Entity management presents numerous challenges for private funds’ in-house legal teams and outside counsel. Neither team tends to have a high-tech solution for forming, maintaining, and managing funds’ many legal entities. Instead, both parties rely heavily on paper and electronic documents, emails, spreadsheets, slide decks, and structure charts.
For law firms, traditional entity management practices have the distinct disadvantage of hindering collaboration, delaying important workflows, and accruing unnecessary fees. Ultimately, the lack of robust entity management practices may reflect badly on the firm’s client service. Law firms can resolve these issues by adopting or encouraging clients to adopt a modern and industry-specific entity management solution that allows for collaboration among clients, law firms, and other third-party advisers.
Disadvantages of current entity management practices
Law firms spend significant time managing entity information for their private fund clients. Despite this effort, it’s often challenging for associates to locate accurate information for fund formation, fundraising, investing, divesting, and compliance purposes.
There are several reasons law firms struggle with entity management. Law firms tend to have a hard time keeping up with movement within a fund’s many legal entities, such as changes to officers and boards of directors, which means they may have out-of-date information.
Entity management work typically falls to first-year associates who, despite their best efforts, aren’t sure what to look for and where. They have to locate, open, review, and compare numerous governance documents, structure charts, spreadsheets, or decks. In the end, they often need to reach out to the others at the firm or even the client for help.
These manual entity management practices lead to a cascade of issues:
- Associates might provide inaccurate information based on out-of-date materials.
- Associates may need to consult internal teams or their clients for institutional knowledge.
- Associates take too long to find and provide the fund manager information, delaying situations with tight timelines.
- Associate delays lead to over-billing, which can lead to clients requesting write-offs or discounts.
- The private fund or law firm acting on its behalf could perform an incorrectly authorized corporate action based on inaccurate information.
These challenges can contribute to poor relationships between a law firm and its private fund clients. Over time, tension over fees and increased risk could lead to clients choosing new representation.
Modern entity management built for private equity
What is Ontra Atlas?
Ontra Atlas is a modern entity management solution for private fund managers and their outside counsel. Ontra Atlas streamlines how fund managers and law firms organize and manage the many legal entities across funds, saving everyone time and helping them reduce risk.
What can law firms do with Ontra Atlas?
Law firms and their private fund clients can:
- Digitize, centralize, and organize governance information for legal entities across clients’ funds.
- Visualize and understand relationships among entities across clients’ funds.
- Build and share custom structure charts based on entity type, capitalization, ownership, holdings, and other relationship data.
- Automate entity management workflows.
- Update director & officer slates, authorized signatory information, and other governance information once in Ontra Atlas, eliminating the need for repetitive manual updates.
- Share data internally or with third parties while also limiting access through role- and entity-based permissions.
What are the benefits of Ontra Atlas?
While many law firms and their private fund clients worry about implementation challenges, Ontra Atlas is easy to use and supported by Ontra’s global Legal Network, which can oversee entity data migration. Once a law firm and fund manager set up Ontra Atlas, it does away with the need for storing and updating entity governance information across multiple mediums, such as paper and electronic documents, slides, spreadsheets, and legacy tech.
With a central repository for entity information, law firms can better control data accuracy and integrity, ensuring they and their clients have access to up-to-date information at any moment of the day. A secure repository also offers law firms and their clients protection against knowledge loss when senior lawyers or fund professionals move on in their careers.
Both law firms and their clients can answer questions faster with well-organized information and visually appealing structure charts. They can collaborate efficiently, pulling information from the same repository, and ultimately, saving everyone a lot of time and reducing tension related to over-billing and write-offs.
By spending less time on routine entity management tasks, law firms can better focus on strategic and pressing assignments for their clients.
Conclusion
A digital transformation is underway in the legal industry, and it’s influencing client expectations. Private fund managers are looking for better ways to manage routine legal tasks, from negotiating NDAs to generating structure charts.
Leading law firms are partnering with Ontra to offer their private fund clients industry-specific solutions, such as Contract Automation, Insight, and Ontra Atlas.
