Transforming M&A in Brazil: the role of AI in due diligence and efficiency

The Brazilian M&A landscape is experiencing a technological revolution. As artificial intelligence reshapes how dealmakers approach transactions, Brazilian law firms are emerging as unexpected leaders in legal innovation. The combination of unique market conditions, abundant public data, and a thriving legal technology ecosystem has created fertile ground for AI adoption in M&A processes.

The Brazilian advantage: a unique legal tech ecosystem

Brazil's legal market presents distinctive characteristics that have accelerated AI development and adoption. With approximately 80 million ongoing lawsuits nationwide, the country generates an extraordinary volume of publicly accessible legal data. This includes cases from specialized courts, labor tribunals, and various judicial systems that create a rich foundation for algorithm development.

This data abundance has sparked explosive growth in the legal technology sector. The Brazilian Association of Legal Tech Companies (AB2L) tracks hundreds of legal tech firms, with new solutions emerging regularly. This competitive environment has produced sophisticated tools specifically designed for the Brazilian market, particularly for conducting thorough independent research on target companies during M&A transactions.

The availability of four or five different tools within a single firm for public information research demonstrates how Brazilian legal practices have evolved beyond their global counterparts in certain aspects of due diligence technology.

From skepticism to strategic necessity

The journey toward AI adoption in Brazilian law firms has been transformative. Initial skepticism positioned AI as something futuristic or applicable only to technology companies and mathematics. However, the rapid pace of technological advancement and global information accessibility has shifted this perception dramatically.

Today, AI adoption is viewed less as an efficiency driver and more as a survival imperative in an increasingly competitive market. Leading Brazilian firms began investing in innovation years before AI became mainstream, initially focusing on technologies that addressed repetitive, time-consuming activities that consumed billable hours.

Early innovation efforts

Forward-thinking firms started by targeting specific pain points:

• Document review and due diligence processes
• Standardization of repetitive documents in capital markets transactions
• Automation of purchase agreements and corporate meeting minutes
• Streamlining internal workflows to eliminate inefficient interactions

This foundation in technology adoption positioned early movers to quickly understand and implement AI tools when they became available, creating a significant competitive advantage.

Addressing the security challenge

The most critical hurdle in AI adoption for M&A work is information security. Dealmakers handle confidential information constantly, making data protection paramount before any AI tool can be deployed.

Leading firms have implemented comprehensive security protocols that include:

• Multi-disciplinary committees evaluating each tool before testing begins
• Involvement of data privacy officers and compliance teams
• Thorough vendor scrutiny ensuring strict security standards
• Internal protocols protecting sensitive information
• Transparency with clients about AI usage and data handling

This rigorous approach means that even suppliers offering trial licenses must complete a full security review before any testing occurs. The scrutiny covers not just data access but also metadata handling and ensures that document content is never used for training purposes without explicit permission.

Beyond efficiency: strategic value creation

While efficiency gains are obvious and significant, AI's true value in M&A extends far beyond speed improvements. The technology fundamentally changes how legal professionals allocate their time and expertise.

Key benefits include:

• Enhanced client relationships: by automating routine tasks, lawyers gain time to focus on strategic matters and relationship building, leading to improved client satisfaction and loyalty.
• Comprehensive analysis: AI tools enable more thorough due diligence coverage, allowing firms to analyze targets more comprehensively than traditional methods permit.
• Proactive engagement: some tools allow preliminary analysis of potential targets before formal engagement, helping firms better understand scope, staffing needs, and appropriate fee structures.
• New service development: AI capabilities enable the creation of entirely new legal products and services, generating additional revenue streams while solving client problems in innovative ways.

The multi-layer approach to problem solving

Effective AI implementation in M&A requires creative thinking and a willingness to combine multiple tools. Rather than seeking a single solution for each problem, sophisticated firms are building customized approaches that layer different technologies.

A recent example involves analyzing over 100,000 lawsuits for a single client. Using legal design methodology, the firm created a “multi-layer AI due diligence” product that approaches the analysis in four distinct layers. Clients can choose which layers to pursue based on results from previous stages, optimizing both depth of analysis and cost efficiency.

This solution integrates four different AI tools, each handling specific aspects of the process. The approach demonstrates how technology enables unprecedented solutions to traditional problems, particularly as clients become more cost-conscious while still demanding comprehensive analysis.

Building a digital culture

Successful AI adoption requires more than just technology implementation. It demands a fundamental shift in organizational culture. Firms that began their technology journey eight years ago, well before the generative AI hype cycle, built familiarity and comfort with digital tools across their organizations.

