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How to evaluate a legal due diligence AI tool

Short answer

Test the tool on a real data room and judge the report, not the demo. Check six things: the output, traceability, reliability, legal depth, data protection and how the team works with it.

1. What do you actually get?

A chat answer you have to copy into Word, or a structured red-flag report? The output shows what the tool was built for.

Ask:

  • Is the report structured by legal area and ranked by deal impact?
  • Does it cover the full scope of the mandate?
  • Can you export it in your firm's format?

2. Can you trace every finding?

Every finding should link to the exact source paragraph in one click. If you cannot check where a statement comes from, you cannot put your name under it.

3. How does it handle reliability?

No AI is error-free. Ask how the tool reduces the risk of confident but wrong statements.

Good signs:

  • Citations always point to real passages in the data room
  • The tool shows what it could not verify
  • It says "not found" only after it has read the whole document
  • Results are consistent when you run the same review twice

4. Is the legal logic deep enough?

Reading many languages is not the same as knowing the law. Ask:

  • Who wrote the review logic? Practising M&A lawyers, or generic prompts?
  • Does it apply the governing law of each document?
  • Which jurisdictions are covered today?

5. Where does your data go?

Ask where data is stored and processed, how long it is kept, whether it is used for training and which subprocessors are involved. Ask for a DPA and a security certification. Vague answers are an answer.

6. Does it fit how your team works?

  • Can several lawyers edit, comment and finalize in one place?
  • Does it handle questions to the other side and new documents?
  • Is the setup effort reasonable for a live deal?

Quick checklist

AreaQuestion
OutputStructured red-flag report, ranked by impact?
TraceabilityOne-click link to the source paragraph?
ReliabilityShows what it could not verify? Consistent results?
Legal depthLogic written by M&A lawyers, fit to the governing law?
DataLocation, retention, no training, DPA, certification?
WorkflowTeam collaboration, Q&A, updates?

FAQ

How long should a test take?

One real deal, or a closed past deal, is enough to judge the output.

Should we compare against our own past reports?

Yes. It is the fastest way to see what the tool finds and what it misses.

Key takeaways
  • ✓ Judge the report, not the demo.
  • ✓ Insist on source links and consistent results.
  • ✓ Check legal depth per jurisdiction and data terms in writing.

Fusewise is an AI legal due diligence platform for M&A deal teams, based in Zurich.

See how Fusewise runs AI legal due diligence.

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