Insights and updates
from MinuteBox

Compliance with the Corporate Transparency Act is a necessary legal obligation so that entities avoid the repercussions of non-compliance. Qualifying beneficial ownership data must be submitted to federal regulators at FinCEN by pre-determined filing deadlines to maintain compliance with the enforced laws.

However, many legal entities risk undermining their compliance only weeks after the enactment of the CTA legislation. According to a joint study by Deloitte and the Association of Corporate Counsel (ACC), nearly one in three legal entities still need a corporate compliance calendar.

What is the use of a compliance calendar?

Most corporate entities have annual filing deadlines for legal, tax, and accounting purposes. A corporate compliance calendar keeps track of all compliance filing deadlines, which can include:

• Corporate meeting minutes
• Reporting obligations
• Industry filings
• Permits or accreditations
• Merger or acquisition filings
• Beneficial ownership reports

A compliance calendar also assists with operational efficiencies, such as standardizing compliance workflows and assigning compliance tasks to key filing dates. Aligning the compliance calendar with an organizational chart also helps expedite approvals and signatories from key organizational stakeholders.

These are among the strategic business benefits that come from maintaining a corporate compliance calendar. Unfortunately, entities with limited legal entity management resources — working time, compliance budgets, corporate counsel staff — fail to reap these benefits.

What are the costs of non-compliance?

A compliance calendar ensures all filings are submitted by the appropriate deadlines. The compliance calendar also increases compliance awareness across the business. Greater awareness leads to fewer data or clerical errors, streamlining the entity management process.

However, what’s the biggest reason why your entity needs a corporate compliance calendar? According to Ponemon Institute LLC — with sponsorship from Globalscape — the average cost of non-compliance is $14.82 million.

In a benchmark study of multinational organizations, the researchers determined that the average annual cost of compliance is $5.47 million. Contrast this cost with the cost of non-compliance, and it results in 63% annual savings by simply submitting reporting data at the appropriate deadlines.

Additionally, the cost of a single non-compliance deadline amounts to revenue losses of $5.87 million for the average legal entity. If one out of three entities still lacks a corporate compliance calendar, this means billions of potential revenue dollars are sacrificed for no justifiable reason.

What information goes on a compliance calendar?

The Corporate Transparency Act was enacted to improve how corporate entities report data on their beneficial owners. The Act is part of a government effort to crack down on money laundering, tax evasion, and other financial crimes nationwide. A corporate compliance calendar tracks all filing deadlines so that ownership data is transparently submitted without penalty.

However, a compliance calendar isn’t just useful for tracking external filing deadlines. You can use your compliance calendar to set operational compliance workflows and assign deadlines to each entity management team member. This ensures that all reporting requirements are tracked using project management strategies so that filings are submitted in detail and on time.

How to create a corporate compliance calendar

If you’re amongst the one in three legal entities without a compliance calendar, it’s time to change that approach. Assess your business needs and evaluate your past compliance processes to proactively make improvements to those workflows.

Once you’ve mapped out your compliance objectives, you can create your compliance calendar. Many modern business entities use legal entity management software like MinuteBox, which has a built-in compliance calendar to automate, streamline, and verify all compliance workflows.

Using the calendar’s guided template, follow these steps to build a compliance workflow.

• Review current compliance trends, laws, and reporting requirements.
• Upload the dates into your entity management platform compliance calendar.
• Create a work-back schedule that contains all internal reporting deadlines.
• Set up reminders for each team member and schedule them for deployment.
• Review and modify your compliance calendar as needed.

Are you tired of conducting compliance workflows without a proper compliance calendar? Become a modern compliant business entity by joining the MinuteBox revolution. You’ll effectively maintain compliance with speed and precision while avoiding the steep financial penalties of non-compliance.

Responsibilities placed upon legal departments have thoroughly expanded in recent years. Where once entity management required legal teams to maintain diligent minute book records, modern entity management plays a more strategic role in global business leadership.

Legal teams must coalesce with compliance, tax, and finance departments to implement effective entity management practices. Collaborative efforts between various department stakeholders allow for accurate summations of reporting data. Additionally, unity between each department minimizes corporate risk and protects the legal standing of the corporate entity.

