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The legal industry is constantly evolving and with it, so is the technology that supports it. One area that has seen significant advancements in recent years is legal entity management. In this blog post, we will explore how legal entity management is impacting corporate practice and how it can streamline processes and make them more cost-efficient.

Here’s a summary of what we’ll look at in this post:

• Legal entity management is impacting corporate practice in a big way
• It streamlines processes and makes them more cost-efficient
• It allows for easy access to information and documents, even across different time zones
• Legal entity management can connect to other areas of practice and enhance overall efficiency

The move to legal entity management has been a game changer for the corporate practice. Karen Anderson, Corporate Services Manager at Blakes, Cassels & Graydon LLP, highlights the benefits of this technology and how it is impacting the way corporate lawyers work. “It’s exciting because it streamlines the processes and it makes everything more cost efficient. We can do things in a lot less time than we did historically. And other offices can access this information. Vancouver is on a different time than us, but they can access it late in the afternoon if people are no longer available or whatever it may be.”

Watch the full interview, Legal Entity Management: Streamlining Processes and Enhancing Efficiency

The ability to access information and documents quickly and easily has been a huge benefit of legal entity management. This is especially true for corporate practices where there are a lot of documents and information to keep track of. “It also helps on transactional work because all the documents are there and you can share them in a minute. In days gone by you would have been collecting PDFs, copying the minute book, but now it’s all at your fingertips.”

What’s more, legal entity management can connect to other areas of practice and enhance overall efficiency. “Legal entity management can spread into other area’s as well, and that’s exciting to me!”

The legal industry is constantly evolving and with it, so is the technology that supports it. Legal entity management is just one example of how technology is impacting the way lawyers work and making the process more efficient. As this technology continues to evolve, we can expect to see even more improvements in the way the legal industry operates.

Corporations hire experienced legal professionals to oversee legal entity management on behalf of the business. These hires can be either in-house, under the direction of general counsel, or as contracted members of an outside law firm.

In either scenario, legal professionals rely on their team of law clerks or paralegals to help administer entity management best practices. This includes assembling all corporate filings into one centralized database of records to maintain business compliance with regulatory laws.

How corporate entities maintain business compliance

Legal teams follow entity management practices, policies, and procedures to maintain business compliance with regulatory authorities. Entity management is a governance system that organizes the corporate records of a legal entity to improve business compliance and corporate transparency.

Effective entity management organizes records from an array of sources into structured minute book records. Examples of prominent sources to collect entity management data include:

• Organizational charts
• Organizational calendars
• Corporate workflows
• Statutory non-compliance records
• Date-based compliance records
• Clerical and administrative records

Many legal professionals use entity management software to assist with the management of corporate data in support of business compliance. Entity management software is a specialized system built by legal minds for legal minds. It simplifies how law firms and legal departments manage large amounts of corporate data in service of numerous legal entities.

Four tips to help paralegals maintain business compliance

Simplification goes a long way to helping paralegals and law clerks remain on top of the entire business compliance process. Each record of data must be inputted into the master entity management database, which requires diligent recordkeeping skills and vast amounts of time dedicated to this process.

So, how can you make life a little easier for your paralegal team, while still ensuring that business compliance is maintained? Entity management software is one of the best resources to simplify the workload. Here are four helpful ways these platforms will help your paralegal team maintain business compliance, and also preserve their own mental health.

1. No-code document assembly

One of the biggest reasons companies choose not to insert modern technology into their workflows is that platforms require technical expertise to manage. Many legal departments don’t have the staffing or resources to invest in a tech guru. In fact, according to the Association of Corporate Counsel, the median total of legal staff in any given department is just six people.

The chief benefit of entity management software is that it’s built to support the non-technically savvy legal department. The platform includes no-code document generation templates, allowing teams to leverage intuitive software that easily creates and customizes legal documents with no technical requirements. This approach significantly reduces the time it takes to create documents to a few simple minutes.

1. Time to consult with stakeholders

Paralegals and law clerks often wear multiple hats. In addition to managing corporate entity data, their responsibilities include serving as the primary point of contact between the heads of the legal department and the other key stakeholders of the business.

Scheduling time to converse with those stakeholders with fully briefed and informed documentation is a challenge for paralegals. Since the average team has only six functioning staff members, juggling all these responsibilities without sacrificing the requirements for effective business compliance is a tall order.

The simplicity of entity management software streamlines the entire business compliance workflow. Using these systems, legal teams save valuable hours on recordkeeping, enabling more prompt and effective meetings with key entity stakeholders. It’s a workflow that generates value and improves the efficiency of meetings throughout the entire organization.

1. Greater alignment between attorneys and paralegals

Any documentation submitted to regulators will undergo meticulous scrutiny. Business entities provide transparent records to regulators, who then review and make their judgment on whether the entities meet the standards for business compliance.

