Posted by Sid Jiwnani, a solicitor and Director (Europe), at Legal Futures Associate Knovos
Jiwnani: Optimising collaboration with law firms
Virtual data rooms provide a secure collaboration and document sharing platform that consolidate documents into a centralised repository and facilitates their efficient management.
By employing such technology, organisations can establish secure connections with their clients and instantly access information from any location around the world. Virtual data rooms have been traditionally used in corporate due diligence scenarios but can also be used effectively in banking/finance situations.
In 2018, a renowned special purpose company (SPC) with millions of pounds under its management sought a new solution in support of a programme offering compensation to various banks due to certain historical events.
By employing virtual data room technology, the SPC optimised its collaboration with a number of client banks and their representative law firms.
Background
The SPC’s new program involved a huge number of operational and compliance procedures to check the application process, eligibility criteria, financial statements, and much more. It also required oversight from several law firms and other legal representatives.
Prior to its use of a data room, the SPC relied heavily on legacy systems with limited document sharing and collaboration capabilities to handle all of this data, as well as to manage various deliverables like contracts and financial documents.
The SPC also previously used regular emails to communicate with client banks regarding queries on particular documents — a process that could generate discrepancies and possible delays.
In addition, the SPC:
- Had custody of sensitive client information like financial statements, the mishandling of which could lead to document integrity and safety issues;
- Had to routinely cater to information requests from external parties for updated program details or application submissions, which could quickly become difficult to manage; and
- Wanted to mitigate any risk related to the breach or disclosure of its clients’ critical financial information.
Solution
By using an online data room, the SPC was able to ensure efficient document management, with new and updated information provided to requesters like banks with properly maintained historical versions.
Version controlling helped the SPC reduce turnaround time, with updated information readily available for sharing. In addition, the law firms involved could be provided quick, secure access to documents, with detailed information and documents all stored in a central place.
A good virtual data room will also include a built-in Q&A feature that allows users to engage in collaborative back-and-forth to quickly address issues or concerns with others.
Another value-add is the use of advanced encryption standard AES_256 to securely encrypt documents while in transit or at rest, ensuring the safety and security of critical information by preventing unauthorised access or hacking.
The enhanced protection of sensitive client information also helped the SPC avoid any negative consequences or corruption of its image.
In addition, the company benefited from integrated fully secure emailing capability, which employs complex encryption algorithms to ensure that client information remains safe and secure within the application.
State-of-the-art data rooms also provide highly valuable technology such as an activity alert system that automatically informs data room administrators when a new application is uploaded or completed, with both the sender and recipient receiving an auto-generated notification.
Analysis
A secure document collaboration solution can help financial clients streamline information request handling and internal collaboration processes through an organised information structure, permission-based access, versioning capability, secure communication, Q&A process flow, task management, and more.
Entities like banks and law firms can leverage advanced virtual data room technology for such benefits as a secure central data repository, easy accessibility, direct access to the latest and most updated information, pre-organized folder structure, and activity alerts.
Organisations can also use data rooms to ensure the safety of a vast amount of sensitive information within a secure perimeter, with advanced encryption and security standards protecting the data against unauthorised access and willful spoliation.
Users clearly witnessed optimised collaboration with all parties, ensured faster decisions by using the built in Q&A feature, as clarification on issues could be received immediately.
Using a virtual data room, the users could improve the turnaround time for providing the latest document version to any requesting body such as a law firm or regulator.
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