Document Management for In-house Legal

A complete guide for Corporate Legal searching for a solution

Legal Departments are document-centric. Almost everything that comes to the attention of in-house counsel comes in written form and ends up as an electronic or paper record. Whether trivial or critical, those records end up filed away on digital media or in storage boxes for future retrieval.

The problem arises when legal staff needs to find one of those documents. An in-house attorney loses hundreds of hours per year organizing, searching for and recovering documents. A 2012 IDC survey found that attorneys and legal staff spent roughly 15% of their time dealing with document management issues. The problem is only getting worse:

♦ Email and messaging volumes are increasing – constantly adding to the body of documents that must be managed.

♦ Storage options are proliferating. A Legal Department document hunt can now encompass searches of cloud repositories, mobile devices, desktop computers, network folders, file cabinets, file rooms, and off-site storage.

The productivity costs attached to labor-intensive document management exercises add up quickly. If IDC’s estimates are correct, then for a staff of seven lawyers the equivalent of one full-time attorney salary is devoted to document management issues.

An effective solution to these productivity problems is to leverage an automated Document Management System (“DMS”).

What is a Document Management System?

A DMS is a specialized application designed to organize digital and paper documents. A good system should allow a Legal Department to:

♦ Capture documents at the time of creation or receipt

Convert paper documents to digital format

♦ Store documents in a secure and accessible manner with a database index of key metadata descriptors and a searchable full-text index

♦ Manage documents in a number of ways, including categorizing them, adding them to a case file, providing check-in/check-out controls, maintaining version histories, freezing documents so they cannot be altered, and adding rules-based workflow features

♦ Retrieve documents based on keyword searches and meta-data filters.

♦ Archive documents online or near-offline, retaining them based on pre-defined records management rules

The documents to be managed will come in a variety of formats, ranging from email messages with internal clients and outside counsel to word processing files for contracts and memos to engineering graphics for IP matters to hard copy legacy records.

The DMS needs to be flexible enough to handle digital documents of virtually any type. The better systems will be tightly integrated with the corporate email system and the applications most often used for document creation and editing.

The DMS must also have features to allow the conversion of paper records to digital format.

Source: Altman Weil 2018 Chief Legal Officer Survey, www.altmanweil.com/CLO2018/.  © 2018, Altman Weil, Inc. Reprinted with permission.

Moving to a DMS is considered a critical step to going paperless. For those organizations that must retain a hard copy, the DMS should include features that support the management and tracking of onsite and offsite paper records.

Specific naming conventions, including record numbers and metadata tagging, can be applied to make both digital and hard copy document storage and retrieval more efficient.

How do Document Management and Case Management Software Differ?

A DMS is one of the linchpin applications used to automate Legal Department operations. The others include case management, contract management and e-billing/legal spend management systems.

In some organizations, document management tools are so tightly integrated with the case management system that the two are indistinguishable. In other organizations, particularly those that have adopted a companywide DMS, the two systems are run separately and must be integrated.

To avoid confusion, let us first distinguish case management software from a document management software. A case management system enables legal Department staff to administer various aspects of their cases – not just the related documents.

Examples of the types of information recorded in a case management system include case file numbers, matter names, jurisdictions matter summaries, key dates, etc.

These systems are designed to provide attorneys and upper management with matter tracking, budgeting and risk management information tools.

Document management software, on the other hand, is focused on those documents created outside the case management system that are needed to supplement the case file.

Examples include pleadings, court forms, contracts, policies, client and attorney communications, transaction records, intellectual property filings, etc.

When the two types of systems are used together, they become a powerful productivity tool for in-house legal staff.

If your department needs a complete case and document management system, you need to contact a vendor that specializes in Legal Department software. If you wish to use the document management pieces alone, you can expand your search to also include DMS vendors.



One caveat – be careful to target your DMS search for the most suitable products. Some law firm software vendors advertise their solutions as ‘legal document management systems.’ This can be misleading.

