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Let’s start with a few questions: Is your company qualified to do business in more than one jurisdiction? Is your business structure complex? For example, does it have subsidiary companies or is it conducting business under multiple legal names? Is your business publicly held? If you answered yes to one or more of these questions, your legal department should be using automated tools to manage the growing intricacies of corporate compliance and governance. Many corporate legal departments have been making do with generic solutions such as Access databases or Excel spreadsheets and the tireless work of their attentive paralegals. As compliance and governance obligations multiply, however, the effectiveness of these homegrown approaches rapidly diminishes. The consequences of an oversight such as a missed deadline can range from minor internal inconveniences to fines that carry a significant cost, not to mention the bad press that can generate residual liabilities. The good news is that many compliance and governance tasks can be automated and incorporated into a comprehensive software package. Most of these tasks are routine yet essential and require adherence to process, policy, compliance details, and deadlines. Some examples: • Filing annual reports for Companies A, B, and C in 23 jurisdictions by each deadline and in compliance with each jurisdiction’s procedures. • Making sure that searches for liens on a potential acquisition include combing through data within every applicable jurisdiction. • Adhering to the regulations on name changes or changes in company structure in each jurisdiction in which the company does business. By using technology tools that are designed for these tasks, you can increase efficiency as well as accuracy. Using a central data repository also can help improve management control over your corporate record. When a change occurs to your record, it need be changed only once � not once in an Excel spreadsheet, a second time in an Access database, etc. EVALUATING AUTOMATED TOOLS If you’re thinking that automated tools might be a good solution for your department, here are some key considerations to keep in mind when evaluating systems. 1. Is it rules-based? Generic business spreadsheets and databases are not designed to ensure compliance. Your automated tools should have built-in rules based on the relevant laws and regulations. For example, entering details about your business structure, subsidiaries, and other basic information should be enough for the system to cull the related rules for each jurisdiction in which you do business, and help you prepare filings and keep track of due dates and other compliance requirements. 2. Does it integrate compliance and governance? Though corporate compliance and governance are two distinct functions, there is a tremendous amount of overlap in the corporate records information required to complete tasks for each area. Having a rules-based system with which you can manage both annual report filings and name changes, for example, certainly helps improve efficiencies. And much of this same data can be repurposed to manage Securities and Exchange Commission insider filings or prepare for corporate board meetings. 3. Will it allow inter-system data sharing? Certainly, economy of scale and efficiency are achieved when a single system is able to handle various aspects of both governance and compliance requirements. However, corporate law departments that already have systems in place for discrete parts of their programs may want to adopt other solutions for other aspects. If this flexibility is important to you, look for solutions that offer XML integration with third-party systems. This means that the system is able to share information with other systems. This is also a criterion for electronic filing, discussed below. 4. Does it foster collaboration? As important as the ability to share data between systems is the ability to collaborate with colleagues throughout your organization, with your management teams, and with outside counsel. Web-based tools are the easiest to deploy for this collaborative flexibility, as all that’s required are Internet access, a browser, and the appropriate authorization (as designated by your department). Providers of Web-based tools also are responsible for data storage and system upgrades, and minimizing technology manpower and capital equipment requirements on your organization. 5. Will it support electronic filing? The number of states accepting business entity filings electronically continues to increase; many are actively promoting e-filing by reducing fees for electronic filings. In the corporate governance area, the SEC recently began requiring that all Section 16 insider filings be submitted electronically. Various other regulators are beginning to realize that it’s less costly and more efficient to mandate e-filing. It only makes sense to prepare for the inevitable by putting the right systems into place now. OVERCOMING OBSTACLES In spite of the obvious benefits in efficiency that automated solutions can offer, the corporate legal community still reports some roadblocks to implementing these solutions. For example, a survey by Corporate Counselmagazine (an American Lawyer Media publication) reported last May that lack of funding and management support were still barriers to deploying new technology. Here are some trends and facts that can help bolster your case as you seek management or IT support: • More regulation, not less, is most certainly the foreseeable direction. If lack of time has been one of the reasons for not implementing an automated solution, your department is likely to get even busier. • The costs � and risks � of running increasingly complex compliance and governance programs using manual, labor-intensive approaches will only increase. In fact, a recent study by Foley & Lardner found that the costs of being a public company have increased by nearly 100 percent since the passage of the Sarbanes-Oxley Act. Automating routine compliance measures is an obvious way to save money. • Instituting best practices while an organization is small is far easier than attempting to retrofit those practices into organizations after they’ve grown. • Management never likes to spend money on infrastructure � whether it’s a new building, a new phone system, or a new legal work-flow tool � unless there’s a bottom-line justification. Argue your case using their terms: Identify staff reallocation opportunities and cost savings. Quantify the potential risks � again, not just in fines and hard costs, but in time, goodwill, and the like. Finally, don’t wait for your IT department to present ideas to you. More providers are offering Web-based, hosted applications that minimize the need to approach an already over-allocated IT department for support. There is a wealth of information you can readily locate on a variety of automated tools for corporate legal departments. First, take time to evaluate your department’s needs. Then research the available solutions. Identify a few attractive options, speak with these providers, solicit feedback from current customers, and find out the vendor’s experience in delivering legal services. It will be time well spent, far better than the time spent doing tasks manually � or, worse, correcting a mistake. Gene Landoe is president and CEO of the CT Corp. ( www.CTAdvantage.com), a corporate legal service provider based in New York.

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