In this chapter from our Transaction Management eBook, Jack Shepherd, Legal Practice Lead at iManage, explores whether technology advances have really changed ways of working and what is needed in order to do so.
That any time-honoured process must have been fundamentally changed by technology seems self-evident – but the processes most in need of change are frequently the most resistant to technology, or change.
Are we resistant to technology, or resistant to change?
Completing a transaction is complex, and might involve different jurisdictions, giving rise to divergent legal considerations. Hundreds of documents may need to be agreed, multiple parties with competing interests may be involved, and things can really go wrong.
While it may seem like an environment well-suited to benefit from technology, and one that is now well-resourced with a growing number of legal transaction solutions available, many lawyers and firms continue to do things manually.
What is the process, where is the pain?
A transaction has two pieces:
- Project management – ensuring everything goes according to plan.
- Execution – getting all the documents signed and executed.
In past practice, an individual maintains a list of all transaction documents in a closing checklist. This checklist, commonly a Microsoft Word table, identifies who is responsible, the status of each document and any related comments. The checklist is sent back and forth by email.
The key drawbacks of this method of project management are that:
- It quickly becomes outdated
- It is slow to update due to a single “owner”
- It is difficult to act on due to related resources located elsewhere
This Word-based closing checklist remains popular with law firms, despite its shortcomings, and despite the availability of newer technologies that bring greater efficiency to the closing process.
Similarly, for decades, signatories have signed documents and returned them to a central person, who prepares a composite document. The tedious oversight of all of these signatures has been a thankless but necessary function.
A key solution for this has been the adoption of e-signatures. Signatories don’t need to print, sign, and return paper documents, saving lawyers time when compiling the composite. Nonetheless, e-signatures are not used consistently in transactions, despite many legal barriers being removed and the reduced ability of people to work with printers and scanners during the pandemic.
Is fundamental change possible?
Recent technology developments have unlocked a new realm of possibility for optimising how transactions are completed. Many pain points of past working practices were resolved years ago by the introduction of email and electronic document formats, but this was not fundamental change. In fact, while in some ways more efficient, email could be said to have made transactions more complex, neutralising the optimisations by increasing volume.
Technological advances have shown great promise to optimise current processes however, they do not fundamentally challenge our conception of what it takes to complete a transaction. What they do challenge is the status quo.
Legal transaction management (LTM) software products, such as iManage Closing Folders, fully support and automate the transaction closing process. They can:
- Centralise: LTM products provide one central place to view, update, and access underlying checklist documents.
- Reduce risk and error: By automating manual processes that are prone to mistakes – such as signature compilation and closing bible production – and by encouraging users to adopt the most effective way of closing a deal, LTM products can reduce reputational risks and errors.
- Enhance client services: With greater visibility into deal status and collaborative project tracking, LTM products can provide instant updates to clients and keep partners informed on the progress of the transaction.
- Consistency: LTM products help channel lawyers into working consistently from matter to matter. This makes legal work more predictable, which helps firms price matters more accurately at the outset.
A fundamental recharacterisation of process through technology
There is much work to be done in developing the necessary legal cultures, processes, and incentives to unlock the potential of the technology already available. As we continue to forge new paths toward fundamental changes that rewrite decades of ways of making knowledge work, and ways of working, our biggest challenge remains in persuading people to use it.
This is a chapter from our eBook Transaction Management: Is technology taking over the deal? You can read more insights from legal industry voices on the role technology is playing in the transaction management lifecycle in the book. Download the eBook today.
Jack also featured on an episode of our Transaction Management podcast series. Check out his episode here.