Automating Legal Documents for Due Diligence


A legal due diligence review is more than just the legal equivalent of hitting the tires on an automobile. It is a thorough investigation that includes lawyers and CPAs who verify documents and facts. It involves a thorough review of many areas including a legal review, which covers contracts, litigation liabilities and intellectual property as well as corporate records and regulatory compliance. It also includes a financial review, which includes financial statements, accounting policies and tax returns. Also, it involves a study of the management, organizational structure and products, services marketing, sales facilities and equipment.

Depending on the size of the deal and complexity of the business and the complexity of the company, the legal due diligence process can be extremely time consuming, particularly with large public companies with massive piles of documents for lawyers to sort through. As a result, many legal departments have begun to make use of technology to streamline and speed up the process, like a document review platform that integrates AI tools.

Before starting the legal due diligence process, set the structure and goals for the investigation. It is beneficial to make a checklist with key areas that need to be addressed and get the legal team to agree on a plan of action with the business owner. It is also important to determine which areas require professional input from the company. For instance, a legal due diligence review of an IP holding company could include questions from an intellectual property specialist to determine whether the company is in possession of any significant patents or other intellectual property rights and whether there are any infringement proceedings currently pending or threatened.