A legal transaction is a broad term for a deal executed between parties in various realms of the corporate, finance, real estate, and business worlds. Organizations and individuals involved in deals hire prestigious law firms to:
These transactions generally have several things in common:
Carrying out and closing deals is often chaotic, and the transaction process is mired in inefficiencies from end to end. Outdated practices are largely to blame for these inefficiencies. While many other industries have undergone significant transformation in the last decade, lawyers today work in much the same way they did 15 years ago: using email, phones and paper.
Take the due diligence process as an example. It often requires an army of lawyers to sift through thousands of documents. The team is left to track down documents, reorganize file folders, dig for templates, and attempt to oversee multiple versions of documents with their review. At the end, they worry that a key piece of information was lost in the haystack.
What about workflow management? A transaction is a complex road with numerous procedural steps, documents to collect, conditions precedent to meet, and deadlines not to miss. Large transactions can often take 1 or 2 years before closing. They require meticulous organization, and time equals money.
Closings may be the most taxing part, and the most prone to error. At physical closings, parties wait in a meeting room for hours on end signing and initialing hundreds of pages. Remotely, lawyers track signatures from various parties while they await original documents to be exchanged via mail, at the risk of being lost or damaged. Documents then have to be scanned and meticulously assembled while the client endlessly waits for their closing book.
This process is unpleasant for both lawyers and their clients. Clients’ data are unsafe, the deal is slow, and lawyers spend hours performing tasks manually with no added value. At the end of the day, the value of lawyers’ expertise diminishes.
Many of the pitfalls in the legal transaction process can be avoided. Legal technology, and legal transaction management software in particular, has sought to mitigate these issues in several ways, notably by:
The process described above would look very different using legal transaction management software:
In short, by centralizing everything into one space from start to finish, much of the potential for human error and loss of time is erased.
A report by the McKinsey Global Institute estimated that a full 23% of a lawyer’s job can be replaced by automation, meaning they could save a quarter of their time to focus on their legal expertise. They could also reduce many transaction-related costs: associates spending hours on needless work, logistics (couriers, travel, catering, paper, storage, etc.), costs incurred by slower transactions, IT and security costs. And crucially, legal transaction management software is a marketing and retention tool for the firm; it transforms the client’s experience and makes them happy, and loyal to the firm.
This kind of innovation adds tremendous value to law firms. In the COVID-19 era, it is indispensable. And as a recent report on automation in law firms working remotely aptly points out, the standard will be raised for the entire industry as value is restored to the practice through automation. The report likens a lawyer in the near future using no automation tools to a lawyer today still doing everything by hand instead of using a computer, which seems laughable.
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