The burden of legal entity management keeps growing for large and multinational organizations. The 2021 EY Law Survey found that 89% of companies face challenges managing their legal entities, with pressures arising from multiple directions.
For a start, regulations increase, the compliance burden keeps rising, and requirements change frequently. In addition, it’s incredibly challenging if your organization has a presence in multiple countries because you’ll need to keep on top of many different sets of regulations to remain compliant.
At the same time, legal department budgets are shrinking, mainly as a side-effect of COVID-19. KPMG’s research revealed that 39% of legal departments saw their budgets freeze, despite the growing regulatory burden, and 24% experienced budget cuts this year.
On top of that, the “new normal” of working from home opened up new risk factors for legal entity management. For example, companies had to rapidly find ways for employees, partners, auditors, and other stakeholders to access sensitive and confidential documents remotely securely.
Legal entity management has never been more important
It’s vital to find a way through these pressures and keep changing regulations. Maintaining your legal house in order means your company is better placed to move quickly on deals.
The faster you can respond to opportunities for mergers and acquisitions, emerging risks that you need to dodge, or requests for audits, the greater your competitive edge.
There’s also more public attention being directed at legal entity management slipups. Even concerning a relatively “minor” issue, compliance failures can cause unnecessary fines and penalties, lead to director liabilities, and harm your reputation among potential customers and partners.
Yet legal tech adoption lags
Despite this challenging environment, legal departments have often been the Cinderella left out of the digital transformation ball, while sister departments benefit from a rush of digital adoption.
KPMG reports that just 33% of the surveyed companies have a budget for legal tech applications; an average of 13% of the total legal department budget is spent on legal technologies, and only 37% of organizations have trained or hired specialists in legal tech.
But the past couple of years, especially given the pressures of the pandemic, have driven home the need for a fairy godmother bearing advanced tools for company legal entity management in the digital age.
Here are some tech tools that can improve legal entity management without pushing up costs or increasing the burden on those responsible.
1. Cloud storage keeps data securely accessible
Legal departments need to ensure that every one relevant can reach the data and documents they need while also keeping essential records accessible to only those people with the right level of authorization.
It’s a fine line that requires a digital, cloud-based platform like ContractZen, which can easily track access, ownership, procuration rights, and more. Its secure cloud offers easy document retrieval for consultants, auditors, and colleagues working remotely without weakening access control. You can add and remove people as the situation demands, with no need for anyone to download a document onto their dubiously-secure device or server.
Legal entity management, which spans multiple disciplines including legal, finance, governance, and compliance, needs this level of control and access. Cloud storage can be a game-changer for enabling remote collaboration with internal and external legal partners.
2. Automation increases efficiency
As EY’s data reveals, most legal departments and entity management teams report being overworked and understaffed. While many factors contribute to this, one of the main issues is that employees are overwhelmed by time-consuming low-value tasks like producing reports, verifying data, acquiring signatures, etc.
Tools like LawYaw offer automated workflows that span processes such as data capture, creating documents and reports and streamlining electronic submission to internal stakeholders or regulatory bodies.
By automating low-value, tedious tasks, you free up law clerks to devote more time to complex functions that cannot be automated, helping employees feel that their work is more critical and helping drive value for your organization.
3. Integrated systems bring order to chaos
With so many balls in the air, it’s easy — but highly undesirable — for tasks, data, and deadlines to get lost in the general kerfuffle. EY found that 62% of organizations say their technology does not allow them to track the status of governance activities, which causes confusion and inefficiency.
But integrated systems like Process Street make it easy to track activities across departments. When you automate pulling and pushing data between applications, it ensures that data is shared as needed and lowers the incidence of “lost” information. For example, push notifications and reminders reduce the risk of missing a deadline.
With these cross-departmental, cross-application solutions, you increase efficiency while decreasing parallel processes and rescuing “shadow” data or records from becoming overlooked between the cracks and behind silos.
For legal departments struggling to keep their heads above water, the legal tech could be their life raft. By enabling secure remote access to documents, freeing up employee time for high-value tasks, and improving efficiency, digital legal entity management can help improve productivity and profitability for the entire organization.