Artificial Intelligence (AI) is rapidly transforming the modern world, and that includes professional services. As AI tools become increasingly more sophisticated and accessible, insolvency practitioners, lawyers and creditors alike, are beginning to recognise the opportunities, together with the challenges, which AI brings.
The Association of Business Recovery Professionals (R3) have published their findings in The impact of AI in UK restructuring, turnaround and insolvency practice (the Report). The Report outlines a summary of its key findings, ranging from practitioners' views on AI's efficiency to those already using AI. As the Report neatly summarises, the picture that emerges is one of a profession in transition, not yet transformed.
Consideration has been given in the Report to the structural barriers currently standing in the way of widespread adoption. The profession found those to be: (1) the regulatory landscape; (2) the data security challenges that come with AI; and, (3) software dependency.
As set out in the Report, the consensus amongst the profession is that the current professional standards do not adequately address the use of AI, with only 11% of those surveyed considering that it does. The Report identifies practitioners most consistent concerns being the absence of clear, practical guidance from the Recognised Professional Bodies on what AI use should look like; including when AI is and is not permissible in insolvency work.
The Report finds that the evidence points to a profession in transition, with AI already benefiting specific areas of practice, but with that comes significant barriers to wider adoption.
Those that submitted to the consultation reported that their firms had taken steps towards digitisation, using:
- Document scanning and digitisation services;
- Generative AI tools, such as Copilot and ChatGPT;
- Excel;
- Process Automation; and,
- For those advanced firms, machine learning or AI agents.
The Report sets out how AI is being used. The heavy favourite is data analysis, closely followed by data extraction / document review and case administration. The Report outlines the profession's view on the benefits that AI will bring, the top three being:
- Efficiency and Time Savings;
- Reduced Administrative Burden; and,
- Cost Savings.
With those benefits, the Report identifies concerns that there is a potential compromise of junior employees not experiencing the tasks which were once within the scope of their roles, but which may in future sit with AI. As the Report notes, juniors who miss out on these experiences will miss out on the opportunity to build their professional judgement with hands on experience.
The Report concludes with four points to adoption:
- Leadership by example is key to AI adoption;
- Training must adapt to upskill new professionals;
- Regulatory guidance on AI use is needed; and,
- Successful firms of the future need to use AI intelligently.
The Report is an insightful read. Those that embrace AI will hopefully see the benefits of its efficiency and effectiveness. With that, those benefits will need to be weighed against the challenges. AI is to be used as a tool, but how dependent will people become?
Practical considerations
Looking ahead, AI will not replace the expertise and professional judgement at the very heart of insolvency practice, but it is almost certainly set to become an indispensable tool for those that adopt it. Key for the profession will be considering whether the costs saved by practitioner use of AI will be replaced by the costs of dealing with others using AI.