While law firms and Legal Departments are both in the business of providing legal advice, they have different needs. DMS products developed for law firms are built with features that are appropriate for private practice (e.g. for time and billing, conflicts checking, docketing), and generally lack the functionality needed to:

♦ Integrate with the corporate case, contract and legal spend management systems

♦ Fit into a corporate security/privacy architecture

♦ Meet enterprise compliance needs for records retention and management

♦ Provide collaborative workflow and workspace options for working with others

[1] The terms ‘case management’ and ‘matter management’ are often used interchangeably.

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How Can Document Management Help a Legal Department?

Let’s look at two use cases that demonstrate some of the ways a Legal Department can benefit from a DMS.

Scenario 1

How Can a Document Management System Help with Going Paperless?

Jay is Deputy Litigation Counsel in the Legal Department of Horizon International. He routinely collects and references a variety of digital case files. His biggest document management challenge is that he is constantly required to consult old paper records in relation to a series of consumer fraud matters.

He has a Paralegal who spends at least half his time down in a basement file room, pulling and copying documents. Jay’s office is filled with banker’s boxes, and he and his paralegal have taken over a small conference room on the Legal floor to house the overflow.

The Legal Department recently acquired a DMS. The staff have embraced the new technology enthusiastically. Jay has already loaded his digital documents to the system, but there is still a huge gap that needs to be filled when it comes to the mounds of paper.

The issue is coming to a head, because the General Counsel has been fielding complaints from members of the Legal staff who are having trouble scheduling conference space. She has asked Jay to relocate the documents.

Horizon International is one year into a Go Paperless initiative. It has replaced its copier fleet with multi-function machines that have robust scanning capabilities. Jay discovers that the multi-function scanners can feed the new DMS. He borrows an Associate from Records Management.

 She and the litigation Paralegal begin scanning the paper documents into PDF format digital files.

They are able to scan the records in batch using barcoded slip sheets to separate the documents. The scanning system picks up metadata ‘tags’ from the slip sheets and adds them to the DMS.

Each document is tagged by matter number, original record ID, document source and type. Tags also identify the documents that are on legal hold, that have been sent to outside counsel and that may contain confidential or protected information.

The scanning system is equipped with an OCR (Optical Character Recognition) module. Once a document is scanned, the OCR engine converts the written content to searchable text.

This text is added to each PDF file. When the PDFs are added to the DMS, the system indexes the content for full-text searching.

Once the documents have been loaded to the DMS, Jay performs a quick QC check. A workflow process is set up to automatically send problematic documents back for rescanning.

Jay can add comments to a document, as needed. He is also able to flag privileged material and add issue tags.

System security is set up to restrict access to the documents. Only Jay, his Paralegal, the Records Management Associate and the General Counsel have rights to access the documents.

When Jay or one of the other users want to find a document, they can use the DMS to run a search filtered by metadata (e.g. show all contracts related to ‘MatterX’ that were collected from the Philadelphia office).

They can also search the document content using full-text search terms. 

After six weeks, the boxes have been cleared from Jay’s office and the conference room. A standard workflow is established with Records Management to scan any new evidentiary documents to the DMS.

The VP of Records, the General Counsel, and the COO are so happy with the results that they are looking at scanning all the basement records.

Scenario 2

How Can a Document Management System be Used to Collaborate with Outside Counsel and Vendors?

Lee is Deputy Contracts Counsel at Horizon International. Before the DMS, she used to send rounds to emails to outside counsel with document attachments. This included contract drafts, pricing schedules, legacy agreements and supporting documentation.

It became quite challenging to distinguish one draft from another after several email exchanges. Version control problems detracted from the substantive negotiations ate up valuable time for the in-house staff and resulted in extra billings from outside counsel.

Lee and her staff encountered other problems such as limited access to records when on the road, timely status updates to internal clients and obtaining signatures to execute contracts.

Since the DMS was implemented, Lee has been able to simplify document workflows and create collaborative workspaces for internal staff and outside counsel.

When a new matter is initiated, she sends an email share request via the DMS. Invitees are given access to a secured contract workspace. The digital communications, as well as the storage space, is highly secured.

The DMS keeps track of document versions and edits. It provides a repository of supporting information and communications. It also supports document check-out and check-in to avoid situations where users are overwriting each other’s work.

The workspace can be accessed remotely over secure connections with a laptop computer, smartphone or a tablet. Internal clients are automatically notified as review milestones are achieved and can be granted varying levels of access to the documents (e.g. read-only, edit only).

