Efficiency, Rosen Hagood (Apr. 15, 2024), https://tinyurl. com/4kc3rvjm.

Enhanced Decision-Making

AI’s ability to enhance decision-making is another significant advantage for real estate lawyers. By analyzing vast amounts of data, AI tools can provide valuable insights that guide legal decisions in real estate transactions. For example, AI can help lawyers assess market trends, predict property values, and identify potential risks, allowing them to advise clients more effectively. This data-driven approach enables lawyers to make informed decisions based on comprehensive analyses, rather than relying solely on intuition or limited data. In real estate investment, AI can forecast market fluctuations and offer insights into the best times to buy or sell properties, empowering lawyers and their clients to make strategic, well-timed decisions. As highlighted by the Hispanic Wealth Project, AI has the potential to transform investment strategies by providing more accurate risk assessments and uncovering opportunities that may have otherwise gone unnoticed, thereby improving long-term outcomes for investors and legal professionals alike. Enhancing Real Estate Investment with AI, Hispanic Wealth Project, https://tinyurl. com/4cfb93cv.

have otherwise gone unnoticed, thereby improving long-term outcomes for investors and legal professionals alike. Enhancing Real Estate Investment with AI, Hispanic Wealth Project, https://tinyurl. com/4cfb93cv.

Improved Client Outcomes

AI also offers real estate lawyers the opportunity to improve client outcomes by providing more efficient and accurate legal services. By automating routine tasks such as contract review and document management, AI allows lawyers to focus on higher-level strategic work, which directly benefits their clients. For instance, AI-powered tools can simplify the drafting and review of real estate contracts, ensuring that terms are clear, complete, and aligned with current laws and regulations. Additionally, AI can detect errors or inconsistencies in contracts that may be overlooked by human lawyers, thus reducing the likelihood of costly mistakes. These capabilities lead to more reliable and timely legal counsel, enhancing client satisfaction. Moreover, AI’s predictive capabilities can help lawyers guide clients through complex real estate decisions by offering detailed risk assessments and market predictions. As real estate law increasingly integrates AI technologies, firms can offer a more personalized and proactive service, positioning themselves as more responsive and effective advocates for their clients’ interests.

Challenges of Implementing AI in Real Estate Law

Cost Implications

Although the benefits of AI integration in real estate law are clear, one of the main challenges is the significant cost involved in implementing these technologies. AI systems, particularly those tailored to legal practices, often require substantial upfront investment, not only for the software itself but also for the infrastructure and training needed to integrate it into existing systems. These costs can be prohibitive for smaller law firms, limiting their ability to adopt AI solutions. Additionally, the need for ongoing maintenance, updates, and support services can add to the financial burden. As AI technology evolves, legal firms must continue to invest in the latest tools to remain competitive, which can be a barrier for firms with limited budgets. According to a report by William Josten, AI offers efficiency gains, but its high implementation costs are a significant factor in the decision-making process for many legal practices, especially those that operate with tight margins or in niche markets like real estate law. William Josten, Pricing AI-Driven Legal Services: It’s Not a Question of Cost Recovery, Thomson Reuters (May 15, 2024), https://tinyurl. com/bdemah3e.

The long-term financial implications of AI implementation extend beyond initial setup and directly affect the cost of legal service delivery. As touched upon previously, AI technology demands not only a substantial initial investment but also continuous spending on maintenance, upgrades, and compliance to stay current with legal standards and technological advancements. For real estate law firms, especially those operating on tight margins, these ongoing expenses can quickly accumulate, affecting their overall financial sustainability. Smaller firms may struggle to keep up with larger counterparts that can more readily afford AI infrastructure. Furthermore, as the demand for cuttingedge technology in client services increases, law firms that do not adopt or continuously update AI solutions may find themselves at a competitive disadvantage. Although AI can enhance efficiency and streamline routine tasks in the long term, these cost implications remain a critical factor that many real estate law firms must weigh carefully when considering AI adoption.

Job Displacement Concerns

Another significant challenge of implementing AI in real estate law is the potential for job displacement, particularly among junior lawyers and support staff who handle routine, data-heavy tasks. With AI capable of automating document review, contract analysis, and data organization, roles traditionally filled by paralegals and entry-level associates face uncertainty. This shift could lead to fewer opportunities for early-career professionals to gain foundational legal experience, ultimately affecting career progression in the field. As AI systems take on these responsibilities, firms may become less inclined to hire for these positions, opting instead for a more efficient, technology-driven structure. Although AI can streamline workflows, it does not replace the need for critical thinking, judgment, and the nuanced understanding required in complex legal scenarios. The question of how to balance technological efficiency with workforce stability remains a pressing issue in the legal industry, sparking debates about the future role of lawyers in an AI-driven landscape.