Sometimes, supportive positioning statements that provide additional context to the records make or break the case for regulators. If there’s misalignment between the legal professionals and paralegals who submit the records to regulators, the argument may become diluted or confusing.

By using a platform that centralizes all records and streamlines the time investment necessary to maintain those records, attorneys and clerks can dedicate more time to making their arguments in clear, concise, and aligned manners. It will also allow any misalignments or disagreements over submissions to be squashed without leaving paralegals feeling threatened or at risk of dismissal.

1. Paralegals will not succumb to burnout

The most consistent benefit of entity management systems is the time saving efficiencies they provide to resource-strapped legal teams. Valuable working time is granted back to legal departments, chiefly, the paralegals, whose primary duties are to maintain those records.
Paralegals are under enormous pressure to maintain business compliance. It’s natural to feel overwhelmed at times, especially if workloads become overwhelming due to rigid time constraints. Using entity management software, the work gets done faster, paralegals feel accomplished, and creeping thoughts of burnout dissipate into the subconscious. It’s a win all around for everyone

The adoption and implementation of legal technology within law firms is becoming increasingly common. As technology continues to advance and change the way we work, law firms are recognizing the benefits and are becoming more open to using legal tech to streamline their processes and increase efficiency. However, while firms may be receptive to legal tech, the adoption and training of the technology can be a problem.

Here’s a summary of what we’ll look at in this post:

• Firms are becoming more receptive to legal tech
• Newer lawyers within the firm are receptive to legal tech but adoption and training can be a problem
• Adoption and training are crucial for success
• Continual training and technology champions are necessary to ensure the system is being used on a regular basis

One of the main issues is that newer lawyers within the firm may be receptive to legal tech, but may struggle with adoption and training. They may be familiar with the traditional way of working and may find it difficult to change their habits. Additionally, when a deal or case becomes stressful, it can be easy for them to fall back on the familiar and rely on paper documents and traditional processes.

Watch the full interview, The Importance of Adoption and Training in Legal Tech

This highlights the importance of adoption and training for the successful implementation of legal technology. Without proper adoption and training, the technology may not be used to its full potential and may not have the desired impact on the firm.

How to overcome legaltech adoption issues in legal departments

To overcome this, firms should focus on continual training and the appointment of technology champions within the firm. These individuals will be responsible for ensuring the technology is being used on a regular basis and providing support and training to their colleagues.

In conclusion, while the adoption of legal technology within law firms is becoming more common, the success of the technology is dependent on the adoption and training of the technology. Firms should focus on continual training and the appointment of technology champions to ensure the technology is being used to its full potential.

Maintaining secure and accurate corporate entity data underscores the foundation of an organization. Legal teams are tasked with managing entity data to ensure regulatory compliance with jurisdictional laws.

Unfortunately, managing all this data becomes increasingly challenging, time consuming, and resource intensive. According to a joint study by EY Law and the Harvard Law School Center, 89% of organizations struggle to maintain diligent corporate records.

Why the struggle? Let’s dig into that.

Legal teams have limited resources to manage global entities

In a survey of 427 legal departments, the findings show a median of six experts on an in-house legal team. Even more telling is that the number of experts considered part of the legal operations division is approximately 5% of the total staff.

Think of legal operations in a similar role to a revenue operations team. These are the people who provide the data, the resources, and the structure to help the professionals who will go out and sell the value of the business to a potential buyer.

In revenue operations, they provide salespeople with leads to go and sell the business. In legal operations, these are the paralegals or clerks that provide trained lawyers with all the information they need to service clients. In the case of in-house corporate counsel, the client is the business entity itself. It’s a vital role that, in the legal community, is sorely lacking in bandwidth, headcount, and resources.

Legal experts must manage global entities and subsidiaries

The strain on legal departments grows as businesses scale to global levels. At this stage, securing data and maintaining compliance for the principal corporate entity are only one aspect of a legal department’s responsibilities.

The greater challenge lies with managing subsidiary data and those business records. As corporations become global businesses, they often establish subsidiary branches in different jurisdictions. This means creating new subsidiary business names, bank accounts, tax IDs, office locations, executive officers, employees, etc.

Among the main reasons why businesses create new subsidiaries include:

• Protecting corporate assets from subsidiary liabilities
• Enforcing compliance in international jurisdictions
• Receive tax advantages that can’t be claimed by parent companies
• Improve mergers and acquisitions with newly acquired companies
• Coordinating financial disbursements to support overseas operations
• Providing another arm of guarantor security if the corporation requires credit financing

Subsidiary management best practices

Given that in-house counsel is a limited team with global responsibilities, it’s best to provide your legal department with subsidiary management best practices. This will help teams use their resources effectively and avoid the frictions or pitfalls that can arise from uncoordinated subsidiary management.