What is modern entity management?

Once upon a time, entity management described the management of basic entity information, such as managing, sorting, and filing accurate minute book records.

Modern entity management has expanded into a more complex series of responsibilities. Sound entity management processes enable corporations to implement sustainable corporate governance and compliance across a global business entity.

How modern entity management affects general counsel

Forward-thinking corporations incorporate entity management practices into business strategy. This is one of the reasons why general counsellors increasingly function as strategic advisors to a corporate entity’s board of directors.

In a 2022 survey analyzing general counsel’s expansive role in business operations, 76% of participants expect their respective general counsellors to serve in several strategic roles for their businesses.

• Act as a legal counsellor and manager of legal risk for the corporation
• Contribute their views on business strategy and operations
• Actively participate in strategic planning and decision-making for the business

The data acknowledges the potential risks and costs of entity management and the potential that those risks could disrupt options or dovetail growth. The general counsel functions as a leader and advisor to corporate stakeholders while directing legal entity management at an operational level throughout the organization.

Align legal, finance, and tax for effective entity management

With entity management carrying significant risks to the business, general counsel uses their expansive leadership position to drive entity management best practices across numerous departments. Collaboration is most common across legal, compliance, finance, and tax departments.

Here are some of the best ways general counsel can align various departments and create a more robust entity management workflow.

Learn how to speak the language of various department heads

Legal and compliance teams share similar goals, and they sometimes function as the same, depending on the corporation. Similarly, finance and tax departments also speak similar languages, analyzing key decisions based on projected revenues or costs.

Use the position of strategic business advisor to effect

General counsel should tailor the need for effective legal entity management using language that various department heads will comprehend. In the role of strategic advisor, general counsel regularly data, trends, and dynamics to determine their collective impact. Use that analytical approach to explain the need for cooperation and create effective entity management workflows.

Create efficient entity management workflows

Finally, outline an entity management workflow that is efficient and effective. Explain how teamwork across the various departments helps streamline how reporting data is gathered, filed, and submitted. Research various tools and resources that will assist with the entity management workflow and select one that helps centralize all aspects of entity management.

Invest in entity management software to facilitate alignment

After receiving buy-in from various department heads, and creating strategic frameworks for entity management workflows, it’s time to establish the working processes. First and foremost, you need to select the right resources to assist with the workload.

Entity management software is the best resource to align legal, compliance, finance, and tax teams. These systems are built by legal professionals for legal professionals, creating a centralized single source of truth for all legal entity data.

The platforms include built-in compliance frameworks with easy-to-use modules that function as digital checklists for all matters concerning legal compliance. Additionally, you can build structured organizational charts, cap tables, and shareholder ledgers within the platform. All the corresponding data is centrally located, allowing managers from finance, tax, and compliance to add their contributions and finalize all reporting data.

Using entity management software, organizations can address critical entity management functions in a structured and consistent manner. Most importantly, they make entity management workflows more efficient and collaborative. Teams across multiple departments can work towards a common goal, and general counsel can provide progress reports in their respective roles as strategic advisors to the board.

Since 2016, the legal technology Clio has released annual Legal Trends Reports that summarize the latest advancements in legal entity management. The 2023 Legal Trends Report was recently published, and in the report, they’ve highlighted several key trends that are shaping the evolution of legal entity management.

If there’s one common theme throughout the report, it’s that successful legal talent consistently adopts a client-first approach. This means successful legal managers adapt their processes and update their workflows as new innovative solutions emerge. Modern technology allows for more flexible client-facing legal services, and successful practitioners embrace flexibility to improve client satisfaction.

Here’s a breakdown of the biggest takeaways from the 2023 Legal Trends Report.

Report methodology

The Clio team conducted two principal surveys to craft their report. The first survey was administered to 1,446 legal practitioners in the United States between May 31, 2023 and July 20, 2023. Participants included practicing legal professionals, as well as legal support staff like paralegals, law clerks, and office administrators who help run the day-to-day interests of a firm.