The DMS is integrated with Adobe Sign so that signatures can be collected online. When a contract is fully executed the final signed copy is retained in an unalterable format. Workflow steps notify Lee and her staff to update the contract management system with critical information about expirations, renewals and other terms and conditions.

Contract turnaround times have improved. For routine matters, Lee is now able to complete the entire process over the course of a few hours.

What Legal Departments Want from a Document Management System?

The single most important characteristic of a DMS should be that it is easy to use. If it is not, it will not be fully utilized. DMS users and developers have learned through painful experience that enterprise-level document management systems can come loaded with features that are overkill for a small to mid-size Legal Department.

Source: Altman Weil 2018 Chief Legal Officer Survey, www.altmanweil.com/CLO2018/.  © 2018, Altman Weil, Inc. Reprinted with permission.

The system must be well integrated with the other applications used to manage legal operations, and its integration with productivity tools like email or the Office 365 suite must be nearly invisible to the end-user. Nothing undermines the success of a DMS rollout like clumsy user experience. There should be no toggling back and forth between applications to complete tasks, no overly dense or laborious input screens, and no manual folder creation.

To summarize, the key features of a document management solution include:

♦ The ability to integrate with Microsoft Word and Adobe PDF tools

Integration with Microsoft Outlook for messaging and calendaring (must have)

♦ Version control features

♦ Internal and external document collaboration capabilities

♦ Indexing of all types of textual documents including the ability to capture OCR text from scanned paper and from image files (e.g. a digital fax, a Jpeg copy of a document)

♦ The ability to search for documents base on both metadata and full text

♦ Check-out and check-in controls over documents during editing

♦ Workflow controls and automation, including automated alerts

Should the Document Management System be Cloud Based?

Web-based cloud DMS solutions are becoming popular because they can be cost-effective and easy to implement. They also reduce the need for internal IT staff and the infrastructure needed to maintain the system.

Case management and legal DMS vendors with cloud solutions recognize that they will be hosting sensitive information, and many have invested in high levels of physical and cyber security.

There is little in-house system administration required when using a cloud-based DMS, and documents are easily accessible 24×7 from any location. A good cloud-based DMS can hold Terabytes of data without any issue.

When assessing an online, cloud-based solution, you must ensure that the system is able to securely synchronize documents to remote backup facilities or to local and file server drives. This provides the Legal Department with added control over its document repository in the event of a business or systems incident.

On-premises DMS systems are also available. These solutions are most often used by large, Fortune 500-type companies, by organizations with extraordinary security or regulatory needs, or where there is a high degree of customization required to get the DMS to work with other business systems.

In these situations, the organizations have the institutional experience and infrastructure to maintain a complex in-house system. Needless to say, the hardware, data center, security, and staffing costs of running an on-premises DMS can add up quickly.

Our experience indicates that the future of DMS belongs to cloud-based solutions and that on-premises systems are no longer the norm.

How Is a Document Management System Priced?

Cloud-based DMS costs tend to be lower and more predictable than on-premises costs. They may be built into the pricing of a case management solution. In other cases, the client can purchase standalone DMS modules based on monthly per-user fees.

Enterprise DMS for a mid-sized organization can range from tens to hundreds of thousands of dollars depending on the number of users, the size of the document population, license fees, hardware costs, staff costs, customizations, conversion needs, and ongoing maintenance charges.

Implementation costs must also be considered. These will be larger when working with an on-premises solution.

The most time consuming and costly step required to implement a cloud bases system will be the uploading of your existing document collection and the population of metadata information about those documents.

This can be done manually by in-house staff or the software vendor may be able to provide upload utilities that can process hundreds of documents at a time via a batch file.

On-premise DMS systems require careful planning. You will need to analyze the vendor software and hardware requirements and limitations. You will also need to define system administration requirements and determine whether it is preferable to build these in- house or outsource them.

 On-premises implementations can range from a few weeks to months depending on such factors as the complexity of the application and the population of documents that need to be converted.

Conclusion:

A legal DMS can quickly translate to time and cost savings and to increased levels of staff satisfaction. We hope that this article has helped you to identify and refine your document management needs and narrow your search for solutions.

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