A legal due diligence review is more than just the legal equivalent of hitting the tires of the car. It is a thorough investigation that includes lawyers and CPAs who verify documents as well as facts. It involves a review of several areas, including a legal audit, which includes contracts, litigation liabilities, and intellectual property, as well as corporate documents and regulatory compliance, an audit of financials that includes accounting policies, financial statements https://medicaldataroom.com/how-to-prepare-your-legal-documents-for-due-diligence/ and tax returns. It also includes a review of the organization’s management structure, and the product, service marketing, sales, facilities and equipment.

Legal due diligence can be a time-consuming process, depending on the extent of the company’s operations and the amount of money involved in the transaction. This is especially the case for large businesses that have virtual piles documents that lawyers have to sort through. As a result, many legal departments are beginning to utilize technology to simplify and speed up the process, like an online platform for document review that integrates with AI tools.

Establish a framework for the investigation and set a goal prior to when you begin the legal due diligence. It is beneficial to create a checklist of the areas that need to be addressed and get the legal team to agree on a strategy with the business owner. It is also essential to determine which areas require specialist input from the firm. A legal due diligence review on an IP holding company, for instance might include questions from an expert in intellectual property to determine if the firm has any important patents or other intellectual property rights and if there are any infringement cases being considered or expected to be filed.