Automating Legal Documents for Due Diligence

Legal due diligence goes beyond running the tires of a car. It is a thorough investigation that involves lawyers and CPAs who check documents and data. It requires the review of a variety of subject areas, such as a legal review of material contracts as well as litigation liabilities intellectual property, regulatory compliance, corporate documents as well as financial reviews of accounting policies and financial statements, and tax returns. It also includes an operational review of the company’s management structures, organizational structure, sales, products, services marketing facilities and equipment, supply chain, customer relationships and distribution channels, as well as competition.

Legal due diligence can be a lengthy process, depending on the nature of the business and the amount of money involved in the transaction. This is particularly true for large public businesses that have virtual piles documents that lawyers have to sort through. A lot of legal departments are making use of technology to speed up the process. For instance a document review platform is integrated with AI tools.

Before beginning the legal due diligence process, set a framework and goal for the investigation. It is helpful to develop an outline of the key areas to be addressed and to get the legal team to agree on a strategy with the business owner. It is also essential to decide which areas need specialist input from the firm. For instance legal due diligence review of an IP holding company may include queries by an intellectual property specialist to determine whether the company has any significant patents or other intellectual property rights, and whether there are any infringement lawsuits in the process or being considered.

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