Background
Our CEO is an ex Project Finance lawyer who experienced the challenges faced by legal professionals. He found himself spending hours and hours on administrative tasks that were required to help manage each deal. To help with this, he developed Legatics to help take some of this pressure away, allowing lawyers to focus on the more technical aspects of their deals.
Project Finance is one of our biggest use case on the Legatics platform. It continues to grow with lawyers using it again and again to help them manage their deals more efficiently.
✍️ What are conditions precedent?
Because of the non-recourse risk in Project Finance deals, Lenders will only finance a project once all contracts, permissions, permits, insurance and other matters are ready to go. If you finance a power station that lacks a power generation license, rights to build on the land, someone to buy the power, or many other things, you risk losing all your money (perhaps $500 million!).
To prevent these risks from materializing Lenders have ‘conditions precedent’. They will often sign the loan in principle, but on the condition that between 100-1000 different things are in place, which are often specific to the project. Many of these are legal documents.
💼 How is this process managed outside of Legatics?
Once the main fnance document (often called the Common Terms Agreement), which will include a conditions precedent (CP schedule), has been negotiated, lawyers turn the CP schedule into a CP checklist.
💡A CP schedule is legal language that describes the conditions that needs to be satisfied before a ‘drawdown’ (taking a tranche of money) can occur.
A CP checklist is a list of documents that satisfy the legal conditions in the CP schedule. It’s often created as a massive table in word and used as a project management tool.
A word table would then be used to manage the CP checklist where lawyers will project manage the collection of CP documents and lender sign off.
Pain points
Administrative work: Often junior lawyers will spend hours creating a CP checklist and they will be required to continually manage the document as the deal progresses
Confidentiality of lender approvals: Before circulating the latest version of the CP checklist in word, the lawyers running the deal will need to create different versions for each lender so that approvals stay confidential
Responsibilities aren't clear: Parties working on the deal don't know what to so next unless they search through the entire word table
Creating closing sets / binders: Creating a hyperlinked index and compiling all of the final versions of documents takes a huge amount of time
How can Legatics be used to manage this process?
Start a list from Legal Text: Turn a CP schedule into a CP Checklist really quickly.
Role Assignment: Users can assign roles and they can also use the status column to update items.
Collaboration and Permissions: Invite external and internal users to action items. directly within your deals using Legatics. Set permissions on lists, columns, and rows for controlled access.
Real-time Collaboration: All parties can log in to Legatics, respond to enquiries, raise further questions, upload supporting documents, and manage enquiry statuses.
Dashboard Usage: Utilise the dashboard to review the transaction's status.
📈 Key benefits of using Legatics
Time Saved:
Legatics helps to reduce the amount of time a junior lawyers spends on setting up a deal, maintaining the CP checklist and circulating the correct version.
Binders can be created within seconds using Legatics which saves hours of someone's time compiling final versions and indexing them.
Confidentiality of Lender approvals:
Lenders can be anonymised from one another meaning that lender approvals can be managed effectively within the same list.
Real time updates:
All parties are aware of which actions they need to take and there is no need for a word table to be circulated weekly.
Fewer calls and emails:
As everyone is aware of what they need to next, there is no need to send hundreds of emails to each party, either chasing them on actions or asking for sign off.
✏️ How can I use Legatics to manage Project Finance transactions?
We encourage you to set up a demo matter first and work with your colleagues using an exisiting CP schedule to create a list from legal text.
Then you can add columns to manage the upload of documents, statuses, comments and approvals.
You're ready to create a live matter and start managing your Project Finance transactions in Legatics!
If you have any further questions, please get in touch with us at support@legatics.com