Paul L. Caron

Thursday, March 2, 2017

JPMorgan Software Does in Seconds What Took Lawyers 360,000 Hours

J.P.MorganBloomberg, JPMorgan Software Does in Seconds What Took Lawyers 360,000 Hours:

At JPMorgan Chase & Co., a learning machine is parsing financial deals that once kept legal teams busy for thousands of hours.

The program, called COIN, for Contract Intelligence, does the mind-numbing job of interpreting commercial-loan agreements that, until the project went online in June, consumed 360,000 hours of work each year by lawyers and loan officers. The software reviews documents in seconds, is less error-prone and never asks for vacation.

While the financial industry has long touted its technological innovations, a new era of automation is now in overdrive as cheap computing power converges with fears of losing customers to startups. Made possible by investments in machine learning and a new private cloud network, COIN is just the start for the biggest U.S. bank. The firm recently set up technology hubs for teams specializing in big data, robotics and cloud infrastructure to find new sources of revenue, while reducing expenses and risks. ...

As for COIN, the program has helped JPMorgan cut down on loan-servicing mistakes, most of which stemmed from human error in interpreting 12,000 new wholesale contracts per year, according to its designers.

JPMorgan is scouring for more ways to deploy the technology, which learns by ingesting data to identify patterns and relationships. The bank plans to use it for other types of complex legal filings like credit-default swaps and custody agreements. Someday, the firm may use it to help interpret regulations and analyze corporate communications.

Another program called X-Connect, which went into use in January, examines e-mails to help employees find colleagues who have the closest relationships with potential prospects and can arrange introductions.

Legal Education | Permalink


An odd article. The original claim, made by JP Morgan’s publicists without published backup, was that the software would displace “360,000 hours of work each year by lawyers and loan officers.” I have unsuccessfully searched the internet to see if any breakout of this number between the two categories is available. Based on my experience as outside bank counsel, I would guess that almost all those hours were loan officer hours – lawyers are too expensive for this kind of routine work. Our firm was never called upon to review commercial loan agreements unless the deal was significantly nonroutine. My guess is that JP Morgan would still call in lawyers to review significantly nonroutine deals even after having run them through its new software. This is not to say that lawyers’ work cannot be automated. My point is simply that Bloomberg’s title -- “JPMorgan Software Does in Seconds What Took Lawyers 360,000 Hours” -- is an example of the classic game of telephone, where multiple repetitions of the same sentence eventually produces seemingly small changes in text that significantly change the sentence’s meaning. I doubt there is any factual support for the sentence as Bloomberg published it.

Posted by: Theodore Seto | Mar 19, 2017 1:28:46 AM

Absolutely spot on, Tech. Just as we can never overfish the oceans, deplete the topsoil, hunt species to extinction, or have human activity change the climate, neither will technology ever destroy more jobs than it creates.

Posted by: Unemployed Northeastern | Mar 3, 2017 10:25:07 PM

Technology doesn't destroy jobs. It changes jobs and lets people focus on more interesting work.

Posted by: Tech | Mar 3, 2017 4:39:19 PM

As UN's post inquires, were these really law jobs? How many among us went to law school to be scriveners?

Posted by: Publius Novus | Mar 3, 2017 8:02:08 AM

Lawyer-Luddites Unite!

We must DESTROY this spawn from Hell!

Posted by: Kneave Riggall | Mar 2, 2017 3:54:49 PM

Ah, yet more signs of totally-not-structural-change in the legal profession. Must be a slow news day. Why doesn't Taxprof focus on the real trend, which is the widespread resurgence in scrivener hiring?!?! Uh, NYC to $190k!


Posted by: Unemployed Northeastern | Mar 2, 2017 3:05:27 PM

360,000 hours = 180 lawyer/loan officer jobs per year lost.

Posted by: Old Ruster | Mar 2, 2017 12:43:35 PM