How To Strengthen Legal Entity Management For 2022 And Beyond
Arguably, legal entity management is more vital than ever as we head into 2022 and beyond. One of the many legacies of the COVID-19 pandemic is that regulations are changing swiftly, on topics as wide-ranging as health and safety, diversity and inclusion, and sustainability. And with so many large-scale business deals happening at a more rapid pace than ever before, companies must remain due diligence-ready at all times.
Companies must be able to keep track of requirements as they evolve. Compliance failures, even with relatively “minor” issues, can damage your reputation, cause unnecessary costs in fines and penalties, ruin deals and provoke director liabilities. On top of that, public attention has increased towards issues like ESG breaches, poor DE&I practices, and treatment of employees that’s either unfair or perceived to be unfair, with a knock-on effect on sales and revenue.
On a more positive side, when your legal house is in order, it gives you the foundation you need to be able to move quickly on deals and opportunities.
Legal Departments Are Struggling
Unfortunately, a vast number of organisations have trouble contending with the demands of everyday legal entity management. One study found that 89% of companies report facing challenges in managing their legal entities. It’s understandable; after all, the pressures bearing down on them are manifold. For a start, budgets are tight. COVID-19 put the squeeze on everything and legal departments saw their financial allocations drop, sometimes dramatically, with 88% of legal teams saying they feel pressure to reduce costs. But at the same time as budgets are falling, the compliance burden is increasing. It’s particularly difficult for companies that have a presence in multiple countries because they need to remain compliant with numerous sets of regulations.
Additionally, the post-COVID norm of remote work opened up new risk factors for legal entity management. Employees, partners, auditors, and other stakeholders often need to access sensitive or confidential documents from home, but companies can’t risk relaxing security measures.
Still Uncertain About Tech Solutions
The most oft-recommended solutions revolve around advanced tech, but uptake is moving surprisingly slowly. There can be a range of reasons for why companies are dragging their feet over-investment in legal tech solutions, but according to KPMG, the top factors include prioritising other change management (45%), not knowing what to invest in (36%), and a lack of knowledge about the different options (15%).
One common thread is the need for education about legal technology so that employees know which solutions to choose and how they can make a difference in their workflows.
Here are some of the ways that tech can improve legal entity management:
1. Find Documents Instantly
As a baseline, legal departments need to know exactly what data and documents they possess and where they are located. A digital, cloud-based platform like ContractZen offers easy retrieval for documents, using intelligent search together with tags so that all your legal entity documents are at your fingertips. You can also use this platform to manage contract workflows, e-signatures, board meetings and set up extra-secure virtual data rooms for due diligence situations as they arise. Smart filing systems put an end to panicked searching for documents that had their file names changed or were moved to different folders, and help stop vital items from going astray.
2. Remove Silos To Data
Cloud storage means everyone can access a single version of the truth. It doesn’t matter if your employees are in different countries or use different servers; when documents are stored in the cloud, they are accessible to everybody. Shared cloud storage services like Google Drive, Microsoft OneDrive, and Dropbox allow employees from different departments to share data from their reports and draw on other departments’ data.
This is particularly important as legal investigations and compliance audits cross-team and departmental boundaries. Legal clerks need to draw on data from every corner of the organisation, without hitting brick walls. Automated workflows that pull or push data between other applications across the organisation also help prevent data from being accidentally siloed in a single application.
3. Remove Distractions And Errors When Exploring Data
Legal entity management isn’t just about being able to find data when you need it, but also about using it in ways that shorten time to insights. The right visualisations aren’t just a nice bonus; they actually help highlight important changes, make it faster to spot key trends, and aid business decision-making.
Sisense offers advanced customisable tools that permit each team and stakeholder to choose their view, drill down, or zoom out however they like. Adjustable dashboards mean you can bring the datasets, visualisations, and factors you use the most to the fore, and remove those that aren’t relevant, to prevent distractions. Even small mistakes in data entry can have enormous repercussions, which is why automated tools can be so valuable. With automated data capture, validation, and data accuracy spot checks, you can increase data quality and reduce errors. Tools like Fluix offer data capture automation and verification that help lower the risks of manual error and improve the reliability of legal entity data.
4. Free Up Employee Time
Tedious, time-consuming manual processes are an enormous time-suck for legal employees, with 87% of companies agreeing that their General Counsel spends too much time on repetitive tasks such as legal entity compliance, and 47% reporting that this work distribution is hurting employee morale.
Fortunately, automated workflows can span processes such as data capture, producing reports, electronic approvals and e-signatures, and electronic submission to internal stakeholders or regulatory bodies, releasing employees for more rewarding and valuable work. For example, Clio automates the production of legal documents and reports, so legal teams can devote more time to other jobs.
Digital Legal Entity Management Beyond ‘Nice-to-Have’
As legal teams struggle to keep their footing in a world of shrinking budgets and growing regulatory burdens, legal entity management tech is rapidly becoming a must-have. By reducing the risk of errors, releasing workers from time-consuming tasks, breaking data silos, supporting decision-making, and removing obstacles to finding vital documents, new legal tech could be the answer to your legal department’s prayers.
