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Toronto legal startup Kira offers law firms an artificially intelligent (AI) search engine that can scour thousands of documents in the due diligence phase of corporate mergers and acquisitions and is partnering with a major player in the U.S.

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A Toronto legal startup that offers law firms an artificially intelligent (AI) search engine that can scour thousands of documents in the due diligence phase of corporate mergers and acquisitions is partnering with a major player in the U.S.

Toronto-based Kira Inc., whose Kira Diligence Engine is used by blue-chip firms such as Torys LLP, says it has a new partnership with New York-based Intralinks Holdings Inc. that will see Kira's AI software put to work in many more major corporate deals.

Intralinks, which is listed on the New York Stock Exchange, is a large provider of what are known as "virtual data rooms" for law firms engaged in corporate merger-and-acquisition deals. Virtual data rooms are secure digital locations where companies bidding on a deal can see all of the documents of the firm they are seeking to acquire.

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Now, users of Intralinks will also have access to Kira's tool to scour through tens of thousands of a company's contracts, making it possible for deals to close more quickly and more cheaply, the companies say.

Due diligence, which can represent 30 per cent or much more of the total legal bill on a deal, is typically the kind of grunt work that law firms leave to their most junior lawyers, who must sort through thousands of contracts signed by a target company in a potential acquisition. Typically, they are looking for potential liabilities or clauses in contracts that hinge on a change of control and could cause problems for the deal.

This kind of AI search technology is increasingly being used by law firms as clients push for lower legal bills. For example, a variety of companies offer AI services aimed at so-called "e-discovery" in litigation.

This software typically sorts through the millions of e-mails provided before a civil trial to find information relevant to the case.

Kira founder and Torontonian Noah Waisberg left elite New York firm Weil Gotshal & Manges LLP to found Kira in 2011 along with Alexander Hudek, a computer science PhD from the University of Waterloo.

It took more than two years for the software to be ready, and legal experts are continually helping the program "learn" how to better spot potential issues or irregularities in contracts. Mr. Waisberg said his software has already been used to help clear $70-billion (U.S.) worth of deals worldwide, with most of its clients law firms based in the United States. Kira now has more than 20 employees.

Mr. Waisberg said using his software is about more than reducing billable hours. He said one elite Bay Street firm, which he would not name, found that work that took two junior lawyers six and a half hours without the software could be done in just two and half hours by one junior lawyer using Kira's search engine. And the computer-assisted work also had fewer errors, he said.

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While this may mean law firms will need fewer junior lawyers on this kind of file, Mr. Waisberg said doing this kind of grunt work at an elite firm after graduating with high marks from law school is not ideal for associates either: "There are certainly challenges to the junior associate market. But I actually think technology can, for firms that embrace it, really be something that helps them drive business."

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