Now more than ever, private equity needs technology-based solutions to address the expanding amount of legal work generated by an increasingly complex industry. Rapid private markets growth, heightened competition, and mounting regulatory scrutiny have all contributed to this complexity.
Historically, asset managers attempted to meet these demands by hiring larger internal legal and compliance teams and by outsourcing more work to external law firms. While these approaches provide short-term relief, the associated costs make these methods unsustainable over the long term.
On the surface, artificial intelligence seems to provide a viable alternative — a cost-effective way to streamline processes and improve efficiency. Unfortunately, conventional AI platforms don’t meet private equity’s high standards.
That’s why Ontra spent over 9 years building Ontra Synapse, an AI platform designed to address the legal use cases core to fundraising, portfolio investment, and fund operations. With Ontra Synapse, private equity gets a scalable way to stay ahead of mounting legal demands without having to worry about the limitations of conventional AI.
Why conventional AI fails private equity
There are several challenges to implementing AI in the legal and private funds industries:
- Legal language is difficult for conventional AI to understand and construct due to complex document structure, passive language, jargon, and non-standard syntax.
- The legal profession performs specialized tasks, such as marking up documents based on established precedent and client expectations, which generic AI models can’t address out of the box.
- Legal work, such as contract drafting and negotiation, requires a high degree of precision. When legal, financial, and reputational risk is at stake, there’s no margin for error.
Conventional AI fails to conquer these challenges for two primary reasons. First, it lacks specialized training data. Machine learning models depend on large volumes of high-quality data to learn how to perform specific tasks. Most companies don’t have access to the volume of private funds contract data required to generate acceptable outputs.
Second, generic AI models aren’t tuned to deliver the use case-specific answers private markets legal teams need to do their jobs. Given the shortcomings of conventional AI, legal professionals can spend too much time reviewing and revising outputs, negating any benefits derived from the technology.
What is Ontra Synapse?
Ontra Synapse is the proprietary AI technology that powers the applications Ontra has built to manage the legal workflows associated with fundraising, portfolio investing, and fund operations. Think of our AI-enabled solutions as a legal operating system for the private markets.
What makes Ontra Synapse different from conventional AI solutions?
Industry-specific data: To deliver high-quality answers, AI depends on high-quality training data. There’s not a lot of information about private equity contracts in the public domain, which is why conventional AI can’t meet the needs of the industry in terms of relevance and precision. Ontra’s AI training data set contains unparalleled data from more than 800,000 negotiations, representing hundreds of millions of individual data points. Our AI continuously learns from every document processed on Ontra’s platform.
In-depth contract frameworks: Private markets contracts contain nuances not found in contracts from other industries. For AI to be effective in contract automation, it needs a detailed understanding of all the clauses in a given document as well as the associated details. Ontra has seen nearly one million private equity contracts which have become the basis for our extensive, industry-specific contract frameworks. These “contract anatomies” can contain up to 500 fields.
Proprietary set of predictive and generative AI models: Based on industry-specific use cases, Ontra has defined the types of answers private markets customers need to accelerate their legal work. For example, users may need to access precedent while negotiating a contract or quickly summarize an executed document. Based on our deep understanding of these requirements, we’ve built a set of predictive and generative AI models to produce the high-quality, context-specific outputs users need.
Native integration: Ontra offers a seamless user experience by embedding AI outputs throughout Contract Automation and Insight. Ontra Synapse surfaces the right information at the right time to maximize productivity. For example, when a lawyer is reviewing a contract term, Ontra Synapse can retrieve previously negotiated contracts that contain similar provisions and highlight relevant clauses.
Human supervision & expertise: The private funds industry requires a high degree of precision and can’t rely on AI models that produce answers with low relevance and accuracy. Conventional generative AI models are prone to present fabricated facts as true (known as hallucinations) and deliver inconsistent responses to questions. Ontra Synapse avoids these pitfalls by tapping a global network of over 600 legal partners to review the accuracy of our AI outputs. We use lawyer feedback to further train our models and deliver stronger and stronger outputs over time.
How Ontra Synapse helps private fund managers
Ontra Synapse is simple to deploy and delivers immediate value. Since it’s trained on vast amounts of contract data and integrated into Ontra’s suite of legal applications, it can accurately analyze new contracts from day one. Better yet, we’re constantly feeding our models new data to guarantee relevant and accurate outputs even as market standards change.
Ontra Synapse supports several use cases, including document analysis, precedent retrieval, and contract summarization and reporting.
Document analysis assesses a document’s complexity to optimize negotiation for speed, cost, and outcomes. Ontra Synapse will identify and prioritize time-sensitive contracts, determine a contract’s type so that it can be matched to the correct playbook and legal resources, and flag sensitive contract provisions that should be reviewed immediately. All these features help to accelerate routine contract negotiations.
Precedent retrieval surfaces relevant precedent to expedite negotiations and ensure consistency across contracts. Ontra Synapse retrieves similar contracts that have been negotiated previously and highlights relevant terms and associated redlines in the documents.
Contract summarization and reporting aggregates and synthesizes contract data and generates data-driven insights and reports, all of which are stored in a central contract repository.
The bottom line
- Private equity needs technology-based solutions to address expanding legal workloads.
- Conventional AI lacks the training datasets and models required to effectively address private equity use cases.
- Ontra Synapse is the proprietary AI technology that powers Ontra’s legal operating system.
- Ontra Synapse is trained on industry-specific data from more than 800,000 industry-specific negotiations.
- Ontra Synapse’s outputs rely on industry-specific ML models and exhaustive contract frameworks.
- Native AI integrations throughout Ontra’s applications surface the right information at the right time to maximize productivity.
- Ontra has pioneered a human-in-the-loop system in which a global network of over 600 legal partners helps improve the accuracy of Ontra Synapse’s outputs.
Continue to explore legal AI
Over the next several weeks, we’ll dive deeper into the topic of legal AI for the private markets. In future posts, we’ll explore the power of the human-in-the-loop model and provide insights on how private equity firms can evaluate and use AI to gain a competitive advantage.