The second survey focused on the interests of the general public. 1,012 participants from across the United States were surveyed between June 13, 2023 and June 22, 2023. The survey’s purpose was to gather opinions from the general public about the legal profession. Many participants had hired a lawyer or retained the services of a firm in the past.

Productivity and Legal Recurring Revenue reach new highs

Productivity within the legal industry has significantly improved compared to workflows in 2016. The average legal professional works 25% more cases today compared to seven years ago, and they also record 35% more billable hours.

Improved administrative efficiencies have helped professionals collect more revenue for every hour of legal work. Billable hours and collected revenue have risen over two and a half times compared to 2016 numbers. As a result, Legal Recurring Revenue for legal practices is improving in response to more efficient workflows.

The cost of inflation impacts billable hourly rates

While Legal Recurring Revenue is improving for most firms, individual billable hourly rates are not rising at equal rates. Practicing attorneys have seen their hourly rates rise by 28% since 2016, increasing from $256 per hour up to $327 per hour in August 2023. However, billable hours charged by paralegals have only risen by 19%, rising from $150 to $178 over seven years.

The cost of legal services for clients has risen over the years, adjusting for inflation year over year. But over the past two years, global inflation has spiked to levels not seen since the 1980s. Mindful of the inflationary impact on clients, legal practices appear to be cutting or controlling some of the costs invoiced to clients. It appears that billable hours charged by paralegals are mostly being squeezed by inflationary pressure.

Improved utilization rates elevate invoiced billable hours

In the legal industry, a utilization rate measures how much of a legal practitioner’s eight-hour workday is put towards billable hours for clients. Since legal talent is working 25% more cases and invoicing 35% more billable hours to clients, improved productivity suggests utilization rates are improving.

And the data supports that estimate. In 2016, the average legal utilization rate was 28%. In 2023, that number has improved to 37%, marking a 32% increase in time that’s invoiced as billable hours to clients. If the numbers are broken down, this amounts to an average of three-quarters of an hour of billable time added to daily workloads.

Realization rates are steadily growing but there’s still room to improve

Realization rates determine how much of the time that a firm puts into a particular case ends up invoiced to clients. In 2016, the average firm realization rate was 77%. In 2023, that rate has jumped up to 86%.

While this is a remarkable improvement, the outstanding 14% can still be fully realized. Firms can utilize more modern technology to help bridge the remaining gap in actual rendered work and work that’s invoiced to clients. Automated billing systems produce more transparent invoices sent to clients, while efficient entity management systems can reduce the time that legal talent spends on non-client-facing work.

Entity management systems are law firm efficiency solutions

To help reduce the time and energy that legal talent spends on non-client-facing work, your legal practice needs to utilize modern technology. There’s no better time-efficient solution for legal practitioners than entity management systems like MinuteBox.

Entity management software is an example of cloud-based technology built by legal professionals to help legal professionals. The primary purpose of entity management software is to streamline workflows when creating diligent minute book records for clients.

Legal talent can reduce the time they spend filing, sorting, and managing minute book records. As a result, they can channel more time and energy into client-facing work and further increase billable hours.

Since entity management software is cloud-based, it’s also more efficient and convenient for clients. All minute book records can be accessed from anywhere in the world, enabling client meetings about the records to be conducted at the client’s time. It’s faster and more flexible, and it’s proven to improve client satisfaction rates — increasing the potential for repeat business.

Eager to increase billable hours invoiced by your firm and further augment Legal Recurring Revenue? Join the MinuteBox revolution today and introduce more time-efficient workflows to help your legal team maximize revenue opportunities.

Paralegals are the backbone of any law firm and in-house general counsel department. Tasked with conducting legal research, preparing legal documents, conducting client interviews, and running the day-to-day operations of a law office, no firm can function effectively without talented paralegals providing legal support.

Some paralegals are satisfied with their positions as legal support staff. Others pursue certifications to become professional practicing attorneys. However, many paralegals choose a career in legal operations, or legal ops, as the next step in their career paths.

What exactly does a career in legal ops look like, and how does it differ from a paralegal career? Let’s break down that transition and outline how more paralegals can open new career opportunities for the future.

What are legal operations?

