In a perfect world, in-house legal teams should function in harmony. All members of the department should complement one another in order to maximize productivity, streamline internal processes, and optimize efficiency.
However, many in-house legal teams do not function as efficiently as they could. While there are many potential causes for these barriers to productivity, one of the most common culprits is improper entity management.
In order to remedy this issue, corporate legal teams must proactively alter their entity management protocols and replace aging systems with modern technologies.
Below, we examine some of the greatest challenges facing in-house legal teams in the current legal landscape and outline proven entity management best practices that will help them overcome the identified pain points.
Common Challenges Faced by In-House Legal Teams
Perhaps the most significant challenge facing 21st-century in-house legal teams is a lack of visibility across the department.
This blindness can often be attributed to the formation of siloed information. A data silo is formed when key pieces of information are compartmentalized in separate databases that are not capable of effectively communicating.
The negative effects of data silos are exacerbated by poor document management practices. Relying on manual processes, such as keeping up with physical minute books, can be particularly detrimental to productivity.
Fortunately, all of these problems can be resolved by unifying an in-house legal team's various sources of information into a single platform. This unification facilitates inter- and intra-department visibility, makes data readily accessible, and improves document management.
Digital Best Practices for Entity Management
As your in-house legal team explores new ways to refine its entity management protocols, we recommend leveraging three best practices. These best practices are as follows:
Improve Subsidiary Management
In the corporate realm, entity management is a vital responsibility that is often shared between finance and legal. However, outdated technologies and poor collaboration often make subsidiary and entity management unnecessarily difficult. To address this, your organization must systematically improve its subsidiary management practices.
First, your organization should craft a framework for entity management. This framework can be documented in a Subsidiary Governance Framework, an SLA, or a playbook. Establishing a playbook will facilitate consistent and standardized governance by setting minimum standards for key activities.
In addition, you should consider incorporating transfer pricing or TP into your entity management structure. Doing so will require you to establish intercompany agreements or ICAs.
Successful ICAs must be aligned with the allocation of risks, rewards, and functions described in your transfer pricing policies. By using ICAs and establishing a standardized protocol, you can enhance your in-house legal team’s ability to collaborate with finance, thereby improving entity management.
Transition to Virtual Minute Books
As you know all too well, having accessible and accurate minute books is integral to the success of your in-house legal team. However, traditional bookkeeping processes require your team to keep up with paper documents, which can be extremely tedious.
In order to alleviate this pain point, you should convert to virtual minute books.
Leading-edge entity management technologies include cloud-based digital minute book tools that allow you to do just that. With this software, you can create a shareable, readily accessible, single source of truth. The result is better transparency and streamlined collaboration.
Streamline Entity Management with Technology
According to recent research, legal professionals spend only 2.3 hours per 8-hour workday on billable tasks. The other 71% of their time is wasted on redundant administrative duties that are created by inefficient entity management practices.
Not only does an overreliance on outdated tools hinder productivity, but this practice also poses several other challenges as well. Specifically, archaic tools can cause problems such as:
- Reducing trust in the accuracy of records
- Exposing the team to regulatory liability
- Increasing the risk of data entry errors
By replacing these aging and unreliable tools with cloud-based entity management software, in-house legal teams can gain access to the resources necessary to thrive in the current corporate ecosystem.
This technology facilitates the seamless sharing of important business insights, enhances productivity, promotes compliance, and removes manual tasks from the team’s workload.
With that being said, it is essential that in-house legal teams carefully vet any entity management solution.
Teams should find a solution that offers superior data security, a comprehensive set of entity management tools, and proactive support. By doing so, these teams can ensure that they find the right suite of technologies for their evolving needs.
Ready to Learn More?
If you and your firm would like to learn more about the latest entity management best practices, we invite you to download our eBook.
In the eBook, Best Practices in In-House Entity Management, our experts discuss each of the above topics in great detail. This information can be invaluable to your in-house legal team as you strive to become more efficient in the evolving legal ecosystem.