AI Glossary for LegalTech Professionals

Comprehensive Explanations with Application Examples and Keywords

This is a comprehensive glossary of key digital and AI-related concepts, explained in plain language. It covers terms like Logic Reasoning, NLP, OCR, CSV, Regulatory Monitoring, Compliance, No-Code, and more—each with definitions, real-world applications, and relevance, especially in legal, technical, and regulatory contexts.

Logic Reasoning


What is Logic Reasoning?

Logic Reasoning refers to the ability of a computer program to draw new conclusions based on defined rules and existing information. It is the digital equivalent of human analytical thinking.

How does it work?

Imagine you have a set of facts and rules. For example:

All cats are animals. Felix is a cat.

The human brain instantly infers: “Felix is an animal.” A computer with logic reasoning capabilities applies logical rules in the same way. It analyzes the given information, applies predefined logical patterns, and arrives at new insights.

Everyday Applications

  • Legal assessment: A system can analyze legal documents and assess, based on laws and precedents, whether a case falls under a specific regulation.
  • Medical diagnosis: A program can match symptoms to known medical conditions and suggest possible diagnoses.
  • Tax returns: Software can evaluate financial data and determine eligible deductions based on tax regulations.

Why is it important?

In an increasingly complex regulatory environment—whether legal, medical, or financial—logic reasoning capabilities help navigate complexity, identify patterns, and draw conclusions that might otherwise go unnoticed.

NLP – Natural Language Processing

What is Natural Language Processing?

Natural Language Processing (NLP) is a branch of artificial intelligence focused on enabling computers to understand, interpret, and sometimes generate human language. It allows machines to communicate with us in our own language.

How does it work?

NLP combines linguistics with algorithms and mathematical models. It breaks down text into sentences and words, analyzes structure and context, and tries to interpret meaning.

For example, if you ask, “What’s the weather tomorrow?”, the NLP system must understand:

  • “tomorrow” refers to the next day
  • you are requesting a weather forecast
  • your current location is relevant

Everyday Applications

  • Voice assistants: Siri, Alexa, and Google Assistant use NLP to understand spoken commands.
  • Email filters: Spam filters rely on NLP to analyze email content.
  • Translation apps: Tools like Google Translate use NLP for language conversion.
  • Legal documents: NLP can identify clauses or risks in long contracts without manual reading.

Why is it important?

NLP bridges the communication gap between humans and computers, making interaction more natural and enabling efficient processing of large text volumes. In legal contexts, it helps sift through vast documents to extract relevant information, significantly aiding lawyers and compliance officers.

OCR – Optical Character Recognition


What is OCR?

OCR (Optical Character Recognition) is a technology that captures printed or handwritten text from images or scans and converts it into machine-readable text. In simple terms, it turns a picture of text into editable digital content.

How does it work?

OCR involves multiple steps:

  • Pre-processing: Enhancing contrast, removing background, aligning text.
  • Text detection: Identifying regions containing text.
  • Character recognition: Recognizing letters and symbols within text regions.
  • Post-processing: Correcting errors using dictionaries or grammar rules.

Everyday Applications

  • Digitizing old documents: A bakery scans handwritten recipes into a digital recipe book.
  • Invoice processing: OCR extracts data like suppliers and amounts from paper invoices.
  • ID scanning: Hotels use OCR to auto-fill registration forms from ID documents.
  • License plate recognition: Parking garages and toll systems automatically capture license plates.

Why is it important?

OCR bridges the paper and digital worlds, saving time otherwise spent manually transcribing. In legal contexts, it makes document archives searchable and streamlines research and analysis.

CSV Format

What is the CSV Format?

CSV stands for “Comma-Separated Values.” It’s a simple, universal file format used to store tabular data. Each line represents a record, and each value in the line is separated by a comma (or sometimes a semicolon).

How does it work?

A CSV file is a plain text file with structured data:

Name,Age,City
Anna,28,Berlin
Thomas,35,Munich
Sarah,42,Hamburg

Each line is a data record, and each value corresponds to a table column. The first line typically contains headers.

Everyday Applications:

  • Contact lists: Exporting/importing contacts between email programs often uses CSV.
  • Financial data: Banks provide CSV downloads of statements for spreadsheet analysis.
  • Product catalogs: E-commerce sites manage inventories in CSV format for easy import/export.
  • Sensor data: Simple devices store data like temperature and timestamps as CSV.

Why is it important?

CSV is popular because it’s easy and compatible with almost all data tools—from Excel to databases. It enables data exchange across systems and allows non-technical users to work with structured data.

Regulatory Monitoring


What is Regulatory Monitoring?

