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Legal Tech Due Diligence Agreement

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LEGAL TECH DUE DILIGENCE AGREEMENT

This Legal Tech Due Diligence Agreement (the Agreement) is made and entered into as of Effective Date: by and between Client Name: , a with principal place of business at (Client), and Provider Name: , a with principal place of business at (Provider).

RECITALS

WHEREAS, Client seeks to evaluate Provider's legal technology products, services, processes and related documentation (collectively, the Technology) for the purpose of assessing suitability, security, compliance and integration potential; and

WHEREAS, Provider possesses knowledge, documentation and access to the Technology and agrees to provide such access and information to Client for the limited purpose described herein under the terms and subject to the conditions of this Agreement; and

WHEREAS, the parties desire to set forth their respective rights and obligations with respect to the due diligence activities to be conducted by Client and its advisors.

NOW, THEREFORE

In consideration of the mutual covenants and agreements contained herein and other good and valuable consideration, the sufficiency of which is hereby acknowledged, the parties agree as follows:

1. DEFINITIONS

1.1 "Confidential Information" means all non-public information disclosed by Provider or Client, whether in oral, written, electronic or other form, including source code, algorithms, technical designs, security architecture, documentation, data processing practices, vendor lists, pricing, contracts, and business processes, and any analyses, summaries or derivatives thereof that are marked confidential or would reasonably be understood to be confidential.

1.2 "Deliverables" means any reports, assessments, findings, lists, checklists or documentation produced by Client in connection with the due diligence activities described in Section 2.

2. SCOPE OF DUE DILIGENCE

2.1 Provider shall provide Client and its authorized advisors with reasonable access to personnel, systems, documentation and demonstration environments necessary to evaluate the Technology. Access will be limited to the Scope Description provided below and to the Duration set forth in Section 2.3.

2.2 Client agrees to use access solely for the purposes of technical, legal, security and commercial evaluation and not for production use or to extract Provider trade secrets beyond what is reasonably necessary to evaluate the Technology.

2.3 Due Diligence Period: Start Date End Date . Either party may request a reasonable extension in writing, which shall not be unreasonably withheld.

3. CONFIDENTIALITY

3.1 Each party shall hold Confidential Information of the other party in strict confidence and shall not disclose such information to any third party except to those employees, contractors or advisors who have a need to know and who are bound by confidentiality obligations at least as protective as those herein. Confidential Information shall not include information that (a) is or becomes generally available to the public through no breach of this Agreement; (b) is rightfully received from a third party without breach of any obligation of confidentiality; or (c) is independently developed without use of the disclosing party's Confidential Information.

3.2 Client shall not use Confidential Information to compete with Provider or to create derivative products that replicate Provider's core functionality, and Provider shall not use Client Confidential Information except to perform its obligations hereunder.

4. ACCESS, SECURITY AND DATA HANDLING

4.1 Provider shall ensure that any non-public data provided for the purposes of due diligence is segregated and access-controlled. Provider represents that it has implemented and maintains commercially reasonable administrative, physical and technical safeguards appropriate to the sensitivity of the data.

4.2 If processing of personal data occurs, the parties shall comply with applicable data protection laws. Provider shall notify Client promptly of any unauthorized access or breach affecting data made available during due diligence and shall cooperate in remediation efforts.

5. USE OF FINDINGS AND REPORTS

5.1 Any Deliverables prepared by Client shall be for Client's internal evaluation purposes only and shall be treated as Client Confidential Information. Client shall not publish or distribute Deliverables that contain Provider Confidential Information without Provider's prior written consent, except as required by law.

6. FEES AND PAYMENT

6.1 As consideration for the due diligence activities, Client shall pay Provider Fees in the amount of USD, payable as follows:

6.2 Failure to pay amounts when due is an event of default that entitles Provider to suspend access to the Technology after providing five (5) business days' written notice.

7. INTELLECTUAL PROPERTY

7.1 Provider retains all right, title and interest in and to the Technology, including all intellectual property rights therein and any improvements, modifications or derivative works made by Provider. No license or other rights are conveyed to Client except the limited right to access and evaluate as expressly set forth in this Agreement.

