Victoria Langley Contract automation is a clever way to push toward an asset manager’s strategic goals. By taking high-volume, repetitive work off the in-house team’s plate, a firm can enhance the internal resources available for more valuable endeavors, including risk mitigation and preparing for potential U.S. Securities and Exchange Commission regulations.
With non-disclosure agreements and other routine contracts taken care of, in-house lawyers and deal professionals can focus their time and attention on what matters most: meeting the firm’s obligations to its investors and generating alpha.
Asset managers take advantage of legal process automation
Years ago, outsourcing in the financial services industry felt like a dirty word. Yet it became clear to asset management firms that their time and money were better spent on their core functions and not routine processes. The impact of that attitude shift was an increase in outsourcing back-office processes.
Slowly, firms accepted outsourcing as not only financially necessary but strategically advantageous. They began outsourcing some middle- and even front-office processes, and eventually, an entire industry grew to address this need. Legal process outsourcing providers and alternative legal service providers are ready and waiting to take on firms’ non-core functions.
In recent years, outsourcing has evolved into legal process automation due to advances in artificial intelligence. For example, Ontra’s contract management solutions include human-in-the-loop Contract Automation. We combine advanced, AI-driven contract automation with a global network of freelance lawyers who provide crucial feedback to update our machine learning models and improve the accuracy of our predictions.
5 signs asset managers should automate their NDAs
Not every asset management firm has the same relationship with outsourcing. Some kept routine work in-house as long as possible, while others outsourced numerous processes over the years.
1. Firms want to reduce spend on outside counsel
Many asset managers already outsource and automate NDAs and other routine contracts to traditional law firms. While outside counsel provides high-quality results, it comes with an even higher price tag. Meanwhile, contract automation software enables firms to process repetitive agreements efficiently and at a lower cost.
2. Firms’ in-house teams struggle to find time for high-value work
In-house lawyers and deal professionals should be able to dedicate their working hours to core tasks that bring the firm closer to its business goals. Yet, these professionals often complain of manual tasks like executing NDAs taking time away from what matters most. Contract automation solves this problem by taking routine agreements off their desks.
3. Firms need time for new, critical tasks
With more possible SEC regulations looming, many firms in the private markets realize it’s time to step up their game when it comes to risk mitigation and obligation management. Right now, their teams need more time to focus on new — or newly important — tasks. Legal technology can not only tackle high-volume, routine legal tasks, it can also boost firms’ proactive compliance efforts.
4. Managing partners are concerned with employee morale and churn
Routine tasks like negotiating NDAs are more than an annoyance. This redundant and unpleasant work can harm employee morale and drive talent to other firms. Adopting a solution to handle repetitive contracts can boost morale and help firms retain top talent.
5. Firms must reduce their headcount
An unpleasant but sometimes necessary task is to reduce the firm’s headcount in specific departments. Contract automation can help firms cut the size of their teams and costs. In a similar vein, HITL contract and NDA automation can scale when firms hit periods of higher contract volume, preventing the firms from having to bring in new or temporary staff.
Save money and focus on core functions
Asset management firms derive several benefits from handing off routine contract management. At the most basic level, contract automation lowers costs, particularly when firms choose a solutions provider that uses AI to enhance efficiency and shorten turnaround times. AI NDA and contract processing is faster and cheaper than traditional law firms with high hourly fees.
Private equity NDAs are essential. Firms have to execute them — and do so well. But these agreements don’t provide significant value to the firm or its investors. When associates deal with NDAs, they aren’t working on mission-critical tasks. Automating NDAs and other contracts means they no longer pull team members’ attention away from the firm’s core work.
Automate NDAs and routine contracts with Ontra
Another benefit of legal document automation has moved to the fore in recent years: Unlocking contract data. Contract processing through AI-enabled technology can give firms structured data and actionable insights. As a result, asset managers can do more with these routine contracts that firms often take for granted.
Ontra’s Contract Automation solution provides real-time visibility into negotiations for routine contracts. In-house teams can see each contract status and use automated tools to track ongoing negotiations through a user-friendly dashboard. With our HITL contract management solution, firms can speed up turnaround times, track key terms and obligations, and benchmark against precedent for future negotiations.
This blog was originally published April 7, 2022.