This digital culture creates several advantages:

• Lawyers become comfortable with technology and creative in applying it
• Teams develop deep understanding of the legal tech market
• Problem-solving approaches naturally incorporate technological solutions
• Resistance to new tools decreases as success stories accumulate

Creating this culture is not easy, especially in a profession built on precedent and established practices. However, firms that invest in cultural transformation position themselves to extract maximum value from AI tools.

Client response and adoption

Client reactions to AI in M&A have evolved significantly. Initial concerns centered on data security and confidentiality, which remain valid and important considerations. However, as firms demonstrate their commitment to security and clients see tangible benefits in agility and cost reduction, enthusiasm has grown.

Transparency is key to client acceptance. Leading firms include specific language in legal fee proposals explaining AI usage, data handling procedures, and security safeguards. This openness, combined with demonstrated results, has turned potential resistance into competitive advantage.

Clients increasingly appreciate that firms invest in tools that ultimately benefit them through better service delivery and more competitive pricing.

Navigating the regulatory landscape

Brazil is approaching formal AI regulation after four years of congressional deliberation. The proposed framework, initially inspired by the European AI Act, has evolved to balance innovation protection with safety and human rights concerns.

Many companies are not waiting for final regulations to pass. They are proactively implementing governance frameworks that often exceed current proposal requirements. This forward-thinking approach makes sense given that existing laws, including constitutional protections, civil code, and consumer protection statutes, already provide legal frameworks applicable to AI usage.

The Brazilian regulatory discussion reflects the fundamental tension between preserving human rights and mitigating risks while avoiding regulations that could economically disadvantage the country. Early indications suggest Brazil may achieve a more balanced approach than some other jurisdictions.

Practical guidance for AI adoption

For firms considering AI adoption in their M&A practice, several key principles emerge from Brazilian experience.

Start now, start small

Do not wait for the perfect solution or ideal timing. Begin experimenting immediately, even on a small scale, to understand AI basics and how they apply to your specific work. Ensure all sensitive information remains protected throughout this learning process.

Invest in security

Data protection cannot be an afterthought. Implement robust security measures from the beginning, recognizing that this may be particularly challenging for smaller firms with limited budgets for enterprise-grade security features.

Engage your team

Listen to lawyers who will use the tools. Their insights are invaluable for successful implementation. Be prepared to adapt processes and remain open to testing new approaches.

Prioritize training

AI is only as effective as the people using it. Comprehensive training is essential. Having powerful technology without the knowledge to use it properly is like having a rocket with only a driver's license.

Embrace creativity

Use AI for more than basic search functions. Explore the full range of possibilities, test different approaches, and refine your processes. Generative AI rarely produces perfect results immediately, but iterative refinement can yield exceptional outcomes.

Stay informed

Technology evolves rapidly. What seems cutting-edge today may be obsolete in months. Follow thought leaders in legal technology, understand emerging trends, and anticipate future developments to position your practice strategically.

Overcome resistance

Recognize that resistance to technology is often unconscious. When initial results are imperfect, the temptation to revert to familiar methods is strong. Push through these moments, recognizing that 60–70% accuracy on first attempt often leads to superior results after refinement.

The changing economics of M&A legal services

AI adoption is fundamentally altering the economics of M&A legal work. Clients are increasingly cost-conscious, and fee pressure continues to mount in competitive markets. AI provides a path to maintain or improve margins while delivering better value to clients.

The technology enables firms to:

• Measure work scope with greater precision
• Justify fees with detailed analysis of complexity and effort required
• Deliver more comprehensive services at competitive price points
• Create new service offerings that generate additional revenue

This economic transformation means that AI adoption is not merely about doing the same work faster. It is about reimagining what legal services can be and how they are delivered.

Looking ahead

The Brazilian experience with AI in M&A offers valuable lessons for dealmakers globally. The combination of abundant data, a thriving legal tech ecosystem, early adoption by innovative firms, and a culture that embraces technology has created a laboratory for legal innovation.

As AI capabilities continue to advance, the gap between firms that have built digital cultures and those that have not will widen. The skills required for successful M&A practice are evolving, and technology fluency is becoming as important as legal expertise.

The transformation is not coming. It is already here. Brazilian dealmakers who recognized this early have positioned themselves for success in an AI-driven future. Their experience demonstrates that with the right approach to security, training, and cultural change, AI can transform M&A practice from a document-intensive, labor-heavy process into a strategic, insight-driven advisory service.

For firms still on the sidelines, the message is clear: the time to begin your AI journey is now. Start small, prioritize security, invest in training, and embrace the creative possibilities that these tools enable. The future of M&A belongs to those who can combine legal expertise with technological capability to deliver unprecedented value to their clients.