Non-disclosure agreements (NDAs) play an essential role in important legal matters. Without NDAs, some of the world’s largest corporate transactions could be subject to substantial business and legal risk.
5 types of contracts you should be outsourcing
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If you’ve been considering legal process outsourcing, routine and recurring contracts are a great place to start. Legal practice generally involves two kinds of work – transactional tasks that are highly nuanced and complex, such as fund formation or tailored M&A agreements, and high-volume legal work that involves routine contracts and processes. This latter category makes up the bulk of the work in most companies, meaning that staff are focusing their time and energy on handling routine tasks rather than work that relates to core business objectives.
Attempting to handle routine legal work in-house is an inefficient use of resources. Outsourcing this work to a specialist, on the other hand, frees up your staff to focus on higher-value work that advances your core business objectives, while ensuring that the more routine work is handled by someone who is dedicated to seeing that it’s done right.
Ontra specializes in handling exactly those kinds of matters that don’t require the valuable time of your internal staff.
The following five types of contracts, while crucial to your operations, are time-consuming and highly routine, making them perfect candidates for outsourcing to a contract specialist.
1. Non-Disclosure Agreements
Non-disclosure agreements (NDAs), also known as confidentiality agreements, are agreements between two parties to keep certain specified information confidential. Under an NDA, you or your deal targets, vendors, or other business partners agree to not disclose things like trade secrets, business plans, or other non-public information to third parties.
Most companies who use NDAs do so under circumstances that continually recur – for example, with every deal target or every vendor. The content of the agreement rarely changes significantly, save for the identity of the counterparty or the description of the information that is not to be disclosed. Therefore, while these agreements are crucial to protecting your business or keeping your deal flow active, they don’t require the attention of your internal staff, who should be focused on more nuanced work. A legal outsourcing provider can easily oversee all your NDAs, ensuring consistency, managing your liabilities, and protecting your interests while you handle higher-value work.
2. Joinder Agreements
Joinder agreements are frequently used by companies to bind new parties to existing contracts, such as NDAs, shareholder agreements, LLC operating agreements, trust agreements, or partnership agreements. Unlike the underlying agreements to which the joinder agreements refer, which require complex negotiations and nuanced wording, the joinder agreements themselves are usually fairly standard.
Because joinder agreements are meant to bind the joining parties as if they were parties to the original agreements, the terms are already set and little negotiation is required. The routine nature of joinder agreements makes them perfect for delegating to a legal outsourcing provider.
3. Engagement Letters
Many business relationships start with an engagement letter that defines the relationship and the scope of the parties’ engagement and expectations, including critical factors like compensation and duration. Engagement letters typically follow a fairly standard format.
Because companies can sign so many engagement letters, they are a high-volume task that can take significant time away from other core work when they’re handled in-house. These important agreements are one of the best candidates for outsourcing.
4. Vendor Contracts
If you’re like most companies, you’re working with several vendors at any given time, each with its own agreement defining the scope of the goods or services to be provided. However, while the nature of those goods or services and the price you’re paying for them will vary from vendor to vendor, the other terms of your engagement likely won’t.
The details of how most companies interact with their vendors are usually well established, from confidentiality to security measures. That means that vendor contracts are highly standardized, requiring only a handful of terms to be changed and inserted each time. The routine nature of vendor contracts makes them an ideal task to outsource to a specialist, freeing up your internal workforce to instead focus on core tasks.
5. Non-Reliance Letters
Any company that engages in due diligence should be familiar with non-reliance letters. Prior to any sale, both the buyer and seller typically undertake due diligence, be it for legal, accounting, tax, or other purposes, which results in a due diligence report outlining the relevant findings. Most companies consent to release that report to their counterparties subject to a non-reliance letter that states that the report is being provided for informational purposes only and cannot serve as the basis for any future legal claim
Non-reliance letters are standard documents that incorporate routine clauses protecting the company issuing the letter from liability. Most companies will use the same letter in every instance, changing only the names of the involved parties and the description of the underlying transaction. Because these are routine documents that don’t require much negotiation, they’re ideal for legal outsourcing providers to handle.
Outsourcing Contracts to Better Allocate Internal Resources
In order for your company to succeed in a competitive market, your internal staff should be focusing as much of their time as possible on the things that your company is uniquely good at. Any time spent on things other than core business tasks prevents you from achieving your primary objectives as a company.
Routine legal work is hugely time-consuming, and not something that you should be devoting your internal resources to. The contract types outlined above are just a few examples of the kinds of routine tasks that are taking significant time away from core business tasks if you try to handle them in-house.
When you outsource these contracts and other high-volume legal work to an experienced legal outsourcing provider like Ontra that offers a scalable, end-to-end solution and a proven track record of success, you can rest easy knowing you’re getting high-quality work and that your business interests are being protected. It’s time to leave the routine legal work to the experts and free up your staff to focus on the high-value work that’s crucial to growing your business.
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