Onex Combats Escalating Legal Fees and Increased Turnaround Times by Partnering with Ontra
Challenge: Outsourcing routine legal work for two global private equity platforms
Onex’s private equity business has two separate platforms: the large-cap Onex Partners and the middle-market ONCAP.
Prior to 2015, both platforms worked with a preferred list of outside law firms to process their NDAs. Then the firm heard about Ontra’s (then InCloudCounsel) recently launched Contract Automation solution, and it decided to partner with Ontra.
In May 2015, Onex partnered with Ontra to handle routine legal agreements for its Onex Partners and ONCAP private equity platforms.
After engaging with Onex, Ontra onboarded the firm’s large-cap and middle-market private equity platforms to its Contract Automation solution. The Ontra team worked with Onex to develop a comprehensive playbook and iron out a new NDA workflow.
As one of Ontra’s earliest customers, Onex’s onboarding required some adjustment on both sides. Even so, the two platforms were up and running with Ontra’s Contract Automation solution in relatively short order.
Solution: A solution for inbound and outbound legal documents that most law firms can’t provide
Today, both platforms benefit from the time and cost savings of using Ontra’s purpose- built, AI-powered solution to automate their NDA processes. They also get additional savings by leveraging Ontra to handle all the ancillary documents that fall off an NDA.
According to Colin Sam, VP & associate general counsel at Onex, “In the past, whenever we had to sign up an accounting firm, a consulting firm, a financial advisor – all the parties who have to sign onto an NDA – our junior deal team members were responsible for joining those documents to the agreement. Now we have Ontra to coordinate that entire process for us.”
With more than a dozen junior deal team members across the two platforms, the time and cost savings are substantial. However, the two platforms didn’t always have the same experience.
In the early days, the large-cap team experienced what they called “Ontra’s growing pains as a start-up,” so they reverted to working with Onex’ preferred law firms for NDAs while the middle-market platform continued to iterate and develop with Ontra.
Over the next few years, as private markets evolved, outside counsel fees shot up, and ALSPs grew more popular, Onex’s large-cap platform reconsidered its approach.
Sam recalled: “In 2016, misguided or not, there was a perception that if the target was using say Goldman Sachs as lead adviser and maybe Skadden Arps as legal counsel, it wasn’t the best look for our large-cap platform to come to the table with a startup that nobody’s ever heard of. To Ontra’s credit, that perception has gone away. The whole industry has done a really good job of asking, ‘Is it actually the best solution to use white shoe advisory and legal firms for these types of routine legal agreements’?”
On that basis, the large-cap platform reevaluated Ontra and started using the solution again in 2022.
Explaining the decision, Sam said, “Transactions kept getting larger and more complex, and the demands were getting harder in terms of global conflict searches, so outside counsel was taking a while to get out of the gate in order to help us. Sometimes it would be 48 hours before they could even look at an NDA. But with the market moving so quickly, our side needed same-day service that many law firms couldn’t accommodate.”
Sam continued: “Obviously, I was very comfortable because Ontra was working well for our middle-market platform, and I knew the cost savings and additional services were compelling. So I encouraged my teams to take a hard look at ancillary documents, like inbound and outbound joinders, non-reliance letters; all the things we didn’t want to pay an external law firm to do because hourly rates had shot up significantly. So it was on them to do that because we wanted to lower costs, keep our investment teams from getting bogged down in negotiations, and free up their time to devote elsewhere. Overall, the team is happy, we’re moving along, and things are working well.”
Digging into the specifics, Sam said, “Most of the routine legal work connected with our investment transactions resides with over a dozen junior members of the deal team, and they already have a lot on their plate… Everything from managing and building financial models to diligence to working with management and industry experts, a whole myriad of things that can’t be outsourced. By taking the time-consuming work of drafting, negotiating, and handling the back-and-forth of inbound NDAs and outbound joinders off their plates, Ontra frees up an extra hour or two a week for them. That gives them more time for those other high-value tasks and helps keep them from being in the office past midnight.”