7.2 Any materials, analyses or reports created by Client that do not contain Provider Confidential Information shall be owned by Client; provided, however, that Client shall not use or disclose Provider Confidential Information in a manner inconsistent with Section 3.

8. REPRESENTATIONS AND WARRANTIES

8.1 Each party represents and warrants that it has the full corporate power and authority to enter into this Agreement and to perform its obligations hereunder and that the execution and delivery of this Agreement has been duly authorized by all necessary corporate action.

8.2 Provider represents that, to its knowledge, the materials and systems made available for the purpose of due diligence do not infringe third-party intellectual property rights and that Provider has the right to disclose such materials for evaluation under the protections of this Agreement.

9. LIMITATION OF LIABILITY

9.1 EXCEPT FOR A PARTY'S GROSS NEGLIGENCE, WILLFUL MISCONDUCT, OR INDEMNIFICATION OBLIGATIONS, NEITHER PARTY SHALL BE LIABLE TO THE OTHER FOR CONSEQUENTIAL, SPECIAL, INCIDENTAL, EXEMPLARY OR PUNITIVE DAMAGES, INCLUDING LOST PROFITS OR BUSINESS INTERRUPTION. THE AGGREGATE LIABILITY OF EITHER PARTY ARISING OUT OF OR RELATED TO THIS AGREEMENT SHALL NOT EXCEED THE FEES PAID OR PAYABLE UNDER THIS AGREEMENT DURING THE SIX (6) MONTHS PRECEDING THE CLAIM.

10. INDEMNIFICATION

10.1 Provider shall indemnify, defend and hold Client harmless from and against any third-party claims alleging that the Technology, as delivered for due diligence, infringes third-party intellectual property rights, provided Client gives prompt written notice of such claim and provides reasonable cooperation in the defense. Client shall indemnify Provider for claims arising from Client's misuse of Provider Confidential Information or unauthorized disclosure.

11. TERM AND TERMINATION

11.1 This Agreement shall commence on the Effective Date and continue until the earlier of the expiration of the Due Diligence Period or termination by either party upon thirty (30) days' written notice. Either party may terminate immediately for material breach that is not cured within fifteen (15) days after written notice.

11.2 Sections concerning Confidentiality, Intellectual Property, Limitation of Liability, Indemnification, Governing Law and any other provision which by its nature survives termination shall survive termination or expiration of this Agreement.

12. NOTICES

12.1 All notices under this Agreement shall be in writing and delivered to the addresses set forth below (or to such other address designated by a party in writing) by certified mail, nationally recognized overnight courier, or by hand delivery.

13. AMENDMENTS; WAIVER

13.1 No amendment, modification or waiver of any provision of this Agreement shall be effective unless in writing and signed by authorized representatives of both parties. No failure or delay by either party in exercising any right hereunder shall operate as a waiver of such right.

14. GOVERNING LAW

14.1 This Agreement shall be governed by and construed in accordance with the laws of the state specified below without regard to conflict of laws principles.

15. ENTIRE AGREEMENT; SEVERABILITY; COUNTERPARTS

15.1 This Agreement constitutes the entire agreement between the parties with respect to its subject matter and supersedes all prior or contemporaneous understandings, agreements, negotiations and discussions, whether written or oral.

15.2 If any provision of this Agreement is held to be invalid or unenforceable, such provision shall be reformed only to the extent necessary to make it enforceable, and the remaining provisions shall remain in full force and effect.

15.3 This Agreement may be executed in counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument. Signatures transmitted by electronic means shall be deemed originals for all purposes.

MISCELLANEOUS

16.1 Relationship of the Parties: The parties are independent contractors and nothing in this Agreement shall be construed to create a joint venture, partnership, employment relationship or agency between them.

