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Automating Legal Documents for Due Diligence

A legal due diligence review is more than just the legal equivalent of hitting the tires of an automobile. It is a thorough investigation using lawyers and CPAs to verify documents and the facts. It entails a review of several areas, including a legal review, which covers contracts, litigation liabilities, and intellectual property and corporate records and regulatory compliance. It also includes a financial review which includes accounting policies, financial statements and tax returns. It also involves an operational review of the business’s management and organizational structure, as well as products, services, sales marketing facilities and equipment, supply chain, customer relations as well as distribution and sales channels, and competition.

Based on the amount of the deal and how complex the company is depending on the size of the deal and complexity of the company, the due diligence process can be time consuming, particularly with large public companies with a huge amount of information that lawyers must sort through. A lot of legal departments are using technology to streamline the process. For instance the document review platform integrated with AI tools.

Before beginning the legal due diligence process, create the structure and goals for the investigation. It is beneficial to make a checklist of the areas that must be addressed and to get the legal team to agree on a strategy with the business owner. It is also crucial to prioritize which areas require special expertise from the firm. A legal due diligence audit on an IP holding company, for example it could involve questions from an intellectual property specialist to determine whether the company has any patents that are important or other intellectual property rights, and whether there are any infringement cases currently or in the pipeline.




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