The report, The impact of AI in restructuring, turnaround and insolvency practice, by R3 in association with Alph4, reviewed how professionals in this area were using AI and automation in their work.

It was created following a survey of R3 members and qualitative research with practitioners, legal professionals and technology specialists, and is believed to be the first comprehensive review in this area.

It found that while adoption of more advanced AI remains limited, interest in the technology is growing. Around four in five of those surveyed (81%) have digitised their document intake and more than half (52%) are using tools such as Microsoft Copilot or ChatGPT. However, fewer than one in ten respondents report using machine learning or AI agents.

More than 90% of respondents expect AI to improve efficiency and save time, while almost three-quarters believe it will reduce administrative burdens. Two-thirds agree that AI will create a step change in efficiency across the profession. 

It also found that only 11% of respondents believe current regulations and professional standards adequately address AI use in insolvency. R3 stated in its report that “the absence of clear regulatory guidance is constraining adoption, because practitioners who want to use AI responsibly cannot do so confidently.”

However, the research identified a number of barriers to wider adoption, including: data security and confidentiality concerns, uncertainty around professional indemnity insurance, a lack of regulatory guidance, concerns about training and skills and structural challenges created by traditional business models.

The report’s author, Robert Guidi, also highlights concerns about the impact of AI on future professionals. More than three-quarters of respondents expect AI to change the skills required in the profession, with digital literacy, ethical awareness, data analysis and client communication expected to become increasingly important. 

To help the profession adopt AI responsibly, the report made four recommendations:

• Leaders should lead by example on AI adoption, helping to overcome cultural barriers and build confidence in the technology.
• Training should evolve to ensure future professionals continue to develop the judgement and analytical skills needed to challenge AI outputs.
• Regulators should provide clearer guidance on responsible AI use, including expectations around data security, human oversight, quality assurance and disclosure.
• Firms should focus on using AI intelligently, with the emphasis on enhancing professional judgement and capability rather than replacing it.

R3 president, Sonia Jordan, a restructuring and insolvency partner at Knights, said: “This report provides the first comprehensive picture of how AI is being used by restructuring, turnaround and insolvency professionals. While there are already examples of AI helping to analyse data, review documents and improve efficiency, adoption remains at an early stage as firms explore what these technologies mean for their businesses.

“The companies that are likely to benefit most will be those that build technology literacy, put appropriate governance in place and focus on using AI to enhance professional judgement.

“We hope this report stimulates discussion about how AI is being used in practice, how firms can adopt it responsibly and how the barriers to wider adoption can be addressed.”

Robert Guidi, chief executive at Alph4 and author of the report, added: “It’s clear from our research that AI won’t replace professional judgement. Instead, the greatest opportunities lie in using technology to support practitioners, automate routine tasks and free up more time for higher-value advisory and investigative work. As the technology, evolves the opportunity is not simply to do the same work faster, but to rethink how professional services are delivered.”