Tucker Wade, Senior Director of Legal and Compliance at GoDocs, Answers What to Know, Ask, and Watch Out For
Tucker Wade sees the promises and the pitfalls of AI, or artificial intelligence. In this Q&A, we explore his thoughts on the risks and the inherent balance needed as AI continues to evolve, guiding commercial lenders to approach this powerful technology with caution and responsibility.
Q: What is AI, and how have you seen it used in commercial lending?
AI enables computers to process information, recognize patterns, and even make decisions, often using large datasets and advanced algorithms like machine learning or deep learning. In the world of lending, AI is used to streamline processes that have traditionally been slow or manual. For example, AI can help commercial lenders quickly analyze both internal and external data, draft borrower communications more efficiently, or even generate first drafts of certain documents. More recently, large language models (LLMs) have started to play a significant role in loan underwriting, helping commercial lenders assess risk and make more informed decisions.
Q: What pressures are driving commercial lenders to adopt AI in their processes?
Commercial lenders are under increasing pressure to adopt modern technology to improve operational efficiency, reduce costs, and accelerate deal origination and closing. Borrowers expect faster turnaround times, and commercial lenders need to achieve this while maintaining low overheads to remain competitive. AI can help deliver by automating manual processes, streamlining data analysis, and reducing errors. These efficiencies can make a lender more attractive to borrowers by enabling quicker service and potentially lower costs. However, the push to adopt AI is not without significant challenges. Commercial lenders face hurdles such as the complexity of integrating AI with existing systems, high implementation costs, and growing concerns about data privacy and regulatory scrutiny. Regulatory agencies increasingly expect commercial lenders to explain and justify AI-driven decisions, adding pressure to ensure transparency and compliance.
Q: Can AI create legally compliant commercial closing documents that withstand rigorous review?
In short, no. Right now, AI can assist in drafting commercial closing documents and help promote legal compliance by automating contract analysis, flagging regulatory risks, and checking for alignment with relevant standards. While technology is evolving rapidly, current generative AI models lack the nuanced legal judgment and jurisdictional specificity required for consistently compliant commercial loan documents without expert validation. Thus, AI-generated documents are not inherently guaranteed to be legally compliant without careful human review. For example, AI systems can experience “hallucinations,” producing inaccurate information, fictitious citations, or misapplied legal principles that would go unnoticed by a lender if a legal expert wasn’t in place to diligently review it. Further, there is little recourse if commercial lenders misuse AI and abuse its power.
Q: What are the potential risks of using AI for commercial loan closing documents?
Relying solely on AI to produce legal documents without expert oversight can be risky and may expose commercial lenders and their institutions to state and federal legal consequences. One major concern is the potential compromise of sensitive personal information belonging to borrowers and other parties involved in the loan. Depending on the AI platform, this information could be improperly accessed or even made public. Generative AI tools often draw from large amounts of both public and private data, much of which may not always be accurate or up to date. AI currently cannot reliably determine whether the information or provisions it uses are legally sound or appropriate for the specific transaction without the need for attorney review. Even when AI improves in the short-term, there are still open questions about accountability. Unlike attorneys, AI providers may not take responsibility for errors or omissions.
Q: Can commercial lenders use AI if it’s balanced with human oversight?
Human oversight remains essential to ensure accuracy, compliance, and the proper handling of sensitive information. Used thoughtfully, AI can significantly reduce the time and effort required for tasks like document drafting, data analysis, and process automation. As previously noted, it’s important to recognize that AI systems are not perfect, as they can make mistakes or overlook important nuances, especially in complex legal contexts. While AI is likely to automate or streamline many routine tasks, especially those traditionally handled by support staff, it is still clear that attorneys will still play a critical role in reviewing, interpreting, and making final decisions on important documents. commercial lenders can surely leverage AI for efficiency gains but need to maintain a layer of expert review.
Q: Should commercial lenders avoid AI altogether?
No, it’s short-sighted to avoid AI entirely in your growth strategy. AI will be crucial for a lender’s long-term success, provided the risks are carefully vetted and managed. At GoDocs, for example, we’re excited about AI’s transformative potential. We do, however, understand that its integration needs to be thoughtful and refined. Right now, our automation is based on over twenty years of indexable data and documents, monitored and updated for legal compliance in real-time; this automation brings real value while ensuring the accuracy and accountability our customers depend on is provided. As AI continues to evolve and its risks are better understood, accounted for, and better mitigated, we’re excited to explore enhancements that prioritize compliance safeguards and efficiency.
Q: What key questions should commercial lenders include in their third-party due diligence assessment regarding AI?
While not a comprehensive list, these questions serve to inspire further review of AI systems. Although your compliance and legal teams will typically own this evaluation, it’s important to empower all employees to understand the implications of these questions before using AI systems.
Data Handling & Security
- Is sensitive data being fed to the AI system?
- How does the AI system handle data privacy and security?
- Is this a public or private instance of the AI resource?
- How does the AI system prevent unauthorized access or modification of loan documents?
Compliance & Legal
- Is this type of AI compliant with ever-changing financial regulations?
- Has the AI system been thoroughly vetted by this institution’s legal and compliance team?
- How does the AI system handle jurisdiction-specific document legal requirements?
- If the AI makes a mistake or breaks a rule, who is responsible?
- Will the AI vendor cover any legal or financial consequences?
Accuracy & Explainability
- Can the AI system explain its decisions?
- How does the AI system ensure accuracy in document generation and review?
Integration & Process
- Can the AI system integrate with this institution’s loan origination system (LOS)? If so, how safely can it do so?
Ethics & Institutional Alignment
- Does AI align with this institution’s ethical standards?
- Do we have structured guidelines for where to include human intervention in this institution’s AI processes?
How does GoDocs’ automation differ from generative AI platforms?
Unlike platforms that rely solely on AI to generate documents, GoDocs automates attorney-quality documents by drawing exclusively from a comprehensive library loan documents that are fully drafted and vetted by our experienced legal team. Every complex loan structure and unique provision is crafted with the nuance and compliance required for commercial lending. Further, every provision is traceable to applicable laws, regulations, statutes, or market standards. Our legal team carefully reviews and maintains these loan packages, ensuring consistency and accuracy. Additionally, as a SOC 2 compliant company, GoDocs ensures that customer data is handled in accordance with rigorous, independently audited security and privacy standards.
How does this help you?
- Compliant & Secure – Our platform is built to keep up with ever-changing commercial lending laws, reducing compliance risk.
- Fast & Reliable – Get comprehensive, legally sound commercial loan docs generated in minutes—without sacrificing quality or accuracy.
- Expert Support – Backed by decades of legal expertise, GoDocs ensures every document meets attorney-level standards without high costs.
Ready to transform your commercial lending? Learn more about GoDocs and how we can streamline your commercial lending process.
Senior Director of Legal and Compliance at GoDocs
