However, if your legal information is scattered across filing cabinets, or disorganized across different files or servers, you are dealing with an information burden that is undermining your ability to provide counsel and putting your business at serious risk.
Here we explore the 3 biggest consequences paper-based or unstructured document and information management processes can have on your business, and ultimately on your performance as an in-house lawyer:
1. Data lossCertainly, the worst-case scenario for any company is to find out that data has been destroyed by a natural or man-made disaster. If you have a paper-based archive room, just imagine the consequences of coming into work only to find out the whole thing went up in smoke!
While a disaster could severely affect your business, a more probable cause of data loss is due to human error. On average 7.5% of files are lost and 3% misfiled annually, often because we don’t have business wide governance on how to securely store, find, and track information. That can lead to a loss of €25.000 per year for every 1000 documents you manage.
You can eliminate the risk of data loss with secure cloud data storage. With access to your information 24/7, users can retrieve, store, and process information in real time. Live data synchronization and backup means that even in the event of a disaster, you can recover files quickly from the cloud – and keep your business running smoothly!
2. Wasted time and costsMaintaining paper files can be incredibly expensive. Paper archives require room and this means spending money to rent and manage a space to store documents (onsite or offsite). Fetching information in archives is also time consuming – an average employee spends more than an estimated 400 hours per year searching and gathering information. That means other important tasks have to take a back seat while you’re sorting through filing cabinets.
Wasting time also leads to bottlenecks in business processes that can even cause delays in projects. Furthermore, when the legal department is responsible for bottlenecks that create unnecessary hurdles for business operations, it fosters a reluctance in other departments to consult in-house counsel, which undermines your ability to manage risk and can have costly consequences.
Electronic document storage solutions can help you save time tracking down documents or information, while cloud solutions can offer considerable cost saving over on-premise solutions. Cloud technologies are the undisputed choice for small and medium-sized enterprises that rely on lean structures and have limited IT resources. Compared to on-premise solutions that require considerable human resources and investment to maintain local servers and operating systems, you save your IT department time and money with the cloud.
3. Ineffective decision-making and risk managementData is power and legal data can provide some of the most reliable information for forecasting and taking strategic decisions. But, when important legal data is hiding in filing cabinets it is impossible to have an accurate overview of your legal matters, compromising your ability to proactively manage risks, identify business opportunities and ensure compliance.
Reports – like those on liabilities and risks, outstanding claims or expiring license agreements – are invaluable to managers, department heads and/or the C-suite. Yet, collecting reliable data and assembling it into easy to understand reports can be a challenge when information is disorganized. You can never be 100% sure that the information you have is the latest, most accurate. If business decisions are made with wrong or incomplete data, the consequences can range from fines (in the case of audits) to a loss in reputation, market share, operating licenses or revenues.
Instead, when all your legal documents are easy to locate, you can keep track of deadlines, obligations, notice periods and more with alerts and reminders. With technology, you can generate insightful reports to track and communicate information, with the peace of mind knowing that you’re collecting the most up-to-date data available. You can make summaries of contract information and share them with colleagues in other departments to ensure that they understand all of the key terms, and risks involved.
Managing risk is less challenging when everyone has a clear picture of the situation and is working in a collaborative way to identify emerging risks and opportunities. Empowering managers or department heads to identify risks proactively can help them play a more active role in managing their legal risks and, simultaneously, elevate in-house counsel’s role as one of providing real business value.
How can you reduce these risks?More and more in-house legal teams are using digital, cloud-based tools to mitigate these risks (and others) to improve efficiency, data security, reduce their paper trail and meet a variety of information management challenges.
That said, digital transformation can be overwhelming. In our latest guide, “Digital Transformation for Legal Departments” we will explore the risks of current document management systems, the benefits of centralizing your legal information on the cloud, and the 8 simple steps you can take to implement tech in your legal department.