Burness Paull

When future law students study the response of the profession to the 2020 coronavirus pandemic, I wonder how the balance of judgment will fall.

Will the narrative be of a flexiblepool of professionals doing their utmost to guide their clients through rough waters? Or will the story be about slow adaption and missed opportunities?

Eternally an optimist, I like to think the former is more accurate, and that the profession has shown some of its greatest resilience in closing deals during these unprecedented times. In doing so, and adapting to what is quickly becoming the ‘new normal’, what trends can we observe in legal technology as it relates to getting the deal done?

"The ability to legally sign agreements remotely (with or without witnesses) is now a standard practice."

Of course, no analysisof legal technology in 2020 could possibly omit electronic signatures. Despite being codified in EU law by the eIDAS Regulations 2014, prior to lockdown I had seenlittle adoption in our profession beyond perhaps HR and Procurement functions.Around March unsurprisingly demand spiked sharply, becoming a ‘must have’ facility.

Any law firm keeping even vaguely on top of technology developments would have had an e-signature provider signed up beforehand, however there was a sudden need for training and client engagement never seen before. The ability to legally sign agreements remotely (with or without witnesses) is now a standard practice. At Burness Paull our monthly use of DocuSign ‘Envelopes’ shot up tenfold between February and March.

This trend has also been slowly but surely recognised by institutions. In late summer,HM Land Registrybegan to accept certain types of deeds with e-signatures. It seems inevitable to me that financial institutions will follow suit. At the time of writing, many deals still include conditions imposed by funders for hard copy signatures. I predict however that electronic signature on security documents (most likely via Qualified Electronic Signatures) will become widely accepted by the end of this year.

While it’s never quite the end of the matter, achieving financial close on a transaction is often the ‘red letter day’ for many commercial deals. Before the onset of the coronavirus, financial closes were still commonly taking place in person, with hard copy documents.

A regular sight for commercial lawyers (and their clients) was a boardroom hosting dozens, sometimes hundreds, of documents in neat lines with colour-coded cover sheets. Sticky tabs indicated signature locations, a sign-in register made sure everyone was attending in the right order, and a team of trainees would be busily tidying up document piles that had been disturbed. A large financial close could easily run over multiple days.

I have always thought of a financial close exercise as being like a swan – calm and dignified on the surface, a frantic mass of thrashing legs below.Once the national lockdown began however, it meant a temporary moratorium on all in-person signing events. Deals in progress needed urgent attention to find another way.

Electronic signature offered part of the solution (assuming any conflicting conditions precedent were waived by their respective benefitting parties), however the larger the deal was the more unwieldy it became to simply email PDF engrossments around for e-signature. Into that space steps ‘legal transaction management’.

Such platforms provide the parties (often including the clients) with a virtual space for hosting documents, tracking actions, facilitating negotiations and preparing closing bundles. Smooth integration with at least one provider of e-signatures is common, allowing the parties to review and sign all of their documents from the comfort and safety of their homes. There is also of course an environmental benefit – no more printing ream after ream of hard copies.

Perceptive technology houses noticed this emerging demand, and they went shopping. Litera sounded a starting pistol of sorts when it acquired Doxly, emerging as Litera Transact. iManage made a similar play a few months later, when they acquired Canadian outfit Closing Folders. No news thus far on whether Thomson Reuters has an equivalent product in their sights, but the smart money would bet on ‘yes’ – unless of course this is part of their roadmap for HighQ (acquired in summer 2019).

The path ahead is becoming clear: facilitating an entirely on-line financial close is now essential for any major commercial law firm. Even when we return to some form of ‘normal’, many clients will not want to revert to the in-person signing event. Deals with an international aspect in particular will likely remain wholly digital affairs, saving clients a small fortune in traveling costs and/or appointment of local agents.

While many solicitors will have observed a drop-off in deal activity earlier in the course of the pandemic, a great deal of business has still gone ahead and all signs point to a renewal of activity levels in the immediate future. Now is the time for the profession to shift from emergency response to sustainable future proofing.

The ‘great pandemic of 2020’ is still far from over, and a similar disruptive event could be around the corner at any time. It is essential therefore that we, as facilitators of commerce, take positive steps to remove barriers and provide our clients with a smooth route to their desired commercial outcomes.

Never has it been truer that we are either part of the problem, or part of the solution.

Sam Moore is Innovation Manager at independent law firm Burness Paull. He was the first solicitor to achieve ‘Accredited Legal Technologist’ status following the launch of the professional standard by the Law Society of Scotland.