Compliance and Legal Document RAG

For legal and compliance use cases, the bar for accuracy is significantly higher. A "Close enough" answer is a failure; you need Precision.

Precision-Focused Retrieval

Hybrid Search is Mandatory

You must be able to find exact legal terms (e.g., "Force Majeure Clause") while also searching for semantic intent ("What happens in case of an act of God?").

Page-Exact Citations

In legal research, a citation to a 500-page document is useless. You must cite the Exact Page and Paragraph.

Advanced Verification for Compliance

Use a "Multi-stage Verification Loop" (Module 17.5).

• Model 1: Finds the answer.
• Model 2: Attempts to find evidence that disproves the answer.
• Model 3 (Auditor): Resolves the conflict.

Handling Scanned Contracts

Legal documents are frequently scanned PDFs with handwriting or stamps.

• OCR Requirement: High-resolution OCR with layout awareness is essential to distinguish between the body text and marginalia.

Case Study: Regulatory Change Tracking

A bank needs to know how a transition from LIBOR to SOFR affects their 10,000 existing contracts.

• The RAG system reads through every contract, identifies the interest rate clause, and summarizes the "re-papering" requirement for each.

Exercises

1. Why is a "High Re-ranker Threshold" necessary for legal RAG?
2. How would you handle two versions of the same contract (Draft vs. Signed)?
3. What is the benefit of "Closeness Search" for finding defining terms in a long document?