The purpose of a legal operations team is to help legal teams deliver high-quality services at reduced costs with improved results. They remain focused on helping legal professionals perform their duties with efficiency and proficiency.

On a day-to-day basis, the legal operations team assumes responsibility for all operational tasks of a law firm, or in-house general counsel department. They oversee the duties and responsibilities for all operations that do not require a lawyer’s degree to manage.

What’s the difference between paralegals and legal ops?

You may assume there’s a degree of overlap between the responsibilities of paralegals and a legal operations team. While there are some similarities, here’s the biggest disparity between the two legal support roles.

Paralegals primarily manage legal documentation and client interviews

Some paralegal responsibilities do extend to office administration work. However, most of their duties are related to the management of legal documents for clients.

Many paralegals benefit from using entity management software to streamline many of these workflows. Entity management software is a tool built by legal professionals to help legal talent more efficiently manage legal matters.

Workflows that traditionally take several hours can be completed in a more streamlined manner using entity management software. Paralegals can complete their necessary tasks with greater efficiency and efficacy. Subsequently, they can reinvest their own time and energy into fostering the growth of Legal Recurring Revenue to grow the firm.

Legal operations handle more administrative responsibilities

Whereas paralegals manage legal documents and some client-facing duties, legal operations are primarily charged with overseeing the administrative aspects of a law firm. This can include items that range from:

• HR-related tasks
• IT installation and maintenance
• Compliance matters
• Calendar deadlines for important matters

Legal operations managers may also manage any third-party vendor relationships contracted by the firm or by the in-house corporate counsel. They’re primarily concerned with ensuring those services are provided to vendors in the most cost-efficient manner.

Legal operations managers can also benefit from solutions like entity management software. Entity management platforms like MinuteBox are designed with a built-in compliance framework to help legal ops maintain diligent compliance workflows. The platform can help guide legal ops managers as they build compliance programs, ensuring the firm or corporation remains in compliance with jurisdictional laws.

Why do paralegals transition into legal operations?

Suppose your paralegals are concerned about career mapping. Assisting their transition into new areas of responsibilities broadens their skill sets and helps them complete more fulfilling work to satisfy their interests.

The biggest reason for these transitions is to master new career skills. Some people want to develop skills as a manager, and a transition to legal operations is one of the best ways paralegals can develop those skills. Being responsible for all the administrative processes within the firm means operations managers gain influence, authority, and managerial skills.

How do paralegals transition into legal operations?

Legal operations managers often begin their careers as paralegals, so the transition from one area to the other is not that uncommon. The current director of legal operations for MGM Resorts International began his career as a paralegal.

The greatest advice from legal ops executives to aspiring paralegals-turned-legal-ops-managers is to voice your aspirations to your superiors. If you work at a law firm, inform the partners that you’d like to make the transition to a legal operations career. If you work for a corporate legal department, share your goals with the in-house general counsellor.

Use your learned skills and mastery of legal technology

Many paralegals, knowingly or unknowingly, already possess many of the necessary skills to be an effective legal operations manager. By managing client relationships and compliance calendars, paralegals can transfer those managerial skills and help improve legal operations across the organization.

Paralegals who master legal technology, like entity management platforms, have already introduced efficiencies into their operations. During the transition into legal operations, use those experiences to show your merit. Use entity management software to help organize the hierarchy, set date-based deadlines, and implement effective GRC protocols.

As an experienced paralegal, you already have the managerial skills and capabilities to assume legal operations responsibilities. Believe in your abilities and grow your legal career without requiring a law degree.

Since the 1970s, corporate governance has been a measure demanded by regulators to hold business entities and their leadership accountable. At the heart of corporate governance policies are efforts to instill greater ethical and transparent practices that corporations abide by when they operate.

Corporate governance trends have steadily evolved over the years, leading to the enactment and disregardment of specific policies. What remains consistent is a collective effort to maintain responsible governance practices that reflect modern times.

Current corporate governance trends

Some examples of historic corporate governance trends include integrations of governance, risk management, and compliance (GRC) policies to create legal and ethical protocols for businesses. GRC frameworks set benchmarks for responsible business mandates and enable organizations to adapt GRC processes when circumstances require them.