Client

Printed Name:

By:

Date:

Provider

Printed Name:

By:

Date:

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What the Legal Tech Due Diligence Agreement Is

A Legal Tech Due Diligence Agreement documents the scope, responsibilities, data handling, and assurances exchanged when a law firm or corporate legal department evaluates third-party legal technology. It frames access rights to systems, data classification and retention, security controls, confidentiality obligations, and remediation responsibilities during a technology assessment. The agreement serves both as a gating tool for vendor evaluation and as a risk control for procurement, ensuring reviewers can test functionality without creating data exposure or admitting contractual commitments before formal contracting.

Why this agreement matters for legal and procurement teams

The Legal Tech Due Diligence Agreement protects sensitive information, clarifies testing limits, and assigns responsibility for security incidents during evaluation. It reduces legal risk, speeds vendor assessments with standardized terms, and creates an auditable record of what access was granted and why.

Why this agreement matters for legal and procurement teams

Who typically completes and signs this agreement

Legal, procurement, IT security, and vendor representatives commonly collaborate to prepare and approve the agreement before any trial access is granted.

  • In-house Counsel and Legal Ops: Draft and approve terms addressing privilege, data use, and liability limits.
  • Procurement and Vendor Management: Negotiate commercial and SLA-related terms and manage contracting workflow.
  • Security/IT Teams: Define technical access, data segmentation, and required attestations for testing environments.

Final approval typically requires signatory authority from legal or procurement and a named technical contact to supervise data access during the evaluation period.

Core clauses every agreement should include

A concise set of standard clauses simplifies repeated evaluations and makes it easier for legal and security teams to compare vendors on a consistent basis.

Scope of Access

Specify exact systems, data sets, and tester roles allowed during due diligence. Limit access to production data unless expressly authorized and document any anonymization or synthetic data used.

Confidentiality

Define confidential categories, permitted use, duration of confidentiality obligations, and any carve-outs for privileged communications or public information.

Data Handling

Require vendor controls for encryption, access logs, deletion procedures, and data segregation. Include requirements for secure export, return, and certified deletion after testing.

Security Representations

Ask for current security certifications, a summary of vulnerability management, incident response contacts, and a requirement to disclose material breaches during the evaluation period.

Liability Limits

Set mutual indemnities and caps on liability specific to the due diligence phase, including remedies for unauthorized data disclosure or misuse discovered during testing.

Duration and Termination

State start and end dates for access, early termination triggers, and post-termination duties such as data return, destruction certificates, and transition support.

Security and compliance checkpoints to document

Encryption: AES-256 at rest, TLS 1.2/1.3 in transit
Authentication: Multi-factor or SSO required for privileged testers
Audit Trail: Full logging of access, exports, and admin actions
Certifications: SOC 2 Type II, ISO 27001 where available
HIPAA BAA: BAA required for PHI exposure
Record Retention: Define deletion timeline after evaluation

Common risks and contractual protections

Unauthorized Disclosure: Liquidated damages or indemnity for breaches
Data Misuse: Restrictions on analytics, indexing, and resale
Incomplete Deletion: Certification requirement for data destruction
Regulatory Exposure: Vendor liability for compliance failures
Access Scope Creep: Automatic suspension if beyond agreed scope
Intellectual Property: Clarify ownership of derivative evaluation outputs

Pitfalls to avoid when negotiating evaluation access

  • Allowing broad production access without anonymization increases exposure risk and complicates later breach notifications and regulatory reporting.
  • Vague data definitions lead to disputes about what must be returned or deleted after testing, delaying contract close and remediation.
  • Skipping a documented audit trail makes it difficult to attribute actions during an incident, weakening both forensics and contractual remedies.
  • Accepting oral assurances about security posture without documented evidence or certifications creates gaps between expectations and enforceable obligations.

Step-by-step: completing the agreement before vendor testing

Follow a structured sequence to ensure approvals, technical controls, and documentation are in place before granting access.

  • 01
    Draft Clause Set: Assemble confidentiality, scope, and data handling terms
  • 02
    Security Review: IT validates access controls and data isolation
  • 03
    Legal Approval: In-house counsel approves liability and IP terms
  • 04
    Signatures: Authorized representatives execute the agreement

Typical evaluation flow and responsibilities

A clear operational workflow reduces misunderstandings and ensures each team knows its obligations during the due diligence period.