Regulatory Monitoring is the continuous, systematic observation of laws, rules, and regulations relevant to a business. It ensures that a company stays informed about current legal requirements and can respond promptly to changes.

How does it work?

Effective regulatory monitoring includes:

  • Ongoing surveillance: Regularly reviewing official sources (e.g. law journals, government websites).
  • Relevance filtering: Identifying information that matters to the business.
  • Notification system: Alerting responsible staff about relevant changes.
  • Documentation: Logging monitoring activities and detected changes.

Everyday Applications:

  • Retail: Toy stores monitor product safety rules to ensure compliance.
  • Hospitality: Restaurants track changes in hygiene and allergen labeling laws.
  • Transport: Logistics firms watch driver hour laws and emission zones.
  • Construction: Builders track building code and energy efficiency updates.

Why is it important?

Failing to comply with legal requirements can lead to serious consequences—ranging from fines and shutdowns to reputational damage. Regulatory Monitoring reduces these risks by ensuring businesses are always up to date. It lays the foundation for a proactive compliance strategy and gives organizations the lead time needed to implement necessary changes.

Impact and Gap Analyses


What are Impact and Gap Analyses?

Impact and Gap Analyses are structured evaluation methods that help organizations understand the effects of new regulations and identify discrepancies between current practices and new legal requirements.

  • Impact Analysis: Assesses how a new regulation will affect an organization—what departments, processes, systems, or products are impacted, and to what extent.
  • Gap Analysis: Identifies the differences between the current state and the state required to comply with the new regulation.

How do they work?

These analyses usually follow these steps:

  • Understanding the requirements: Thoroughly review the new regulation.
  • Capture current state: Document the organization’s current processes, systems, and controls.
  • Deviation analysis: Compare the requirements to the current state to identify gaps.
  • Impact evaluation: Assess the consequences for the organization, including costs and resource needs.
  • Action plan: Develop a strategy to close the identified gaps.

Everyday Applications

  • Data protection: When GDPR was introduced, companies conducted impact and gap analyses to align data processing practices.
  • Product safety: A toy manufacturer evaluates how new safety regulations affect its product line.
  • Financial reporting: Companies assess changes needed in accounting processes to comply with new standards.
  • Environmental compliance: An industrial firm compares its emissions with new legal thresholds.

Why are they important?

Impact and Gap Analyses offer a clear, structured approach to regulatory change, enabling informed decision-making and effective compliance planning. Early gap detection prevents future violations.

Use Cases


What are Use Cases?

Use Cases are specific, realistic examples that demonstrate how a product, technology, or system is used in practice to solve problems or complete tasks. They describe who uses the system, for what purpose, and with what results.

How do they work?

A well-defined Use Case typically includes:

  • Actors: Who is using the system? (e.g., accountant, client, lawyer)
  • Objective: What is the user trying to achieve?
  • Context: Under what circumstances is the system used?
  • Steps: What actions does the user take, and how does the system respond?
  • Outcome: What problem is solved or value is created?

Everyday Applications

  • Banking app: A customer transfers money via smartphone without visiting a branch.
  • Contract management: A lawyer gets alerts for expiring contracts and starts renewals.
  • Smart home: A homeowner remotely controls heating to save energy.
  • CRM system: A salesperson accesses customer history to make a personalized offer.

Why are they important?

Use Cases make complex systems understandable. They:

  • Help developers build effective solutions
  • Help buyers assess value
  • Help users discover functionality
  • Help stakeholders align on vision

In Legal Tech, Use Cases clarify abstract technologies by linking them to legal workflows.

Compliance


What is Compliance?

Compliance refers to the adherence to laws, regulations, internal policies, and ethical standards by a company and its employees. It ensures that all activities are legally compliant.

How does it work?

Effective compliance management includes:

  • Identification: Determine applicable laws and requirements.
  • Risk assessment: Analyze potential compliance risks and their impact.
  • Policies and controls: Implement rules and oversight mechanisms.
  • Training and communication: Ensure employees understand the rules.
  • Monitoring and auditing: Regularly check compliance and detect violations.
  • Improvement: Continuously update and optimize the system.

Everyday Applications

  • Data protection: An online shop collects and processes customer data in line with GDPR.
  • Occupational safety: A construction firm ensures all site safety rules are met.
  • Tax compliance: A business maintains accurate accounting and submits tax filings on time.
  • Anti-corruption: A multinational implements policies to prevent bribery.

Why is it important?

Compliance is both a legal necessity and a business factor:

  • Avoids fines, penalties, and liability
  • Protects company reputation
  • Builds trust with clients and partners
  • Offers competitive advantages in regulated sectors

As regulatory environments grow more complex, compliance management is critical to sustainable success.

