5 signs it’s time to outsource your private equity NDAs

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Contract Automation

NDA outsourcing is a clever way to push toward your strategic goals. By taking high-volume, low-value work off your team’s plate, you enhance the internal resources available for more valuable endeavors, including risk mitigation and preparing for potential SEC regulations. With NDAs (and other high-volume, routine contracts) taken care of, your time and attention remain on what matters most: meeting your obligations to investors and generating alpha.

Legal outsourcing is the norm

Years ago, outsourcing in the financial services industry felt like a dirty word. Yet it became clear to firms that their time and money were better spent on their core functions and not routine processes. The impact of that attitude shift was outsourcing back-office processes.

Slowly, asset management firms accepted outsourcing as not only financially necessary but strategically advantageous. Firms began outsourcing some middle and even front-office processes. It helps that entire businesses and industries have grown to address this need. Legal process outsourcing (LPO) providers and alternative legal service providers (ALSPs) are ready and waiting to take on private equity firms’ non-core functions.

5 signs you should outsource your NDAs

Not every asset management firm has the same relationship to outsourcing. Some kept routine work in house as long as possible, while others outsourced numerous processes over the years. If your firm still handles NDAs itself, review the five signs it’s time for a new arrangement.

1. You want to reduce spend on outside counsel

Many private equity firms already outsource their NDAs and other routine contracts to traditional law firms. While outside counsel provides high-quality results, it comes with an even higher price tag.

2. Your team struggles to find time for high-value work

Your associates’ working hours should be dedicated to core tasks that bring the firm closer to its business goals. Yet a constant complaint may be that manual tasks like NDAs take time away from what matters most.

3. You need time for new, critical tasks

With possible SEC regulations looming, many private equity firms are realizing it’s time to step up their game when it comes to obligation tracking, compliance, and risk management. Your team may need more time to focus on new — or newly important — tasks.

4. You’re concerned with employee morale and churn

Routine tasks like NDAs are more than an annoyance. This type of redundant and unpleasant work can harm employee morale and drive talent to other firms.

5. You’re forced to reduce your internal headcount

An unpleasant but sometimes necessary task is to reduce your firm’s headcount in certain departments. Outsourcing can help your firm cut the size of your team and costs.

Save money and focus on core functions

Asset management firms derive several benefits from handing off routine contract management. At the most basic level, outsourcing lowers costs, particularly when firms choose an LPO provider or ALSP that uses tech to enhance efficiency and turnaround times. NDA processing involving human-in-the-loop (HITL) technology and freelance lawyers is faster and cheaper than traditional law firms with high hourly fees.

Agreements like NDAs in the private equity industry are essential. They have to be done — and done well — but they don’t provide significant value to the firm or its investors. Every time an associate deals with an NDA, they aren’t working on something that benefits the bottom line. When outsourcing NDAs and other contracts, these low-value, manual tasks no longer pull team members’ attention away from the core work of the firm.

Take routine legal documents out of your routine

Another benefit of contract outsourcing has moved to the fore in recent years: Data. Contract processing through machine learning and artificial intelligence technology can give your private equity firm structured data and actionable insights. You can do more with these routine contracts that firms often take for granted.

Ontra’s Document Processing solution provides real-time visibility into negotiations for routine contracts. Your team can see each contract status and take advantage of automated tools to track ongoing negotiations through a user-friendly dashboard. Our HITL technology combined with a distributed network of top-tier legal talent enables you to speed up turnaround times, track key terms and obligations, and benchmark against precedent to negotiate from a position of strength.

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