Automating Legal Documents for Due Diligence

A legal due diligence review is more than the legal equivalent of kicking the tires on a car. It is a thorough investigation that includes lawyers and CPAs who examine documents and other facts. It involves a thorough review of a variety of areas, including a legal review, which includes contracts, litigation liabilities and intellectual property and corporate records and compliance with regulatory requirements, an audit of financials which 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 sales and distribution channels, and competition.

Depending on the magnitude of the deal and the complexity of the company, the legal due diligence process can be very demanding, particularly for large public companies that have virtual piles of documents that lawyers have to sort through. As a result, many legal departments are starting using technology to streamline and speed up the process, for instance the document review platform that integrates with AI tools.

Before beginning the legal due diligence process, create the framework and purpose for www.medicaldataroom.com/what-is-a-data-room-and-what-are-the-different-types/ the investigation. It is useful to create a checklist of the areas that must be addressed and to ensure that the legal team has a consensus on a strategy with the business owner. Prioritizing which areas need expert input is crucial. For instance, a legal due diligence review of an IP holding company might include inquiries from an intellectual property specialist to determine whether the company is in possession of any significant patents or other intellectual property rights, and whether there are any infringement proceedings currently pending or threatened.