Leadership at many asset managers continues to view in-house legal departments as cost centers. However, with the right legal technology, GCs can derive valuable business insights from the firm’s routine contracts. They also can lower costs by improving the firm’s contract management processes — another boon to the firm’s net returns.
To transition from a cost center to a value center, GCs must find and implement a contract management solution appropriate for the firm’s specific needs. Before getting started in their search, GCs should understand how to get the most out of a contract management platform.
3 ways GCs can leverage contract management software
1. Contract automation
Contract automation offers a variety of ways to improve efficiencies within contract management, from contract drafting to negotiations, compliance, and enforcement. GCs can use point solutions to improve a specific aspect of contracting or adopt an end-to-end contract lifecycle management platform. Both solutions can utilize machine learning and automation to improve various workflows and save lawyers time.
For example, Contract Automation by Ontra combines contract automation and a global network of highly trained contract lawyers. We specialize in efficiently negotiating high-volume, routine agreements for asset managers, such as non-disclosure agreements, non-reliance letters, and joinders. We take repetitive tasks off in-house lawyers’ plates and reduce contract turnaround times by leveraging advanced ML.
Benefits of automated contract negotiations
- Faster contract negotiations
- Real-time negotiation tracking
- More efficient contract execution with integrated eSignature capabilities
- More consistent language across contract types
- Improved investor relations through efficient processes
2. Data analytics and contract intelligence
Many asset managers aren’t taking full advantage of their contracts. Routine agreements contain a wealth of information, including key economic provisions, insights into market trends, precedent language, and leverage for future negotiations. GCs can gain a competitive edge by using a contract management system to digitize their contracts and running reports to analyze contract data.
Ontra digitizes contracts and enables deal professionals to capture critical contract data, language, and terms. GCs and deal professionals can sort, filter, and search the firm’s contracts, as well as drill down into individual agreements and specific clauses. Most importantly, they can export data to Excel, PDF, or via API to share with third parties or create more detailed analyses.
Benefits of data analytics
- Gain visibility into current and past agreements
- Leverage precedent terms and language when negotiating new deals
- Quickly access contract provisions to answer questions and enable stakeholders to act
- Mitigate risk by efficiently tracking key terms, notice periods, restrictive covenants, and expirations
- Quickly run reports to gain insights from all the firm’s contracts or a subset of agreements
3. Proactive obligation management
Some asset managers struggle to keep track of their investor commitments without the right contract management tools. It’s a time-consuming, manual process to view these obligations in paper contracts or PDFs and ensure internal stakeholders comply with relevant obligations. For example, many asset managers must manage a high volume of side letter agreements with their investors, all of which may have different terms and provisions. As a result, managers end up with reactive obligation management programs that could lead to non-compliance and reputational damage.
Insight from Ontra enables managers to adopt proactive contract management processes. Insight is an AI-powered SaaS solution that centralizes managers’ fund documentation. In-house lawyers and deal professionals can quickly surface their key organizational documents, access frequently needed provisions across various funds, compare contract provisions, and assign tasks related to their investor obligations.
Benefits of proactive obligation management
- Visibility into all current affirmative commitments to investors
- Easy access to restrictive covenants that may involve various funds or investors
- Reduced risk of contractual or regulatory non-compliance
- Self-help: review agreements and answer questions in-house
- Less reliance on costly outside law firms
Not all contract management systems are created equal
GCs searching for a contract management platform will run into many generic CLM solutions. While these providers might advertise solutions for the financial services industry, it’s unlikely they’ve explicitly geared their products toward asset managers.
Ontra continues to build contract management solutions suitable to private markets. Our product features and workflows are based on private fund managers’ needs to ensure our customers can realize the full benefit of contract management software.
This blog was originally published March 14, 2019.