27 September 2015

Reduce, Reuse, Recycle: Leaner, Greener Document Management for Law Departments

When it comes to increasing efficiency in a law department, figuring out where to start is often the biggest task. Considering that the volume of standard documentation created by legal departments is only going to grow, the creation and use of a robust document management process is a great place to begin. Such a process can help in-house teams reuse, reduce and recycle effort: reuse prior work, reduce inefficiencies/waste, and recycle well-drafted legal documentation.

While many individuals and small businesses have turned to sites such as LegalZoom and Rocket Lawyer for the creation of standard documentation, larger businesses will need to consider both people and process in addition to exploring technology solutions.  Simply creating a protocol for naming, categorizing, storing, and repurposing standard documentation will go a long way in improving operational efficiencies within a legal department.

This, of course, is easier said than done.  

When implementing this system, one will likely need to overcome the inertia associated with continuing the previous method to which employees had grown accustomed.  Further, the failure to properly train team members on keeping a document management system current can result in the use of outdated documentation.  Yet proper communication from the outset, coupled with the implementation of firm controls on document versioning, will overcome both of these hurdles and result in a well-functioning, time-saving system.

But Where to Begin?

It all starts with people

First, be sure to seek out the opinions of key stakeholders who will be affected most by the change.  These stakeholders include individuals currently responsible for generating legal documentation, those who most frequently request documents for their day-to-day business activities, and any IT resources who may be instrumental in sourcing software solutions to assist with the transition.  This will have the dual benefits of increasing buy-in and providing sufficient information to result in as smooth of a transition as possible from the current standard operating procedure.  Depending on the organizational structure and size of your company, these stakeholders may be numerous and far-flung, embedded within business units or business functions that sit adjacent to the law department. 

Once stakeholders have been identified, it will be important to work with them to analyze the types of documentation that are most common (employment agreements, vendor contracts, etc.), the needs of the organization, and map the current process.  

Making sound choices and building buy-in among all affected stakeholders will help define the scope, reach, and ultimately the effectiveness of your document management protocols.

Time to consider process

Ultimately, an optimized and standardized process for handling company-wide storage is the goal.  Ideally, both present-state and future-state processes for generating, storing, and accessing documentation can be mapped.  This will ensure that all parties involved have the same understanding of the process, and will also be useful in identifying any inefficiencies or areas where the process can be improved further.

The process for uniform document storage should take into account a number of factors.  These include uniform naming structure, version control, and document profiling.[i]  As with any ongoing process, it should also incorporate an audit/quality control mechanism to ensure consistent, organization-wide compliance.

  • Uniform naming structure. A consistent method for naming files. While uniformity is crucial here, there are many methods to achieve that goal.[ii]  The key is to name files in the same manner in which the information will be recalled (e.g. client/counterparty name, business unit, agreement type, etc.).
  • Version control. A method for ensuring that the most recent version of any given document is being accessed. This may be handled directly by an internal document management system, or may be incorporated into the naming structure.
  • Document profiling. A limited number of data points should be captured for all documents. This includes metadata such as the author, file type, and created date, as well as a categorical designation to assist with location when needed in the future.  These categories should be brainstormed with stakeholders during the planning phase of this project.

Implementation of a uniform naming structure, version control, and document profiling is of little benefit without a mechanism for ensuring that the process is being followed in a consistent manner.  Therefore, an audit/quality control process should be put in place.  This process should periodically review documents authored/saved across the organization, and should include efforts to remediate issues that are identified with respect to specific individuals or business units.

Risk Considerations for Process Design

It’s important to acknowledge the risks inherent in the use of legal document templates, as well as to build in safeguards to address these risks.  Specifically, laws and regulations change over time, a fact which will render some boilerplate provisions outdated.  Further, some matters are simply so complex or valuable that the cost associated with the creation of a bespoke agreement is justifiable.

With regard to the use of outdated clauses, it is crucial to keep in mind that reference to template documents is not meant to serve as a stand-in for a legal department’s ongoing duty to stay current on legal developments. 

Rather, it’s meant to reduce the need to draft full documents from scratch.  As a result, attorneys should continue to stay abreast of legislation, regulations, and case law that will impact frequently-used documents.  A best practice in this regard would include the use of a legal tracker that monitors developments in the law, as this can serve as a quick reference when drafting subsequent documents.

In addition, standards should be in place for determining when documents must be sent out for initial drafting by counsel. These standards should include the use of a cost-benefit analysis where there are numerous subjective factors affecting the outcome, as well as a contract value above which legal assistance from the outset is required.

Finally, be sure to encourage the internal modification of document language based on lessons learned in the field.  Items that are frequent points of contention during the negotiation stages or those that are often interpreted adversely by the courts should be adjusted to account for these issues.

Small Effort, Big Change

As with any change, implementation of a document management system will take time and effort.  Through reliance on the above formula, however, your legal department will be able to reuse prior efforts, reduce inefficiencies/waste, and recycle well-drafted legal documentation. 

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[i] http://apps.americanbar.org/lpm/lpt/articles/tch01093.shtml

[ii] See, e.g., http://www.pcmag.com/article2/0,2817,2385613,00.asp

[iii] http://quickbooks.intuit.com/r/compliance-licensing/pros-and-cons-of-using-automated-documents-for-your-business