Virtual data rooms are gaining in popularity for many types of businesses where it’s necessary to share sensitive and confidential information among multiple business entities and people. Virtual data rooms provide the flexibility to create multiple structures in one or more rooms in order to meet the needs of business professionals. Virtual data rooms can easily handle uploading and downloading very large documents. Lawyers and other business professionals can pre-arrange virtual data rooms so that they can set up and arrange business transactions quickly.
One of the most notable benefits to virtual data rooms is that they usually incorporate the highest security measures possible. Privacy and confidentiality are crucial for lawyers. Lawyers who fail to protect their clients and their dealings may cause financial harm to clients and face professional disciplinary measures.
What Are Virtual Data Rooms?
Virtual data rooms are online data rooms. Essentially, they are an online repository for documents that are large and either sensitive or highly confidential. Many businesses have found that large file-sharing systems like Box and Google Docs are not nearly secure enough for confidential business transactions.
Accountants, corporate executives, buyers, lawyers and other business professionals are finding that virtual data rooms offer a secure way to collaborate and to conduct business with other professionals and businesses.
Benefits of Virtual Data Rooms
The most attractive feature of virtual data rooms is the high level of security that they offer, but they have other notable benefits as well.
Online virtual data rooms eliminate the need to rent or provide a physical data room. There’s no longer a need for lawyers or other business professionals to travel to a remote location to review documents in person. Less travel time equates to increased cost savings and productivity, as it creates additional hours in the day to tend to more clients.
Virtual data rooms allow lawyers to file documents electronically, making them ultra-easy to find, as opposed to digging through dozens of files looking for specific documents. Virtual data rooms use cloud-based storage so that there are no worries about documents being destroyed due to a natural disaster such as fire or flood.
Lawyers and other business professionals can track transactions more easily using virtual data rooms. The system lets them see who has viewed documents and when they reviewed them. Lawyers also get alerts when they need to respond to a question, message or transaction so that they can reply at their earliest opportunity.
Perhaps second to security is that virtual data rooms give administrators the ability to exercise control over who has access to the room, and which parts of the room they can access. Administrators decide who can view, copy and print documents. They can also set a watermark on documents to restrict printing only to those who need the documents for authorized business dealings.
Types of Law Practices That Can Benefit From Virtual Data Rooms
Virtual data rooms are beneficial and appropriate for many types of law. Corporate law, especially in the area of mergers and acquisitions, was one of the first types of law that saw the benefits of using virtual data rooms in lieu of physical data rooms. As the benefits of using virtual data rooms for purposes of legal firms became evident, law firms with other types of specialties learned how virtual data rooms could benefit them as well.
Mergers and acquisitions are complex and paper-heavy transactions. Virtual data rooms are extremely helpful for lawyers, bankers and others, whether they’re working with a single buyer or setting up a staged sell-side auction.
What makes virtual data rooms so easy to use is that buyers can upload their due diligence checklist in the established virtual data room and targets can upload their documents in response. As deals progress, administrators can invite lawyers, bankers or other professionals into the virtual data room to review documents and work toward finalizing deals.
Bargaining action is gaining traction in the financial world, which is good for the economy. Unfortunately, the increased activity is attracting hackers, who are continually looking for weak links to steal confidential information. The high levels of security in virtual data rooms deter cybercriminals and hackers.
Lawyers who specialize in corporate finance also find that virtual data rooms are an excellent setting for their work in private placements, debt financings, high-volume municipal bonds and setting up new transactions.
Intellectual property (IP) attorneys find many uses for virtual data rooms. Data rooms provide a convenient, secure environment in which to exchange and share documents, set up joint-ventures and arrange licensing agreements. IP attorneys use data rooms for other purposes, such as creating partnerships, fundraising, financing and reporting. Virtual data rooms are also a secure place to store intellectual property.
Real estate attorneys find virtual data rooms helpful for managing sales and leases as well as dealing with foreclosures and short sales. Virtual data rooms are also a viable online space for restructuring asset-backed mortgages.
Restructuring and Insolvency
Attorneys who specialize in restructuring and insolvency often use virtual data rooms for keeping files organized. They use data rooms for buying and selling assets, closing finance deals and raising additional capital. Being able to control access to files and functionality is a valued feature for attorneys in this field.
Litigation attorneys often need to exchange information with others quickly. Virtual data rooms provide a secure, confidential environment for collaborations with opposing counsel, clients, experts and other litigants. Interactions in virtual data rooms streamline judicial processes.
Choosing a Virtual Data Room That Meets the Needs of Lawyers
Diligent Corporation’s virtual data rooms provide peace of mind for lawyers in various fields to ensure that their communications are secure and can ease their legal processes. Diligent’s messaging program integrates with virtual data rooms so messages are secure while conducting business in the virtual data room. Lawyers can ask and answer questions in real time.
Diligent uses the highest levels of security available, including ISO/IEC 27001 and 27002. Other virtual data rooms promise security with integrated tools like messaging; however, the security may not be as strong as you need for the level of sensitivity and confidentiality that legal transactions require.
Diligent Corporation offers a total solution for enterprise governance management for law firms and most types of businesses.