Why Your Consultant’s Report Is a Legal Liability

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In the high-stakes world of Life Science M&A, hiring expert consultants for GXP, IT, and data privacy is standard operating procedure. But there is a hidden structural flaw in most due diligence programs: Scope Creep. When a consultant identifies "high risk" in a data transfer mechanism, they aren't just giving a business metric—they are venturing into legal opinion. Without the protection of attorney-client privilege, these "compliance scorecards" and "heat maps" are discoverable goldmines for post-acquisition lawsuits and regulatory actions.

In this episode of KLF Deep Dive, we break down why all diligence must be commissioned and controlled through legal counsel. Learn how to transform operational findings into binding indemnities and ensure your next acquisition doesn't become your next legal nightmare.

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Episode Transcript

Darshan (00:00):
So, welcome back to KLF Deep Dive.
Today we're talking aboutlegally vetting their own due
diligence reports.
So, in the life sciences, we'llalways hire expert consultants.
They'll be responsible for GXP,IT data privacy.
They're going to delivercompliance scorecards, the risk
heat maps, and the operationalfix.
That's essential.
But the reports are a businessmetric, not a legal shield.

(00:23):
The problem is scope creep.
When a consultant writes thedata transfer mechanism is high
risk, they've ventured intolegal opinion territory.
But because they're not licensedlegal counsel, the report often
lacks attorney-client privilege.
This means that under the rightcircumstances, it can be
discovered and used against youin post-acquisition lawsuits or

(00:43):
a regulatory action.
Here's why you need a duediligence program.
All compliance and regulatorydue diligence must be
commissioned, controlled, andfunneled through your legal team
or through external legalcounsel.
This structure achieves twothings.
First, it helps to establish aclaim of privilege over the
sensitive findings.
This will protect thatinformation from discovery.

(01:03):
Second, and most importantly, itensures that your legal team and
not the consultant is the oneinterpreting the legal liability
and therefore drafting thebinding indemnities and
warranties in the purchasingagreement.
Don't buy a target based on aconsultant's clean rating.
Ensure that your legal counselhas audited the facts, signed

(01:23):
off on the liability.
That's the only way to transformoperational findings into
transactional security.
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