What are some of the top corporate governance trends impacting business entities in 2023 and beyond? Here are some of the most important considerations.

Current Trend #1: More enforceable ESG protocols

Corporate responsibility is a broad term that has taken on numerous meanings over the years. Most recently, corporate responsibility is shaped by an entity’s environmental, social, and governance (ESG) protocols.

A recent study by IBM determined that 70% of workers are attracted to companies with viable ESG programs. Where business was once solely about increasing revenue and driving growth, it’s since evolved into a more complex system. Today, shared social values between owners and employees give responsible business entities chances to recruit top talent to join their ranks.

Current Trend #2: Shareholder use of the universal proxy rule

ESG protocols reflect progressive corporate cultures, but boards of directors face even more pressure to enact responsible corporate governance. The Security and Exchange Commission (SEC) enacted a universal proxy rule to enforce greater transparency at annual corporate shareholder meetings.

Before the enactment of the universal proxy rule, shareholders could send separate proxy cards instead of attending annual meetings that list nominees to the board of directors. The general counsel struggled to organize management and shareholder nominees through multiple proxy cards, limiting transparency and accountability amongst board members.

The universal proxy rule requires all participants to list their nominees on one universal proxy card. The proxy rule is triggered when a member of the board solicits 67% of a company’s shareholders to enact a new nomination procedure. Shareholders can select the nominees they prefer regardless of who nominated them. The universal proxy card organizes nominations in a more structured format, creating diligent minute book records of shareholder meeting minutes.

Current Trend #3: Economic uncertainty impact on GRC strategies

Throughout the year, global inflationary pressures have forced central banks to instigate sharp increases in central interest rates. Rising costs placed added pressure on corporate managers and directors to maintain growth in an increasingly unstable economic climate.

While much of the world is now expected to avoid a painful recession, that doesn’t calm the uncertain waters. Corporate entities must review their risk management protocols and continue adapting to the uncertainty hanging over prospects for growth. Failing to heed risks to effective corporate governance until too late threatens to undermine growth forecasts.

Current Trend #4: Greater C-suite oversight from boards of directors

Income inequality has always been a concern, but it’s rapidly emerged as one of the most trying social issues of our time. In Canada, for example, Canadians are outraged that grocery chain CEOs are making record profits and lucrative bonuses, all the while food prices grow increasingly more expensive with no relief in sight.

Shareholders will hold C-suite leadership to greater scrutiny and accountability regarding key decisions and executive compensation. Greater oversight over corporate management will help enforce responsible governance, ethics, and accountability to limit the risks of public outrage over so-called unfair business practices.

Emerging corporate governance trends

In addition to current emerging trends, corporate entities must prepare for emerging matters that will impact corporate governance in the future. Here’s a quick overview of what issues will influence responsible corporate governance in the future.

Emerging Trend #1: Disruptive nature of AI

Artificial intelligence is impacting how businesses operate at all levels. As ongoing breakthroughs in AI capabilities continue to emerge, businesses must remain vigilant and adapt corporate governance protocols accordingly.

Emerging Trend #2: The role of business ethics

The example of grocery chain CEO compensation against the backdrop of increasingly unaffordable food costs for Canadians is a prime example of an ethically irresponsible practice. Public backlash tarnishes brand reputations, limiting opportunities to boost revenue and grow business. Expect ethics to play an increasingly important role in responsible governance.

Emerging Trend #3: Streamlined reporting structures

Corporate stakeholders must maintain oversight over all business operations. Yet many reporting systems are very outdated and complex, making it difficult to make fast efficient decisions about business policies. Corporations will require modern solutions like entity management software to centralize, consolidate, and streamline entity reporting data.

Emerging Trend #4: Modern talent acquisition strategies

Economic uncertainty won’t last forever, and companies will need to acquire the next wave of talent to foster future growth. Cultivating a corporate culture built around responsible governance, ESG policies, and values-based decision-making will help attract progressive-minded workers to join the ranks.

Use entity management software to support responsible governance

Creating and adapting corporate governance programs helps companies maintain their reputations, reduce risks, and cultivate reasonable growth prospects. Enforcing responsible governance requires a system that organizes and standardizes all GRC and ESG protocols.

