Automating Legal Documents for Due Diligence

Legal due diligence is more than driving around in an automobile. It is an extensive investigation that involves lawyers and CPAs to verify documentation and evidence. It involves a thorough review of many areas including a legal review which includes contracts, litigation liabilities and intellectual property and corporate records and regulatory compliance. It also includes an audit of financials that includes financial statements, accounting policies and tax returns. It also involves an operational review of the business’s management structures, organizational structure, sales, products, marketing, facilities and equipment, supply chain, customer relations and distribution channels, as well as competition.

Legal due diligence can be a long-winded procedure, depending on the extent of the company’s operations and the size of the transaction. This is especially applicable to large public firms that have virtual stacks of documents that lawyers have to sort through. As a result, many legal departments are starting to make use of technology to streamline and speed up the process, for instance the document review platform which integrates with AI tools.

Before beginning the legal due diligence process, you must establish the framework and purpose for the investigation. It is useful to create a checklist of the areas that need to be addressed and get the legal team to agree on a plan of action with the business owner. The order in which you prioritize areas that require expert input is crucial. A legal due diligence review on an IP holding company, for example could include questions from an intellectual-property expert to determine if the firm has any important patents or other intellectual-property rights, and if there are any infringement cases top 8 vdr features or in the pipeline.