Luddites Unite – Artificial Intelligence Will Replace Us

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We’ve been thinking about artificial intelligence applications and how they might change, even transform, the way we do our business. Then, we heard an interesting story on public radio. It was about a Southern California manufacturer of sex dolls who was introducing models incorporating artificial intelligence. For reasons quite obvious, the story didn’t get very deep into the details, but we learned that these new models were designed to figure out what their owners wanted and to respond appropriately.

We thought this application to be quite amazing in that here was a business way ahead of our own. Artificial intelligence is being used to read medical images with better results than even experienced radiologists achieve. It is being used to screen job applicants, much, much faster than humans doing so and with more satisfactory outcomes. Artificial intelligence is at the heart of visual recognition, allowing machines to replace people in manufacturing operations. It is used to write newspaper articles, such as those reporting sporting events. The list could go on and on. But, what it won’t include is negotiating agreements such as leases. That is, not yet.

Agreements such as leases are not zero-sum games. Though the parties exchange things of equal value, one needs to ask, “Value to whom?” Basically, when someone gets an item of value to them worth, say, $100, the other person may be giving up something worth only $60 to them. Someone may have two widgets and only need one. The duplicate widget isn’t very valuable to that person. A second person may need a widget and have two gizmos, but only need one. In each case, one widget or gizmo has a utility value of $100, but a duplicate one has a utility value of $60. Thus, if the parties trade widget for gizmo, each gives up $60 of value and gets $100 of value in return. That trade creates $200 of value out of $120 of value – a good deal for each trader.

Now, lease and other negotiators know what they want and what they can give up in return. Landlords have vacant space and want money. Tenants have money and want space. At one level, the vacant space and the money paid for it have equal value. Yet, at a different level, to the landlord and tenant, they really don’t. The landlord wants the money more than it wants the space and the tenant wants the space more than it wants the money.

It isn’t just generalities that negotiators know about “their” side. They know what they can trade in return for the right to go dark. They know what they can give up from their exclusive use dream list. They know how many days’ notice will be acceptable for every place where notice is required. Basically, the competent negotiators know what “goods” they have to trade. Advanced negotiators have “playbooks.” Those consist of three or more scenarios for almost every negotiation stance: what they would like if they could get it; what they would accept as a compromise; and what they would settle for – the bottom line. More than a handful of negotiators have such playlists but don’t think of them in that way. They have libraries of alternative lease provisions.

Using exclusive use rights as an example, here’s what each of a tenant and a landlord might have. A tenant may have its “wish list” provision, the “if I were the King or Queen, this is what I would do for myself.” It would also have what it would accept where a project already has or will have major retailers, the presence of which would be incompatible with the tenant’s “wish list.” It would also have the “what we could accept at the end of the day” clause. Depending on the tenant, there might be one to five other alternatives, ones that adapt to common shopping center scenarios. In contrast, landlords would have a set of provisions covering the range of “remedies” the landlord would accept for its breach of a tenant’s exclusive use rights. They would include various levels of what the landlord would be required to do when a “rogue” tenant creates a problem. They would include a range of actions starting with an obligation that is limited to putting the use prohibition in future leases through the obligations to litigate against violators all the way through appeal. The landlord’s playbook would cover rent reduction and lease termination concessions to the tenant.

So, what does this have to do with the future role of artificial intelligence? Imagine you were a retailer or a landlord with more than 5,000 leases and there were a program that could analyze what was in those leases – what range of provisions you have accepted in the past? Most interestingly, this analysis would not merely lead to a compilation of lease clauses. It would be one where the “machine” learns the negotiating postures and compromises behind this collection of leases. That’s knowledge, the kind that artificial intelligence “machines” can use to act just like humans act. Finally, imagine the landlord’s “machine” negotiating with the tenant’s “machine,” human-free.

Think about it. Each of those machines “knows” what its owner needs and what it would give up to get what it needs, all done in an instant and all according to its owner’s play list, one initially created by human decision makers as deciphered from the leases they had negotiated. Can’t imagine that this is possible? That, it can’t be done? After all, cars and trucks can’t drive themselves. Is that your thinking?

Yes, today, cars and trucks seem to be “almost” able to drive themselves. Certainly, they’ve proven their ability to navigate routes in less than complex situations. So, in 2018, those “autonomous” vehicles, relying on artificial intelligence, still need a human driver to fine tune the results. And, when the marketplace becomes lucrative enough for artificial intelligence applications to take over lease negotiation, there will be a place for human negotiators. But, they’ll be starting with an artificial intelligence crafted, pre-negotiated lease, one very close to completion. Imagine a lease negotiation aided by artificial intelligence that takes a week or less to negotiate.

It’s natural to reject these scenarios. To accept them is to belittle oneself – to “admit” that we don’t have very much value. After all, a machine can do what we do. But, we aren’t so reticent to accept that “others” can be replaced by machines. We all know about robotic surgery, the kind where that is surgeon guided or surgeon assisted. But, how many know about surgeon-free robotic surgery? In April of 2016, an autonomous (surgeon-free) robotic system in a Washington, D.C., hospital stitched up real tissue taken from a pig’s small intestine. “Researchers compared the performance of the autonomous bot and a human surgeon on the same suturing task and found that the bot’s stitches were more uniform and made a tighter seal.” [For an article about autonomous surgery, click: HERE.]

How do you think Facebook tags your photographs with the names of those in them? How do you think your airplane flies itself? How do you think Amazon, Google, and others “fixes” your search terms, knows what you were really looking for? In the past, it took people, often experts, to do these tasks, often poorly.

We can deny that the light at the end of the tunnel is a train coming directly at us, but it probably is a train. Ruminations has ideas about the future role for human lease negotiators, but none of those will be useful until and unless enough of us accept that such a list will be useful. And, by the way, all that we’ve written about lease negotiation is equally applicable to all agreements, starting with the most common, such as sales contracts, non-disclosure agreements, and loan documents.

In sum, if sex dolls can “think” on their own, why can’t leases be negotiated on their own? Which is the more human task?

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Comments

  1. Steve Anderson says:

    Ira: I have been a man and I have negotiated leases. I would venture to say that programming sex dolls for men will prove to be far, far easier than programming lease negotiators for clients.

    Steve Anderson

  2. Joel Hall says:

    Ain’t gonna happen. A machine cannot replicate the subjective motive of why one party agrees to or proposes a compromise to another. The variations are infinite. Ira, you’ve been watching too much Westworld.

  3. Stephan L. Cutler, Esq. says:

    It’s going to happen.

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