Entity management software is one of the best systems for creating structured governance protocols. Entity management software functions as a single source of truth, giving stakeholders clear insight into the current state of the business.

All reporting data is stored within organized minute book templates. Additionally, you can build detailed organizational charts, cap tables, and shareholder ledgers directly within the entity management platform. Use this information to create a governance structure that encompasses current governance trends and allows you to adapt to emerging trends coming down the pipe.

Ready to organize your corporate governance in a more responsible and structured manner? Join the MinuteBox revolution and gather all reporting data into one location. Use that structure and convenience to enact responsible corporate governance across your organization.

On January 1, 2024, the Corporate Transparency Act (CTA) will come into effect for all corporate entities operating within the United States. All qualifying entities must report personal information on all beneficial owners to the Financial Crimes Enforcement Network (FinCEN).

Businesses must collect the proper information and comply with reporting deadlines. Otherwise, they risk incurring non-compliance penalties in the form of expensive fines and potential indictments against stakeholders who violate the laws.

What is the Corporate Transparency Act?

The CTA is a federal piece of legislation that was first introduced in 2020. In part due to the global pandemic, and its disruptions to business operations, the full reporting guidelines were not made available until earlier this year. Legislators have set January 1, 2024, as the date that the full extent of the CTA will come into effect.

The CTA is part of the Anti-Money Laundering Act that was created to crack down on white-collar crimes. Money laundering, corporate fraud, and other financial crimes impact the health and well-being of American citizens. The federal government is demanding greater corporate transparency from entities to protect Americans from the consequences of white-collar crime.

What information must be reported to FinCEN?

Corporate entities must supply a full accounting of beneficial owners and their personal information beginning January 1, 2024. Detailed shareholder ledgers are the best resources to both organize and submit these records to FinCEN.

Beneficial owners are defined as any shareholder who holds what’s classified as “substantial control” over the corporate interests. Most beneficial owners acquire their shares through a bank or a broker.

Additionally, any shareholders with 25% or more ownership in a corporate entity are automatically deemed beneficial owners. All share transactions are documented so that the corporation can maintain detailed records on who owns what percentage of the company.

What’s classified as beneficial ownership information?

Under the CTA, corporations must file initial business ownership information records to FinCEN. It’s incumbent upon the corporation to ensure those records remain up to date. Otherwise, the company is liable for non-compliance and could face significant penalties for the errors.

If updates to the reporting information are required, here are some examples of what to include in an updated filing to FinCEN:

• Additions of new beneficial owners within the latest fiscal year
• Departures of previous beneficial owners within the latest fiscal year
• Transfers of ownership from one beneficial owner to another
• Changes in any corporate information, such as the name, address, etc.
• Corrections to any errors that are flagged in the initial filing

Corporations that know they will require multiple filings can request a FinCEN identification number to help streamline the process. Simply include the identification number on subsequent filings to show the connection to regulators.

Does the government offer security to beneficial owners?

While the purpose of the CTA is to create transparent accountability, the government will not allow personal beneficial ownership information to be made publicly available.

FinCEN will create an encrypted reporting system known as the Beneficial Ownership Secure System, or BOSS. The system will encrypt all reporting data, and only authorized members of the FinCEN team will be able to access the reported records.

Use entity management software to gather ownership data

So what’s the best way to prepare for the CTA filing deadline? Entity management software is one of the best resources to prepare for the new world order in 2024.

Entity management software is a system built by legal professionals for legal professionals. It includes a built-in compliance module to help corporations create compliance programs that protect corporate interests. The platform uses prompts to remind account managers of any upcoming date-based compliance tasks, and sends automated warnings if there are any gaps in reporting data that could leave the entity in non-compliance.

Additionally, entity management software has templates to help companies create structured organizational charts, cap tables, and shareholder ledgers. Any beneficial ownership data can be securely stored in the platform on an ongoing basis. When filings need to be made, the data can be exported and sent to the appropriate authorities at FinCEN.

Still need to get your reporting data to comply with the CTA? Join the MinuteBox revolution and create more diligent, structured, and secure records of all corporate data.