Challenge: Time-consuming side letter processes prove unwieldy as funds grow

Before adopting Insight in 2021, the hedge fund’s process for managing obligations to investors was entirely manual.

Legal professionals spent hours copying side letter provisions into a master tracking spreadsheet. Then, once a month, the legal team asked key stakeholders across six departments (compliance, accounting, tax, treasury, investor relations, and risk) to determine whether any events triggered side letter obligations and confirm whether the firm had met any related compliance requirements.

“Our funds grew quickly and our side letter spreadsheet was becoming unwieldy. It just couldn’t scale along with our growth. Plus, coordinating across six different groups of internal stakeholders was tricky to manage.” – Counsel

Manual processes distracted from other mission-critical priorities, and the firm worried about both the amount of time spent managing obligations and the cost of making a mistake.

In 2021, the US-based hedge fund partnered with Ontra to implement Insight and uplevel their side letter and fund document compliance program.

Solution: Seamless implementation operationalizes best-in-class side letter compliance

The onboarding process was quick and straightforward. After initial software training, the firm took the lead on uploading and tagging documents, with support from Ontra’s dedicated legal network members.

“Ontra’s legal network members summarized our side letter provisions, and Ontra’s account team helped group repeat provisions. Overall, onboarding was easy, and we were able to handle most of it ourselves.” – Counsel

Today, the firm uses Insight to manage side letters and agreements across four separate funds, with plans to expand as the firm grows.

The hedge fund noted many benefits of using Insight, but three stand out for the legal team.

1. Streamlined side letter management

With Insight, the firm’s side letters and fund documents reside in a searchable, easy-to-manage central repository. Insight enables various internal teams to quickly surface key obligations without digging through emails, combing through shared drives, flipping through underlying contracts, or asking other teams to find documents.

“What I really like about Insight — and what probably impacts me the most — is having all our side letters in one searchable platform. That saves us from having to maintain a chart of all our provisions. ” – Counsel

2. Quick access to precedent for comparison

Insight’s SmartSearch and SmartLine features enable the firm’s teams to quickly locate precedent, group similar provisions, and redline text to highlight key differences. They can leverage these features to understand existing obligations and enhance future negotiations.

“Recently, someone asked how many investors had received a certain provision about loans among various funds. Insight made it really easy to find the answer.” – Counsel

Insight also facilitates the side letter drafting process by allowing the firm to quickly compare similar provisions, surface precedent, and identify changes over time.

3. A scalable, easy-to-implement system for workflow management

Insight’s workflow tools allow the firm to operationalize obligation management by assigning tasks cross-functionally and tracking completion in real time. Side letter and fund document compliance are now transparent, collaborative, and auditable.

Additionally, the firm can seamlessly add new side letters and documents, integrating them into existing workflows as their funds grow. The firm also benefits from Insight’s robust reporting functionality, which empowers various internal teams to make better, data-driven decisions.

“Assigning people tasks is one of our main uses of Insight. I was actually expecting a lot more internal pushback when we set it up because it’s a new system for us, but it’s been great. Now we don’t have to find time to meet with six different internal groups each month. Insight automatically sends our team emails about upcoming tasks.” – Counsel

Overall, Insight improves the way professionals at the hedge fund collaborate to ensure compliance with key investor obligations. The forward-thinking hedge fund now has an intuitive, efficient, and centralized solution for managing side letters and fund documents that can scale with the firm as they grow.