Leveraging AI to Unlock Value in Restructuring & Turnaround Engagements

Artificial intelligence is reshaping legal practice at an increasing pace. For practitioners in the turnaround and restructuring industry — a practice area defined by complexity, volume, and time pressure —AI tools present real opportunity. The question is no longer whether to engage with these tools but instead how to do so thoughtfully, to extract genuine value while preserving the judgment and expertise clients rely on.

Challenges: What AI Gets Wrong, and What It Gets Right

Perhaps the most significant pressure practitioners face is clients who are already deploying AI in service of reducing professional fees. When a client’s in-house team can generate a preliminary covenant analysis overnight, for example, outside counsel is going to be expected to match that speed, if not exceed it.

But there is a gap between what many users believe these tools can do, and what they can actually deliver. Large language models (LLMs) enhance productivity and expand capacity, but they do not replace expertise. This distinction matters enormously in a practice area where a misread covenant, a missed cross-default trigger, or a misjudged regulatory exposure can have catastrophic consequences for a client. And of course, the well-documented phenomenon of AI “hallucinations.”

The obligation to verify all AI-generated work products is a core professional responsibility. Firms that implement AI without robust quality control risk not only errors but eroding institutional credibility that takes years to build.

Opportunities: Where AI Creates Real Value

Notwithstanding these cautions, the productivity case for AI in restructuring work is substantial. The practice is unusually well-suited for AI assistance because so much of the underlying work involves processing large volumes of structured and semi-structured information, exactly the kind of task where current tools excel.

Automating Rote But High-Stakes Tasks

Contract review and due diligence represent the clearest immediate opportunity for restructuring attorneys. In a typical leveraged finance transaction or distressed acquisition, counsel may need to review hundreds of agreements or leases to identify change of control provisions, consent requirements, negative covenants, and acceleration triggers. AI-assisted review tools can dramatically compress this timeline. Lawyers can focus their review on flagged exceptions and judgment calls rather than raw extraction.

Similarly, in restructuring matters, AI tools can assist with claims reconciliation; a notoriously labor-intensive process in large chapter 11 cases. Sorting, categorizing, and cross-referencing thousands of proofs of claim against a debtor’s books and records is precisely the kind of pattern-matching task that AI handles efficiently.

Digesting and Aggregating Large Data Sets

AI tools can monitor regulatory feeds, summarize new releases, flag relevant developments for specific client matters, and compare proposed rules against existing frameworks. This is not a replacement for regulatory judgment, but it significantly expands the surface area a legal team can cover.

In distressed situations, AI can also assist with financial analysis, like identifying patterns in a debtor’s historical financials, flagging anomalies that may signal fraudulent transfer exposure, or aggregating intercompany transaction data across complex corporate structures. These capabilities can surface issues that might otherwise be missed in the compressed timelines typical in restructuring engagements.

Enhancing the Client Experience

Speed is itself a client service, and AI can meaningfully accelerate delivery timelines across the practice. First drafts of motions, credit agreements, intercreditor arrangements, and ancillary financing documents can be generated from well-designed templates and then refined by experienced counsel.

Clients also benefit when their counsel can produce clearer, faster, and more comprehensive advice. AI-assisted research (when properly verified) allows lawyers to survey a broader body of case law and regulatory precedent than was previously practical, producing advice that is better grounded in the full landscape rather than a curated sample.

Human Judgment Remains Irreplaceable

Efficiency gains are real and important, but they should not obscure what AI tools do. In restructuring work, sophisticated business and legal judgment play the most consequential role for clients. As trusted advisors, professionals can use AI tools to amplify their own expertise rather than replacing it. These tools can serve as research assistants, document processors, and first-pass analysts. An attorney or advisor’s role is to then direct that capacity toward the right problems, validate its outputs, and apply the expertise and judgment that clients cannot get elsewhere.