No-Code


What is No-Code?

No-Code is a software development approach that allows people with no coding knowledge to build applications using visual interfaces. Instead of writing code, users assemble apps by dragging and dropping prebuilt components.

How does it work?

No-Code platforms typically offer:

  • Visual elements: Forms, buttons, tables, charts
  • Drag-and-drop UI: Place and arrange components easily
  • Logic builders: Visually define conditions and workflows (e.g., “If button A is clicked, show form B”)
  • Integrations: Connect to other systems without coding

Everyday Applications

  • Surveys/forms: HR creates job application forms without IT support.
  • Internal tools: Sales teams build apps to track customer calls.
  • Automation: Finance sets automatic alerts for overdue invoices.
  • Prototyping: A startup tests its idea with a simple No-Code app.

Why is it important?

No-Code democratizes software development:

  • Accessibility: Experts build their own tools without waiting for IT.
  • Speed: Solutions are created in days, not months.
  • Cost-efficiency: Reduced development costs
  • Flexibility: Quick adjustments without complex code

In law, No-Code empowers legal experts to turn their knowledge into digital tools without needing deep technical skills.


What is Legal Technology (LegalTech)?

Legal Technology—often called “Legal Tech”—refers to software and digital tools designed specifically for legal work. These tools aim to simplify, accelerate, or automate legal processes.

Think of Legal Tech as a digital toolbox for legal professionals. In the past, lawyers spent hours paging through legal codes or files. Now, Legal Tech enables instant access to information.

A key feature is automation of repetitive tasks. For example, software can auto-generate standard contracts, leaving only custom inputs for lawyers—saving time and reducing human error.

Examples of Legal Tech

  • Document analysis software: Scans hundreds of contract pages and highlights clauses or risks
  • Legal chatbots: Answer common questions like “How do I cancel my phone contract?”
  • Online dispute platforms: Settle minor legal matters without court
  • Legal research tools: Automatically find relevant precedents

Legal Tech increases legal access for non-lawyers, allowing everyday people to draft simple legal documents or pursue claims like flight delays without expensive legal fees.

AI Prompts


What are AI Prompts?

AI Prompts are inputs or instructions given to an AI system to obtain specific information or results. A “prompt” is essentially a command or question that guides the AI’s response.

Think of a prompt as talking to a very literal but highly intelligent assistant. How you phrase your input determines the quality of the output.

Effective prompting involves clearly explaining what you want—including format, length, style, and other relevant parameters. The more precise the prompt, the more useful the AI’s response.

Prompt Examples

  • Basic: “Explain photosynthesis.”
  • Improved: “Explain photosynthesis in a way a 10-year-old can understand. Use everyday analogies and limit to three short paragraphs.”

The improved prompt gives the AI clear context: audience, tone, and structure.

Everyday Applications

Effective prompts help:

  • Retrieve relevant information
  • Generate creative ideas
  • Solve complex problems. They reflect the skill of asking the right question—useful in AI and human communication alike.
TLS Encryption (Transport Layer Security)


What is TLS Encryption (Transport Layer Security)?

TLS is a cryptographic protocol that ensures secure data transfer over the internet. It stands for Transport Layer Security and replaces the older SSL protocol.

When you see a padlock or “https://” in your browser’s address bar, your connection is TLS-secured.

How it works:

  • Handshake: Your device and the server agree on encryption standards.
  • Key exchange: Secure keys are shared.
  • Encrypted communication: Data is transmitted securely.

Everyday Applications:

  • Online banking: TLS protects your credentials and transactions.
  • E-commerce: TLS secures your payment information.
  • Email: Many providers use TLS to protect message delivery.

Without TLS, secure digital communication would be nearly impossible. It’s a core trust mechanism on the internet.

AES Encryption (Advanced Encryption Standard)


What is AES Encryption (Advanced Encryption Standard)

AES is one of the most secure methods for encrypting digital information. Established in 2001 by the U.S. NIST, it’s used worldwide to protect sensitive data.

Think of AES like an ultra-secure vault. Your data is the content, and the key—a 128-, 192-, or 256-bit code—unlocks it. Longer keys offer stronger protection.

How does it work:

AES encrypts data in multiple rounds, transforming it through complex operations to make unauthorized access nearly impossible.

Everyday Applications:

  • Disk encryption: Used in phones and computers
  • Wi-Fi security: WPA2 standard uses AES
  • Messaging apps: WhatsApp, Signal, and Telegram use AES in end-to-end encryption
  • Password managers: Protect stored credentials with AES

AES-256 is so secure that cracking it via brute force would take billions of years, even with supercomputers. Governments and corporations worldwide rely on it to safeguard critical data.

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