Create a subsidiary governance framework

When companies reach the size of a global corporation with multiple subsidiaries, it only makes sense to establish a subsidiary governance structure. By creating a subsidiary management playbook, your legal team can use the guidelines to assist with things like:

• Reporting controls between subsidiaries and the parent corporation
• Processes to create boards of directors and subsidiary executive committees
• Systems to establish powers of attorney for subsidiaries

Establish detailed organizational charts for the subsidiary

Organization charts are an excellent resource to structure and organize your subsidiaries. These charts outline the hierarchical structure of the business, providing detailed records of which executives are responsible for specific operations.

These charts can even include a connective thread to the parent entity. Your legal team can refer to the charts and contact the executives at the top of the hierarchy whenever legal or fiduciary matters overlap between the parent entity and the subsidiary.

Use subsidiary management software to centralize all business records

Finally, the best resource for efficient subsidiary management is an intuitive platform designed to modernize minute book record keeping and maintain corporate compliance.

Subsidiary management platforms automate many of the clerical tasks and responsibilities involved with the compliance process. They also include advanced security measures that store and safeguard important business records, ensuring all data security protocols specified by jurisdictional laws and by-laws are maintained.
Most importantly, subsidiary management platforms help in-house legal teams save valuable working time on compliance protocols. Given that the average in-house legal team consists of only six people, a platform that simplifies and streamlines the subsidiary management process makes it far easier and more efficient for legal teams to complete their responsibilities. Providing these resources will go a long way toward helping your legal team avoid feelings of burnout.

The corporate secretary plays a vital role in any legal entity, and the importance of that role has only expanded with time. A corporate secretary’s primary responsibility is to ensure the integrity of the organizational governance framework.

According to Governance Professionals of Canada, the corporate secretary maintains compliance with statutory and regulatory requirements. They also administer efficiencies throughout the company under the direction and decision-making of the Board of Directors.

Entity management systems are one of the best ways that corporate secretaries can introduce efficiency into their own workflows. Administrating efficiencies for the entire organization also means incorporating solutions that reduce the amount of time and resources necessary to complete all the clerical duties of a corporate secretary.

Let’s break down some of the ways corporate secretaries love entity management systems and the net benefits in their day to day workflows.

Modernized minute book management

Among the most important duties of a corporate secretary are the facilitation of board and committee meetings and the taking of meeting minutes for official record. Corporate secretaries are responsible for minute book management for business entities and the subsidiaries that operate under the corporate umbrella.

Using entity management systems, the minute book management process is modernized with digital software. Corporate secretaries can eliminate the outdated process of making notes on paper files that must be sorted, tagged, and organized for official record keeping.

The entity management system is an intuitive platform that organizes uploaded minute book data into structured PDF-style documents. The minute books can be edited and customized directly within the platform, creating one centralized hub for corporate secretaries to host all minute book records. It’s a faster, more streamlined workflow that improves efficiencies for all important business meetings.

Compliance with federal and provincial governance laws

All entities must maintain compliance with federal and provincial governance laws. The consequences of failing to comply with those laws include stiff financial penalties for the business, and there’s always the possibility of criminal charges against executives and directors at the top of the organizational hierarchy.

Entity management systems help corporate secretaries maintain compliance in an efficient manner. The platform includes an automated compliance module that monitors organizational charts, calendars, workflows, and other templates. The module looks for any errors, statutory non-compliance, and date-based compliance tasks that may inhibit compliance.

Using the compliance module, corporate secretaries can manage their own schedules and the schedules of all signatory managers to remain on track with important deadlines in the compliance process. It reduces stress and confusion while helping the organization work towards the ultimate goal of corporate compliance and responsible governance.

Managing share transactions amongst key stakeholders

Every corporation has shareholders, and each of those shareholders has rights and responsibilities. Each stakeholder owns a percentage of company stock, and they have the right to acquire, sell, or transfer shares at their own discretion.

Each share transaction must be properly documented as part of the mandate for corporate compliance. Corporate secretaries typically manage all share transactions, which include everything from issuing new shares to arranging dividend payments and observing all other legal requirements.

Entity management systems help corporate secretaries automate the share transaction reporting process. The platform includes shareholder ledger templates that can be populated with records of all share transactions. Simply select the data management fields and insert the shareholder transaction information. The process is quick, easy, and painless for corporate secretaries, saving invaluable working time and maintaining strict compliance protocols.

Enhanced entity management security measures

Data privacy and security are paramount when it comes to maintaining compliance and responsible governance. Corporate secretaries are directly responsible for managing sensitive corporate data as well as the personal information of executives, directors, and shareholders affiliated with the legal entity.

