Outsourcing vs. automation: Why entity management tech beats outside counsel
More: It’s the one word that describes the challenge facing in-house legal teams today when it comes to entity management responsibilities.
New regulations like the Corporate Transparency Act (CTA) in the U.S. and the Economic Crime and Corporate Transparency Act (ECCTA) in the UK, along with the complex tax considerations of BEPS 2.0, mean more corporate records to collect, update and verify and more reports to file.
Then there’s the M&A landscape. With elections on the horizon in the U.S. and around the globe, the potential for new waves of political and economic stability are set to create prime conditions for strategic growth. Coupled with the maturation of private equity portfolios, a surge in M&A opportunities may soon be back on the table. This dynamic environment will heighten the demand for accessible and reliable corporate records — an essential requirement for companies to get and stay "deal ready.”
Of course, this means more work for general counsels and their legal departments.
Finding the best force multiplier
When workloads balloon, it’s tempting to bring more people and brains to the situation —especially the experienced minds of outside counsel.
Hiring a trusted third party like outside counsel can seem faster and more cost-effective than hiring an entirely new cadre of in-house lawyers and paralegals (which you may not have the hiring budget for in the first place). What’s more, an external law firm can be ready to go and available as needed faster than new staff who come with onboarding and a learning curve attached, and a law firm’s scope of work can be easily amended, expanded or concluded as your needs evolve.
Yet this approach brings risks as well, such as:
- High costs: If you see bringing in an expert law firm for entity management as an economical move, you may be in sticker shock when you get your first bill. And you may be hard-pressed to defend your decision when leadership asks why you’re spending several hundreds of dollars an hour to check corporate addresses.
- Risk of data loss: Beneficial ownership information, like financial spreadsheets and scans of passport documents, is often highly sensitive, making your organization even more vulnerable every time documents go back and forth between your offices and those of your outside counsel.
- Potential gaps, inefficiencies and errors: When you add more people to the equation, you introduce the potential for more human error.
As a perceived cost center, your legal department must put value and long-term ROI at the forefront with every resource decision you make. Especially in today’s business environment, you can’t afford to make the wrong choice.
If only there was a way to add more power to your team, without the downsides above.
There is: entity management software.
The many benefits of technology-powered entity management
With entity management, technology, and not an outside team, can be the smarter strategic investment. Here are a few reasons why:
- A centralized view — at your fingertips
Even the most skilled outside counsel can’t centralize real-time legal, tax, finance and compliance data on multiple entities and jurisdictions. Doing so requires the time and attention many legal departments don’t have, whether yours or that of a third-party partner.
But entity management software can—and the right solution will include visualization tools to make even the most complex organizational structures easy to decipher at a glance, for more effective compliance, reporting and M&A deliberation. - Automation and AI throughout operations
Entity management software also offers a few superpowers that make everyone’s lives easier: automation and AI.
With such a tool at your disposal, you can exponentially accelerate the collection, management, maintenance of subsidiary data and reporting to regulatory bodies—not to mention improve this data’s accuracy and security. Automated forms and workflows reduce the risk of manual errors, and regular data refreshes keep information current—no checking through files or waiting for a call back to get the latest.
Say goodbye to disparate spreadsheets, systems and silos and hello to improved efficiency, accuracy and peace of mind. - Workflows the way you want them done
Finally, entity management software gives you control by keeping your labor and data in house. All permissions and access controls start with your administrators, reducing third-party vulnerabilities and risk. For reporting on data, you’ll be able to configure data fields and forms the way you want and share them in the formats that resonate best: tables, graphs, charts and beyond.
More efficient, cost-effective, strategic entity management starts here
More complex, high-level advisory work — that’s where outside counsel belongs in regulatory compliance and M&A, not checking business registrations, verifying beneficial ownership information and filing CTA reports.
Entity management software, in contrast, is made for these data- and detail-intensive administrative tasks. What’s more: With the time and savings of the right investment, a solution you can customize and scale with your company and the business environment, you’ll have more budget to bring in outside counsel for the activities which really need it.
The bottom line: technology-powered entity management empowers overstretched in-house legal teams to take on more, confidently keep up with change and grow in their roles as strategic advisors—delivering long-term ROI to your team and your overall organization.
Get ahead of your growing entity management workload. Learn more about Diligent Entities and schedule a demo today.
