Although there are many different types of litigation-related areas of the law – M&A, bankruptcy, intellectual property, etc. – one factor common to all of them is complexity. Most cases that end up in litigation involve a large amount of documentary evidence that needs to be collected, collated, and indexed. Since few cases that end up in litigation involve only one attorney per side, those documents then need to be shared internally among multiple attorneys in the same firm, as well as client(s), co-counsel(s), and opposing counsel(s). For larger-scale cases involving teams of attorneys, and especially as cases get large and complicated enough to involve multiple law firms, it is easy for the list of total participants to reach 20 or more people; in some very large cases (class-action lawsuits, large intellectual property cases, any case reaching the U.S. Supreme Court), there can easily be over 100 different parties involved in a case.
The information management logistics in even uncomplicated legal cases are challenging at best. Virtual data rooms have multiple features that simplify the process of information management, collaboration, and data sharing between attorneys and clients, co-counsel and opposing counsel. Virtual data rooms provide these features while increasing data security, convenience, and in many cases, at substantial cost savings compared to traditional methods of sharing data.
The first step in the discovery process is taking an accurate inventory of the documents on hand. Typically, this requires multiple hardcopy folders, files boxes, and for large cases, ‘war rooms’ featuring rows upon rows of three-ring binders. At best, this makes for tedious and inefficient discovery, and at worst, it makes it easy for an attorney to overlook an important piece of information or evidence.
Virtual data rooms offer law firms several advantages over paper-based systems. For example, virtual data rooms:
- Can streamline the discovery process
- Increase document security and reduce document-handling risk
- Create time and cost efficiencies
Below is a closer examination of how virtual data rooms accomplish the tasks listed above.
Streamlining the discovery process – Virtual data rooms enable law firms to easily manage files, documents, and images gathered during online discovery, and over the lifecycle of a case. Because virtual data rooms function as the online repository for case files, witness folders, etc., discovery material is immediately accessible to any authorized party whenever they may need to access it. Using a virtual data room also eliminates the need for attorneys to all store their own copies of electronic files on their office computer or their office server, to which they may not necessarily have access 24/7.
Virtual data rooms also streamline the discovery process because they make it easier for attorneys to quickly find the information they are looking for. Many virtual data room providers offer powerful search capabilities, enabling a user to search for a term or a concept (the proverbial search for ‘asbestos’) within a document or across an entire collection of files. Importantly, law firms are able to maintain the use of the Bates stamping system within a virtual data room.
Increase document security and reduce document-handling risk – Virtual data rooms provide multi-tier file access permission levels that utilize the same level of encryption used in online banking. This enables room administrators to assign different security classification levels to different documents, files, etc., and control access to documents and files on a per-user basis. So, for example, a firm can provide opposing counsel with access to relevant discovery material only, while co-counsel or lawyers from a single firm located in different cities, can have broader access to documents such as strategy memos.
A common problem that law firms, and especially their IT staffs, struggle with whenever they collaborate with other firms is how to securely store case information and simultaneously enable access to it by outside counsel. IT staffs are generally hesitant to permission outside counsel to access their servers, so information ends up stored outside their own firewall. Utilizing a virtual data room provides high data security and easy access for authorized parties, facilitating open communication as the case progresses.
Create time and cost efficiencies – Once a file is uploaded to a virtual data room, it is immediately available to anyone who accesses the room. As a result, parties do not have to use email, a well-known security weakness, to send smaller files back and forth, or overnight mail for larger files (documents with pictures and graphs often exceed 5MB, beyond the limits of many email servers). This fact alone can provide considerable cost savings. Consider: 100 documents, each with 100 pages, and sent to 25 parties. At a copying charge of 20 cents per page, copy charges alone will total $50,000. Plus delivery costs.
In addition, firms can increase accountability and reduce liability with audit tools available in most virtual data rooms. These tools enable room administrators to prove who accessed which documents, and when, so that in case of litigation involving disclosure issues, trustees have the ability to prove that a particular party examined a specific document at a specific date and time.
Virtual data rooms are a superior method for document management compared to paper-based systems. They have been used in finance for years to streamline and enhance corporate finance transactions. The same security, efficiency, and cost benefits of virtual data rooms are making virtual data rooms attractive to law firms, as well. Firms with clients in different cities, firms with offices in multiple locations, and especially firms with clients or offices in international locations, where time zones become a factor, face real challenges ensuring smooth internal communication, as well as between client and counsel. Virtual data rooms enable law firms to outsource their information management responsibilities, reducing their own headaches while increasing efficiency and security and in many cases, reducing costs at the same time.