Entity management systems offer advanced security protocols that protect all sensitive corporate data. The platform includes biometric and hardware key authentication solutions that restrict access to corporate records. Only those individuals to whom the corporate secretary grants official permission to access those records can view the data.

Privacy protection protocols prevent unauthorized leaks of sensitive data that risk compromising the integrity of the organization. Entity management systems are the best way to enforce those privacy protection measures and ensure the organization remains in compliance with the laws.

Flexible options to run executive and shareholder meetings

In the post-COVID-19 era, employees and executives of business entities expect flexible work options. Gone are the days when people were forced to be in the office every day of the week. Now, most entities have adopted hybrid work models that enable remote work for at least a few days of the work week.

Under these flexible work structures, corporate secretaries often struggle to arrange board, committee, or shareholder meetings with all key stakeholders. Instead of shuffling through dozens of executives’ calendars to coordinate available time for meetings, entity management systems provide corporate secretaries with greater flexibility.

Since entity management systems are cloud-based platforms, all minute book records can be accessed from any location. Once the corporate secretary grants access to key stakeholders, they can all view the data from the convenience of their own homes or any remote work environment. This enables important meetings to be conducted with less administrative hassle.

Entity management refers to a governance system that compiles, organizes, and manages the corporate records of a business entity. Business entities include anything from multinational corporations to partnerships, limited liability partnerships, trusts, LLCs, and other organizational structures.

Legal entity management establishes a consistent framework for how a business entity and any subsidiaries conduct themselves. It aligns department leaders from an organization’s legal, accounting, taxation, and compliance divisions to establish a set of rules and principles that allow the company to operate in a legally responsible manner.

What is the purpose of legal entity management?

The purpose of entity management is to install a structured system that promotes effective corporate compliance and responsible organizational governance. Entity management policies and procedures ensure companies respect the interests of owners, shareholders, managers, employees, regulators, and the public at large.

Entity management is a central piece of an organization’s environmental, social, and governance (ESG) policies and procedures. ESG goals are broad commitments by legal entities to introduce greater diversity, sustainability, and environmental awareness into their operations. Legal entity management respects the objectives of those goals while maintaining strict policies and procedures to respect regulatory compliance.

What information belongs in entity management platforms?

Many companies use legal entity management software to remain in compliance with jurisdictional laws. These platforms function as secure centralized databases for all information pertaining to the organization.

Some of the most common information that can be found within entity management documents include:

• The legal name of the entity (or subsidiary)
• Organization classification (corporation, partnership, LLC, trust, etc.)
• Registered legal addresses for the company
• The official date of incorporation (for corporate entities)
• Jurisdictional certifications to legally conduct business
• Names of registry agents

How is a legal entity management system maintained?

There are a number of business assets that organizations use to maintain proper legal entity management. These assets include, but are not limited to, any of the following:

• Organizational charts
• Capital tables
• Tax reports
• Shareholder ledgers
• Minute book records
• Other corporate documents

Records from each of these documents give executive managers, directors, and shareholders keen insight into the inner workings and operations of the organization. Law firms and general and corporate counsel representing the organization can share the corporate documentation data with the proper regulators whenever necessary. Transparent recordkeeping keeps your organization in compliance, avoiding any disruptions to business growth and operations.

What are the penalties for non-compliance?

Regulators across North America have dedicated years to cracking down on white collar crimes to protect the public from the real consequences of those offenses. Organizations and business leaders that follow the letter of entity management avoid legal pitfalls that compromise the growth and security of their respective businesses.

Those leaders that fail to abide by the responsibilities of legal entity management risk subjugation of criminal indictments. One needs to look no further than charges laid against one former president and head of a namesake corporation as a cautionary tale of falsifying business records for personal gain.

In some cases, failures to uphold proper legal entity management practices can tarnish an entire entity’s future. Case in point: FTX founder and former CEO Sam Bankman-Fried faces multiple charges of fraud for the misappropriation of client funds. The collapse of FTX under SBF resulted in the company filing for Chapter 11 bankruptcy as new CEO John Ray III establishes proper corporate controls.

How can firms and general counsel use entity management platforms

The greatest benefit of legal entity management software is that it allows legal teams to digitize corporate documents and minute book records. By transferring corporate records into secure cloud-based servers, entity management workflows become more streamlined and time efficient.

Since the data is stored in the cloud, it eliminates the need to schedule in-person meetings with key stakeholders to certify the corporate documents. Anyone with biometric and hardware key authentication can access the records at their own convenience from any location. This makes it easier for legal departments to acquire approvals and signatory sign-offs on corporate data.

The platform is very intuitive and includes advanced search capabilities to find and review important minute book records in a matter of seconds. This is a more efficient way to conduct review sessions with stakeholders. If any executive has questions about a particular record, immediately pull up the minute book in question and present the answer. It’s a more efficient workflow for everyone involved!