Selecting Entity Management Tech: a Guide for In- House Counsels

In the modern business environment, choosing entity management solutions can be a pivotal moment for in-house legal teams who seek to streamline their compliance, increase efficiency, automate workflows, or optimize their costs. As the number of data points required for compliance grows exponentially, legal teams rely on automation and technology to stay on par with the changing requirements. Below we offer a practical in-house counsel guide to help legal teams evaluate their entity management needs, address the existing requirements, account for budget considerations, and outline a due diligence checklist for vendor selection.

Evaluating Your Entity Management Needs

In modern business practice, entity management spans multiple aspects beyond regulatory compliance.

Depending on the size of the company and the number of its legal entities, jurisdictions where it operates, and its strategy, in-house teams seeking best entity management tools may have various priorities, which can include:

• finding a more efficient and easy-to-use toolset,
• addressing gaps leading to non-compliance,
• bringing in new workflows to address regulatory trends,
• bringing compliance work up to speed by eliminating manual processes and inefficiencies,
• improving the accuracy and quality of their corporate records for audit- and deal-readiness,
• improving subsidiary governance framework,
• optimizing the costs of compliance work and achieving economy of scale, adopting modern technologies.

When addressing these or other considerations, in-house teams will need to review their existing resources, assess their requirements, and account for their budget and ROI expectations.

Assessing Your Legal Department's Requirements

According to the report by Ernst & Young published in 2021, 76% of legal departments have five or fewer employees involved in entity management and this situation has not changed much in 2024. Meanwhile, with global organizations having on average from 100 to 500 legal entities in their structure and an ever-growing number of data points to ensure compliance, legal departments are having a hard time keeping up with the regulatory trends. On top of that, the same review by the EY pinpoints that most legal departments are under pressure to reduce costs, and many companies consider entity management as the area to realize savings.

In-house counsels seeking to implement new entity management software need to account for the size of their legal departments, the geographic spread of the entities, and the number of jurisdictions where the company is operating. Organizations need to assess their legal operations efficiency, including the availability of real-time access to up-to-date information and actionable data for board support and decision-making.

Budget Considerations and ROI

A comprehensive entity management systems comparison always includes costs as a key factor in choosing among available alternatives. Meanwhile, many companies have difficulties identifying the total cost of their entity management program, the resources and time spent on compliance, and other tasks.

In many cases, entity management involves not only in-house counsel and compliance teams but also draws upon the resources of finance and tax departments. In addition, when global companies manage their entities involving multiple teams across jurisdictions, evaluating the total cost could be even more challenging.

A comprehensive comparison needs to factor in the cost of delays and unbudgeted expenses due to inaccurate data, late filings, and other gaps in entity management work. Last but not least, when comparing the costs of various compliance management solutions, businesses need to compare and account for the time for the company's due diligence and transaction work in each scenario.

Vendor Selection and Due Diligence

Choosing the right vendor for entity management can help bring in external expertise and advanced technology, improve legal operations efficiency, and relieve the legal and other teams from the burden of routine administrative tasks.

Given the critical role fulfilled by the provider, in-house teams need to run comprehensive due diligence to choose the right vendor and compliance management solution. The list of questions that need to be checked when considering an entity management tech provider includes:

• Do they have the expertise and focus on working with organizations with multiple entities across jurisdictions?
• Does the provider have a scalable solution, that can work at all stages of the organization's growth?
• Do they have up-to-date legal technology built around the modern compliance landscape, which is continuously updated to align with new trends?
• Is their technology convenient and easy to use and can be relied upon as the single solution for compliance management without running parallel processes?
• Does the technology allow to track the status of governance activities?
• Does the technology stand up to industry standards by offering a modern interface, instant access from various platforms, a secure repository for all corporate records, automated workflows, audit trails, and capabilities for offering organizational transparency, such as an org charting module?

Learn More with Athennian

In-house counsels considering new entity management technology face a serious task with far-reaching consequences. The process of choosing entity management solutions extends beyond checking functionality and includes assessing the organization's current and future needs for governance and compliance, budgeting and ROI analysis, creating a comprehensive checklist of requirements, and running due diligence on selected vendors.

This guidance offers a practical roadmap for in-house teams, outlining the main aspects of selecting entity management technology. For more information about corporate compliance tools, please don't hesitate to reach out to the Athennian team and request a free demo.

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