Internet Newsletter for Lawyers |
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One of the first tasks facing the Internet Services Team was that there was a real demand from partners and from clients to set up deal rooms. To be honest, at the time, there was a lot of hype surrounding deal rooms and many people were claiming that, in the near future, all substantial transactions would be handled in a virtual online environment. As a result numerous suppliers of deal rooms had emerged, many of them funded by venture capitalists eager to cash in on what was still seen as a potential growth market. Many City firms were boasting of their deal room facilities, and winning awards on the strength of them. It could certainly impress clients at a pitch.
However, at the time, the reality was falling somewhere short of this. Having seen demonstrations by several of the leading suppliers of deal room technology it was clear that many of these were first generation products (i.e. they didn't actually work) and several had attempted to computerise the whole transaction with complex work-flows - which if you think about the average corporate transaction is an ambitious task. In addition, each of these deal rooms had their own very unique interface and it was difficult to understand them and how they worked. When we raised this issue with one supplier, we were offered training courses in Reading - somewhat inconvenient given the client that we were dealing with was based in Toronto and would need to attend as well! So we were in something of a difficulty. There was a very clear demand from clients who expected us to have deal room facilities - and this lead to partners quite properly asking us to deliver them for the benefit of clients. However, every system that we saw was either hugely expensive both in terms of set up and running costs and/or was complex and difficult to use.
Fortunately, we had set up an Advisory Board of clients to help us work our way through issues just like this. These were representatives from many of our largest clients and they had agreed to spend serious amounts of time agreeing upon the services that they actually required from Eversheds, as well as working with us in developing them. It was time to get back to basics.
There were very real reasons why a deal room would be preferable to the normal practice at the time which was simply sending all the documents back and forth between all the various parties by e-mail. Probably most importantly, e-mail was not a secure way of sending documents between law firms or between law firms and their clients. The document could be intercepted while it was in transit and nobody was making much use of encryption - so the fact was that the document could be read. It was like sending it written on a postcard through the mail. Given the sensitivity of many of the deals taking place on a daily basis this alone was a powerful reason to switch to a secure method of dealing with clients and other law firms. Secondly, with the various drafts contained within e-mails and office document management systems this meant that it was not always easy to get at those documents when you were out of the office, either at home of travelling with your notebook. Even if you could get to it there was then the question of whether you were actually looking at the current draft, and where was the corresponding red lined version? E-mail certainly worked and was being used, but it had very obvious short comings. The question for us was whether we could create a deal room that addressed those concerns, but in a way which was useable and secure.
What is a deal room anyway? Basically all it amounts to is setting up a separate website (usually an off shoot of the law firm’s own website) which is held on a secure server. The secure server bit is important - it enables this website to be protected against being viewed by anyone other than those with the correct login and passwords and it has another crucial advantage. When you send documents into the secure site (into the deal room) then they are encrypted automatically as they travel from your office or home to the site. So even though they are travelling across the internet and can be intercepted just like everything else, they could not then be deciphered and read. This all happens automatically in the background without anybody having to do anything. That is why such a secure site works so well. From the point of view of the lawyer or the client all they do is type in the address of the site (the deal room) into an ordinary internet browser and they are then presented with a login and password box. If they enter these correctly they then get to the front page of the site (also the front page of the deal room) and they are now in a fully secure environment. Typically this involves 128 bit encryption which is pretty much as good as it gets.
So now, if you want to send a draft document to your client, or to the solicitors on the other side of the transaction, or both, all you do is logon to the deal room, send the document into the appropriate place in the deal room (called uploading it) and then typically you can arrange for the deal room to send a simple e-mail to all of the relevant people telling them that the document is now available for them to view (but not sending it to them). In order to view the document these people have to go to the site and enter their passwords - so even if the e-mails are intercepted they are of no use and will not break security.
Effectively, what you have is an online filing cabinet with a series of drawers where you can store documents. This is where structure becomes very important. You need to design your secure site (the deal room) so that it is very clear how it works, and what goes where. You can see this as a number of separate pages with clear navigation. For example on the front page of your site (the deal room) you will have a welcome message explaining what the site is about and giving everyone access to all the other areas. In ours, we also put a quickstart guide and full online help so that if someone is very new to deal rooms they can get up to speed literally within a few minutes. On our front page we also put direct access to the full details of the various people involved for every party (surprisingly useful when you are stuck in a hotel room and need to telephone someone) together with any other key information which needs to be shared by all parties.
In other areas of the site you can have a separate "filing cabinet" for the sale and purchase agreement, the funding documentation, tax documentation and so on.
Once you enter one of these areas you will be able to see in a logical order all of the drafts that have been gone through, and typically next to each draft would be its red lined version so you can look at them both together and see where the changes have come in.
Behind the scenes you have to have some clever technology going on to make all this work - for example you might give the solicitors on the other side of the transaction the right to download and amend a document, but when they upload it back into the deal room it has to go in as a "suggested revision" and not overwrite any documents which are already there. Similarly, you might want to have some areas which are private to some of the parties and cannot be seen or accessed by others - and "smart passwords" means that at the very point of entry the system decides exactly who can see what, who can just read documents, who can amend them and who can actually publish final drafts. Once you have set this up you really do have something very useful. You have a totally secure environment and it is available to you 24 hours a day 7 days a week using a simple internet connection. So you can access it not just from the office but also from your home, while travelling or even in an Internet Café. So can your clients. If you are having a telephone conference with your client and/or others then you can all access the deal room at the same time and all be looking at the same documents as you discuss them on the telephone. This is surprisingly useful and really does make a difference to speeding through a transaction.
You do have to make some big decisions when you are setting this up. When it comes to hosting a secure site this is possible from inside a law firm, but you have to decide whether you have the expertise and the resources to run this type of technology. If you are going to get it hosted externally (we chose IBM) then you will need to shop around for a hosting company and be clear in the service standards that you require. Next you need to consider what software you are going to use to run the deal room itself - we chose software from an IBM subsidiary (neatly avoiding any maintenance issues given that it is designed and hosted within the same group) although there are now many off the shelf packages available from legal software suppliers. To what extent do you want something off the shelf, and to what extent do you want to design it yourself? Above all our experience was that it was best to make the deal room as simple as you possibly could. Our deal room does not attempt to computerise transactions or to provide work flow. It does come complete with some useful calendar options and it has a task manager so that you can simply assign tasks to other parties, but it does not try to do the deal for you. Because of that it is very easy to understand and this was the benefit of getting our clients involved in the project. They made it clear that what they wanted was something straight forward that worked (and which they could learn to use in a few minutes) rather than attempt something much more ambitious and complex.
Having established deal room technology it need not end there. You can use the same technology to provide a whole range of services to your clients. For example you could link this into existing case management systems so that the client can see progress on cases that you are handling for them. Alternatively you could also use this type of software to design your own case management system and this would automatically give you case tracking because its whole purpose is to be online. Or clients can use it to store precedents, opinions and letters of advice that they receive from you and have them in a fully searchable format. Or they can use it to store their deeds online, or to enable group working across a whole range of offices when a major project is undertaken within the client company.
The real breakthrough for the Eversheds project was when we were able to integrate every single service we provided and put them all online and accessible through a single site dedicated to the client - giving them their own Portal. So having started with a deal room, having kept it very simple and involved the clients, we were able then to develop that into the core product of our online relationship with our clients. This shows the potential of deal room technology - to genuinely bring lawyers and their clients much closer together and (without huge complexity) to find new and better ways of working together.
Kevin Doolan is Head of eStrategy at Eversheds, www.eversheds.com , email kevindoolan@eversheds.com.
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