Managing Contract Obligations for Third-Party Disclosures

When contracts are produced in response to discovery requests or regulatory investigations, specific notice obligations in those contracts may be triggered. Legal teams may overlook these requirements when focused on meeting high-pressure, high-stakes document production requirements. Many also struggle to identify which contracts include such obligations. In this Q&A, Chase D’Agostino, Managing Director, and Chris Tkach, Director, within FTI Technology’s Contract Solutions team, discuss this issue and how addressing it early on during a dispute, investigation or business transaction can help reduce risk.

Chase, you’ve worked on many matters in which contract review and analysis have been integral to clients’ mergers and acquisitions activity. Can you briefly explain why understanding an organization’s contracts is so important during transactions?

D’Agostino: Yes, contract review plays a critical role in mergers and acquisitions. Pre- and post-transaction analysis of contracts can help organizations evaluate their target’s financial position, fulfill notice and consent requirements, understand and mitigate risks within agreements, and streamline business integration. While there’s a lot to dig into in each of these areas, in short, legal teams can leverage contract analysis in M&A to properly value a target, consummate the transaction, identify overlaps in the parties’ contract portfolios and ensure parties are aligned across risk tolerance and standards. 

As M&A activity surges, and in parallel continues to spur an uptick in related disputes and investigations, we’re also seeing an increased need to uncover notice, confidentiality and consent provisions that can introduce an unexpected layer of risk when a company produces documents in legal discovery or to regulatory authorities. 

Let’s expand on that last point. Chris, will you explain how notice obligations arise during discovery and disclosure?

Tkach: First, I’ll note that while this issue is prevalent in M&A and second requests, it extends to any litigation, investigation or other legal matter in which an organization may produce (i.e., disclose) documents that are bound by these special provisions. Often, when contract language includes obligations to notify counterparties or obtain consent to produce certain documents relating to the relationship or agreement between the parties, contract review is needed to identify the relevant contracts and affected parties. These review exercises also reveal the specific obligations within each contract, as they may vary from counterparty to counterparty.  

For example, contracts may include confidentiality clauses that require parties to keep the terms of the contract confidential. In the event an exception must be made due to production requirements during a legal or regulatory matter, there is typically a provision to notify the counterparty within a certain timeframe (usually in advance of the disclosure taking place).

Will you describe some of the challenges that come up when tackling this issue?

D’Agostino: When legal teams realize they need to identify and respond to noticing obligations as part of a dispute or investigation, they’re already under pressure. Especially during second requests, but also in other investigations and litigations, the clock is ticking to complete a thorough, accurate and defensible discovery exercise across large volumes of documents under tight deadlines. So, the added complexity of addressing contractual issues can place a lot of strain on an already overextended legal team. 

Tkach: Plus, document volumes for the contract population alone can exceed 100,000 unique contracts. Clients need an efficient way to assess their contracts to ensure they are meeting both their contractual obligations without jeopardizing production deadlines, but there’s currently no easy button to fully automate that workflow. 

What steps do you recommend for clients to take to alleviate the challenges?

Tkach: Clients should attend to this issue as early as possible in a matter, so they can adequately satisfy notice requirements while still meeting discovery deadlines. Generally, we see clients in need of help with locating contracts in a population of documents set for production and identifying contracts with confidentiality or other similar provisions. They also often require support with analyzing language to understand notice obligations and extracting and compiling counterparty notice details. 

Aside from resource constraints clients may be under, there’s also usually a need for subject matter experts familiar with the nuances of navigating contract populations. Our team has handled many of these matters and have decades of experience in developing and implementing innovative workflows to efficiently narrow, prioritize and review contracts. We also often apply artificial intelligence tools designed specifically for the task of extracting contract data, alongside a team of experienced contract reviewers to support manual review where needed. 

Can you share an example of a matter where contract review was a critical step during an investigation?

D’Agostino: There was a particularly large second request our team supported in 2024, when our client had more than 18 million company documents in scope as potentially relevant to the Federal Trade Commission’s investigation. The document set included a large population of contracts that required a specialist review to identify contracts containing confidentiality provisions that could have required notice to counterparties in advance of document productions being shared with the FTC. 

Our team used analytics and metadata that had already been collected to exclude duplicates and documents not in scope, helping to reduce the total number of contracts that needed to be reviewed. From there, we applied an AI-powered solution to identify documents containing confidentiality language, and extract relevant provisions for further analysis, allowing the team to efficiently narrow the review set to only 10% of the contract population. 

Ultimately, we provided a process for structuring notice details and supporting the client in automating issuance of notices to contract counterparties where needed, in advance of the second request production deadlines. 

Tkach: The engagement is a prime example of how critical a timely review of confidentiality clauses and other notice obligations can be during high stakes matters. And how proactive attention to contract review, with the guidance of experts, can lead to successful outcomes.  

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The views expressed herein are those of the author(s) and not necessarily the views of FTI Consulting, its management, its subsidiaries, its affiliates, or its other professionals.