As in-house counsel, do you ever stay awake at night and wonder: Are my clients using compliant contracts? Are we fulfilling our contractual obligations on time? Are we aware of all expiring contracts? Am I even aware of all of our active agreements? If so, you are not alone. These are obvious concerns for responsible counsel, especially those who have not implemented some form of document automation software.
Attorneys who understand how document automation works and the benefits it brings are well positioned to develop a strong business case for introducing the technology to their organization. The first article of this three-part series offered an overview of the basics of document automation. This article offers a more in-depth discussion about how document automation can improve compliance and help you sleep better at night.
Taming the Fears of Non-compliance
The first step in taming your fear is to understand it. So, what is compliance, exactly? For the purpose of this article, compliance can be broken down into two main components: external compliance and internal compliance.
External compliance is whether or not company documents meet the requirements of policies created by various regulatory and administrative bodies and whether they adhere to the best practices generally accepted by the legal community outside of your organization. In other words, external compliance involves setting proper legal precedent for the organization as far as the outside world is concerned.
Internal compliance is whether or not company documents meet the requirements of policies created by the organization itself. This includes things like use of the company’s corporate style sheets, preferred payment terms, appropriate notice provisions and other details specified in the organization’s own internal policies.
Now, with a clear understanding of what it means to be compliant, how can in-house counsel respond to a high volume of contract requests while ensuring that every contract their company executes is indeed compliant? Legal departments must be able to respond quickly to keep up with the fast pace of the business; otherwise, businesspeople may be tempted to completely bypass the department and “adapt” documents from previous deals on their own. These “adapted” contracts may contain illegal, unenforceable or financially harmful terms, which clearly jeopardize compliance. This exposes the company to significant risk, costs, lawsuits, government actions and negative publicity. With all these concerns, it’s little wonder that attorneys often have trouble sleeping well. Fortunately, document automation can help.
Compliance Using Document Automation
When implementing a document automation system, first and foremost, substantive policies are codified in automated document templates that then drive the contract creation process. Since all documents generated by the system are derived from these templates, compliance with internal and external policies is ensured. At the same time, procedural policies, such as departmental signoffs, are enforced through parallel or sequential approval processes configured within the system.
With trusted self-service contract creation and workflow processes in place, in-house attorneys can enforce standardized contract language and ensure consistency throughout business units and across individual users. If a document request is incomplete or fails to comply with policies, it is automatically routed to the legal department for review.
Without a centralized document repository, many attorneys lack a complete and easily accessible catalog of existing documents. In this case, the threat of lawsuits or regulatory enforcement is certainly enough to keep them up at night. This lack of visibility is also particularly problematic when companies are grappling with e-discovery demands and the ever-changing regulatory landscape of privacy laws, data protection laws, and other sensitive financial and health information.
To solve these concerns, document automation software ensures that documents are saved in the correct formats and routed directly to the company’s centralized repository or document management system. This automated approach to document storage can ensure that companies can efficiently locate and produce all documents that are relevant to a particular request without the expense of a protracted document collection process. In addition to the legal benefits, commercial benefits of a centralized repository include enhanced business intelligence and reporting on business data.
Another benefit of document automation software is the efficiency gain achieved by eliminating the drafting and review of standard documents. This frees in-house counsel to spend more time researching changes in the law and refining internal policies that are incorporated back into the system, which, of course, further enhances compliance.
In summary, we face a great deal of uncertainty, and perhaps anxiety, around how contracts are being created, stored, and controlled. By automating our contract processes, in-house counsel can guarantee that their internal compliance meets their external obligations, which allows us all to sleep better at night.
Part 3 of this series will discuss document automation best practices.