The potential for job displacement from AI is a particularly pressing concern in the legal field, and real estate law is no exception. As firms increasingly adopt AI for routine legal tasks, junior roles may be phased out in favor of technology that can complete these duties faster and with fewer errors. For instance, automated document review tools are capable of extracting, categorizing, and analyzing information without the need for human oversight, which traditionally would have been the work of junior associates or paralegals. This shift not only affects entry-level employment opportunities but also poses challenges for training new legal professionals. Without hands-on experience in foundational tasks, junior lawyers may miss critical learning opportunities essential for developing their legal skills and judgment, which AI currently cannot replicate. Additionally, the reliance on AI may result in firms prioritizing efficiency over cultivating a steady stream of skilled lawyers who can adapt to more complex legal roles as they advance in their careers.

Quality and Reliability of AI Systems

Although AI offers efficiency and speed, the quality and reliability of these systems in real estate law remain ongoing challenges. AI tools rely heavily on the quality of data on which they’re trained, meaning any gaps or inaccuracies in the data can lead to flawed outputs. In highstakes fields like law, where decisions rely on precise language and interpretation, an AI systems’ inability to consistently analyze complex nuances poses risks. For example, AI-powered legal tools may misinterpret ambiguous contract language or overlook essential exceptions within legal documents, potentially jeopardizing a case’s outcome or a client’s interests. These limitations in accuracy mean that firms must rigorously test AI systems and maintain substantial human oversight, especially when handling critical tasks like contract review or risk assessment. Given these constraints, AI may not yet be reliable enough to fully replace humans in real estate law but instead serves as a tool requiring close supervision.

Furthermore, AI systems bring significant speed and efficiency to legal tasks, but challenges surrounding their quality and reliability persist, especially in real estate law. A key issue is that AI accuracy often depends on the quality and relevance of the data on which it is trained. Even slight inaccuracies in training data can lead to significant errors, particularly in fields like law where context and interpretation are crucial. This dependency on high-quality data and the risk of misinterpretation highlight the limitations of current AI technology in capturing the complexity of legal tasks. Thus, although AI can enhance efficiency, it still requires substantial human oversight to ensure that outputs align with the nuanced demands of real estate law, underscoring its role as a supplementary tool rather than a replacement for human expertise.

The Symbiotic Relationship Between AI and Lawyers

AI as a Complementary Tool

The symbiotic relationship between AI and lawyers in real estate law demonstrates how AI functions as a complementary tool, enhancing rather than replacing human expertise. AI excels at streamlining repetitive tasks, such as document review and data analysis, allowing lawyers to allocate more time to complex, client-facing responsibilities. For instance, legal AI tools can efficiently organize and analyze vast amounts of data, flagging potential risks and inconsistencies in contracts that would otherwise demand hours of manual scrutiny. The interpretation of these outputs, however, requires human expertise to account for legal nuances and subjective reasoning that AI systems cannot replicate. This collaboration enables law firms to harness the strengths of AI while relying on human judgment to navigate the intricacies of real estate law.

Future Prospects for AI in Real Estate Law

The future of AI in real estate law points to an evolving partnership where technology amplifies the capabilities of legal professionals rather than diminishes their roles. AI advancements are expected to delve deeper into predictive analytics, offering lawyers more precise tools for forecasting market trends, property valuations, and risk assessments. For example, AI could refine zoning and land-use analysis by cross-referencing local regulations with geospatial data, enabling lawyers to provide more strategic guidance to clients. Moreover, natural language processing is expected to improve, allowing AI to generate highly customized legal documents and conduct preliminary contract negotiations. The integration of AI requires human oversight, however, to ensure ethical compliance, accuracy, and adaptability to unique legal circumstances.

Conclusion

This article has explored the multifaceted impact of AI on real estate lawyers, highlighting its potential to serve as an invaluable assistant while addressing concerns about job displacement and system reliability. By embracing AI technologies, legal professionals can enhance their practices, improve client outcomes, and adapt to the changing landscape of real estate law. However, a careful balance must be maintained to ensure that human expertise remains central to the legal process.