Dive Brief:

• More than six in ten (61%) private markets professionals said non-disclosure agreement (NDA) negotiations detract from other strategic work their firms need to accomplish, according to a report from the contract automation and intelligence platform Ontra.
• Approximately 65% of the respondents — who included in-house legal, compliance, finance and investment professionals — said they personally spend at least six hours per week negotiating NDAs, the Ontra survey found. Another 17% spend more than 10 hours a week negotiating such deals.
• Half of the 400 surveyed professionals said their average turnaround time for negotiating and executing NDAs was three-to-four days, with another roughly 20% reporting turnaround times of five days or more. The survey was conducted for Ontra by Wakefield Research in late 2022.

Dive Insight:

Challenges with NDA negotiations can have a significant impact on companies’ business operations, according to the Ontra report titled “A perspective on the private markets.”

As an example, 58% of private-markets professionals said they agreed that their firm’s NDA processes negatively impacted their ability to close a deal.

“NDAs are gateways to deals and poor processes lead to several challenges for companies,” said Frank Giovinazzo, general manager of contract automation at Ontra. “They increase negotiation risk by failing to quickly identify and act on sensitive provisions, they lead to slower turnround times and increased demands on internal legal teams and external counsel, they fail to drive consistent results within agreements and across contracts and they decrease transparency and reliable reporting.”

In North America, roughly half of the surveyed professionals said their firm handles more than 500 NDAs on an annual basis.

Roughly one-third of those same professionals said their firm handles 251-500 NDAs a year.

A decline in NDA volume across the last half of 2022 foreshadows decreased M&A activity during the first half of 2023, the Ontra report said.

The Ontra report also highlighted that 43% of private-markets firms plan to invest more in technology related to legal operations this year, with 23% of those surveyed saying their firms plan to invest significantly more.

The areas of legal operations that professionals said would benefit the most from digital transformation included contract negotiations (44%), data gathering about contracts (43%) and contractual obligation compliance (40%).

A survey released in April from ALM and Bloomberg Law found that only one in four in-house counsel reported that their current contract workflow technology met their needs.

Ontra’s Giovinazzo said the escalating volume, complexity and pace of legal work should prompt firms to embrace technology in place of conventional methods used to manage legal processes.

“Firms must abandon antiquated, manual workflows in favor of purpose-built, intelligent platforms that can cost-effectively and reliably address the collective needs of all parties in the NDA process,” he said. 

“As the number of private markets firms has grown, and the deal-making environment has become more competitive, firms that adopt technology to solve these issues are the ones who will emerge as leaders in the space,” Giovinazzo added.