  • Request Access: Vendor submits a formal test request and scope
  • Provision Environment: Vendor supplies sandbox or masked data
  • Conduct Testing: Reviewers run scenarios under supervision
  • Close Out: Return data and obtain destruction certification

Typical configuration items for online testing

Document common configuration decisions so technical teams can repeat setups consistently across vendors.

Field Configuration
Environment Type Sandbox with masked or synthetic data
Access Duration Fixed time windows with automatic expiry
Export Controls Disable bulk export unless expressly permitted
Monitoring Enable audit logging and session recording

Digital signing and secure distribution considerations

Confirm which eSignature and delivery methods are acceptable and document authentication requirements for signers and administrators.

  • eSignature: Specify ESIGN/UETA-compliant methods
  • Authentication: Require MFA or KBA where warranted
  • Integrations: Note permitted integrations and API use

Ensure the platform chosen supports secure audit trails and the data export controls needed to meet contractual and regulatory obligations.

eSignature vendor pricing snapshot for document execution

Below is a concise pricing and capability comparison showing starting prices and select functional differences; signNow is listed first per standard comparison format.

signNow DocuSign Adobe Sign PandaDoc HelloSign
Starting Price $8/user/mo $15/user/mo $14/user/mo $19/user/mo $15/user/mo
Free Trial 7-day free trial Varies by plan Varies by plan Varies by plan Varies by plan
Bulk Send Yes Yes Yes Yes No
Audit Trail Yes Yes Yes Yes Yes
HIPAA Compliant Yes Yes Yes Varies Varies

Digital versus electronic signatures — technical and legal contrasts

Understand the differences: a digital signature is a technical subset of electronic signatures and offers cryptographic assurance where required for certain regulated records.

Criteria Digital Signature Electronic Signature
Definition pki-based cryptographic signature any electronic sound, symbol, or process
Legal Status accepted as esign-compliant where used legally valid under esign/ueta when intent and consent exist
Non-repudiation high due to certificate chain depends on audit trail and attribution
Typical Use regulated records requiring pki routine contracts and approvals

Time-sensitive items to schedule when using the agreement

Set clear dates for deliverables, sign-off, and records disposition to avoid surprises and meet related tax or regulatory deadlines.

Effective Date Entry:

Enter MM/DD/YYYY on execution; triggers obligations

Access Window:

Specify start and end dates for testing access

Destruction Certification:

Require vendor certificate within specified days of termination

Document Retention:

Preserve signed agreement per retention schedule

Tax & Reporting:

Keep records consistent with IRS retention requirements

Practical tips for accurate, efficient completion

Use these operational and drafting tips to reduce negotiation time and ensure enforceable outcomes.

Standardize a Template
Maintain a vetted template with pre-approved security, confidentiality, and indemnity language to speed approvals and reduce attorney-hours for repetitive reviews.
Limit Data Scope
Use masked or synthetic data where possible and explicitly list permitted data elements to minimize exposure and simplify compliance review.
Require Audit Logs
Mandate logging and session records for all tester activity, with retention timelines aligned to your internal forensics and regulatory obligations.
Coordinate Stakeholders
Route a single consolidated version for signature and keep a named technical contact for each party to avoid miscommunication during the evaluation.

Real-world scenarios illustrating agreement use

Representative examples show how firms apply the agreement to limit risk while allowing meaningful product evaluation.

Enterprise Legal RFP

A corporate legal team used the agreement to grant gated access to a contract analytics platform for a two-week pilot

  • The vendor provided a masked dataset
  • The team required a certified destruction notice and retained logs for six months to validate no PHI was exposed and to support procurement decisions.

Healthcare Vendor Trial

A hospital required a signed BAA before any testing of clinical decision support software

  • The vendor provisioned a sandbox with synthetic records
  • The hospital's security team performed a penetration test and paused access until remediation was verified, ensuring HIPAA compliance throughout the evaluation.

Frequently asked questions and quick resolutions

Answers to common questions about execution, data handling, and enforceability during the due diligence process.


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