7 Must-have features in an asset manager’s contract management system

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Contract Management

Asset management firms are limited when it comes to adopting a contract management system. Although there are many contract management solutions on the market, including contract automation, very few meet the needs of asset managers and other players in the private markets.

This doesn’t mean firms should forgo contract lifecycle management (CLM) software. Instead, it means they might need to do a little heavy lifting to find the solution that fits their particular needs.

Contract management software features used by an asset manager.

7 features asset managers need to fully benefit from a CLM solution

1. Secure, centralized contract storage

An essential component of proactive contract management is having a central and secure cloud-based storage repository. Asset managers benefit from retaining contracts and other legal documents in one place versus allowing their lawyers and business professionals to store contracts on a variety of devices.

A central repository is more secure and makes it easier for firms to track their investor obligations. Firms can view all their commitments to investors, across all funds, in one place.

That said, not all software solutions and cloud storage are created equal. Given the sensitive nature of asset managers’ documents, their contract repositories should have strong cybersecurity protections.

Ontra’s suite of solutions has an industry-leading security infrastructure that includes:

  • Data encryption at rest and in-transit
  • Hosting in the United States
  • Fault-tolerant system
  • Redundant, reliable storage and backups
  • A professional technical team able to work with your security risk assessment process
  • Regular penetration testing
  • ISO 27001, SOC 1, and SOC 2 compliant data centers
  • Malicious file detection and deletion
  • Two-step verification and full disk encryption for freelance lawyers

2. An intuitive user experience

Asset managers should invest in CLM software with a good user experience to see the greatest rate of internal adoption and efficiency boost.

When searching for the right CLM, it’s essential to thoroughly demo the product and review its features and workflows. Many CLM solutions market themselves to the financial services industry yet don’t structure their platform for asset managers’ needs.

Ontra created its contract management tools for private asset managers, ensuring an intuitive and efficient user experience for deal professionals and general counsel (GC). For example, the off-the-shelf categories for organizing obligations are based on Ontra’s in-depth analysis of hundreds of thousands of fund contracts.

3. Machine learning and contract automation

The most helpful contract management software solutions take advantage of artificial intelligence (AI), though specific features vary from one CLM to the next. Asset managers should carefully review the contract automation landscape for private markets and whether a particular solution’s automation will benefit their GC and business professionals.

For example, Ontra’s AI reduces the hours lawyers spend executing each contract and speeds up turnaround times. Ontra’s contract automation solution digitizes and summarizes analog contracts and is moving toward AI predictions for 99% of standard non-disclosure agreement (NDA) questions. The solution also includes automated emails, contract status updates throughout negotiations, and automatic storage of executed agreements.

4. Humans in the loop

Although many CLM tech providers advertise using AI in their solutions, AI technology is still limited. Currently, AI can cut down on routine, mundane tasks throughout the contract lifecycle. Over time, with more data, modeling, and human input, automation will advance to take on more complex tasks.

For now, it’s important for humans to review the outcomes of AI in contracting. Ontra uses a human-in-the-loop (HITL) contract automation model in which individuals accept or reject the AI predictions for NDAs. The HITL model creates a continuous feedback loop, enabling Ontra to perpetually improve its AI models.

If a CLM solution provider advertises the use of AI, asset managers should dive into which features rely on AI and how the provider ensures the accuracy and reliability of AI-driven outcomes.

5. A collaboration environment

Contract lifecycle management features should make it easier for multiple parties to work together, including redlining documents and leaving comments without relying on email outside of the platform.

For private asset managers, efficient collaboration is essential to moving through the NDA process swiftly and heading into due diligence as soon as possible. The faster they process private equity NDAs, the sooner they can gather material information and determine whether to move forward with a deal opportunity or not.

6. An electronic signature integration

Asset managers already use digital contracts and eSignatures, which means any contract management technology they adopt should support these features. Unfortunately, not all contract management systems include an eSignature integration, and without this, GC and deal professionals waste time by having to move contracts into a separate solution to gather signatures.

Ontra’s contract automation solution includes a DocuSign integration, ensuring parties don’t have to leave the platform to execute their contracts. They can send and sign contracts on any device as long as they have an internet connection.

7. Contract compliance features

A contract management system isn’t complete if it encompasses only contract execution and storage. A comprehensive CLM solution should also offer contract compliance features to make it easier for asset managers to track and adhere to their investor obligations.

Essential features include ongoing monitoring, robust search, and user-friendly reporting capabilities. With Insight from Ontra, firms turn their digital contracts into structured data. They can quickly sort their commitments, search and compare provisions, and assign ownership for compliance-related tasks. The solution automatically creates a comprehensive audit trail that firms can use to quickly cooperate with a U.S. Securities and Exchange (SEC) exam.

Learn more about contract automation