How to track corporate information with the latest Web-based applications.
Throughout the past two decades, corporate law offices have undergone a quiet revolution. Increasingly sophisticated technology and a much more stringent legal and regulatory environment now provide paralegals with some wonderful opportunities. Many new paralegal job prospects involve employment in a section of corporate legal departments that goes by many names, including the office of the corporate secretary, legal entity management, the corporate secretaries group and corporate compliance management.
Like the names of their departments, the corporate paralegals who help run these offices have a variety of titles: corporate records administrator, financial analyst, senior corporate government specialist and manager of corporate information. But the diversity of names and titles doesn’t alter these offices’ and experts’ functions — the total management of their companies’ legal entity information.
Understanding Legal Entity Management
The lifeblood of legal entities are documents and the information they contain. Articles of incorporation announce a corporation’s birth. Bylaws, in part, explain the rules of its governance. And from the point of its origin until the corporation is dissolved, merged, bankrupt or in some other way ended, a variety of documents track every step, stumble, leap and fall of the company’s existence, however brief or long it is. Documents and the information they contain also are the lifeblood of every other type of business organization, including partnerships (both general and limited), joint ventures, limited liability companies, wholly owned subsidiaries and company divisions.
If documents are the lifeblood of legal entities, the brain and heart reside in a company’s legal department. Typically, that is the office of the corporate secretary, although as mentioned, it can be called various names. Those who work in this office create, track and manage a legal entity’s documents and related information.
Few corporations spend money on what typically is considered overhead unless there is a good business reason to do so. Today, federal and state governments provide companies with that reason. In the wake of accounting scandals such as those at Enron, MCI and Tyco, Congress passed stringent new laws, including the Sarbanes-Oxley Act of 2002. SOX introduced significant changes to corporate governance and disclosure regulations (see “Sarbanes-Oxley” January/February 2006 LAT). More specifically, according to the act’s introduction, SOX promulgated new rules designed “to protect investors by improving the accuracy and reliability of corporate disclosures made pursuant to the securities laws.” The changes in the law were dramatic.
Unfortunately, the U.S. Congress and federal agencies didn’t end their administrative and regulatory efforts with SOX.
Pat Tisdale, senior corporate governance specialist with the Oklahoma City-based Devon Energy Corp., an oil and gas production company, said in the past few years she has seen increased regulatory activity, and companies have to make information available on a timely basis. “Now we have internal auditing,” she said. “We have to provide legal entity documentation to [the internal auditing department] on a regular basis. We have to share and verify more information.”
Because of an increasingly stringent legal and regulatory environment, the type of legal entity information today’s companies are tracking includes (but by no means is limited to):
office addresses and contact
when the legal entity was formed;
when it was sold, merged or
dissolved (if applicable);
entity directors and officers names and dates of service;
whether the entity operates in the United States;
its country of formation;
company securities information;
subsidiary and parent company information (when applicable);
office names and addresses;
registered agents and related information;
critical entity dates (annual meetings, board meetings, etc.); and
critical entity records (articles of incorporation, bylaws, etc.)
Tracking this amount of information can be daunting, especially for a large company, according to Glen England, corporate records administrator for the New York-based American International Group Inc., a multinational insurance and financial services company with offices in more than 130 countries. “We are tracking more than 6,200 entities worldwide,” England said. “And that is only because we are not caught up.”
England is not alone in this monstrous task. Tisdale said she also tracks just about everything having to do with legal entities, and the company has about 175 subsidiaries. “I track all historical information, charter documentation, securities ownership, officers and directors, powers of attorney and just about anything else associated with the legal entity,” she said.
Turning to Technology for Solutions
In the past, managing a legal entity’s documents and related information was a paper-intensive process. Today, the complexity of managing voluminous amounts of legal entity information, and the speed with which it must be made available to others within and outside a corporation, means more and more companies have no alternative but to leverage some of the latest technological solutions.
“Some kind of entity management software (vendor-based or homegrown Microsoft Word or Excel) is probably being used today by the majority of the Fortune 2,000 companies,” said Mark Selinger, managing director of Computershare’s World Records, based in Shelton, Conn.
One of the new requirements of SOX legislation involves chief executive officer and chief financial officer certification of a corporation’s financial statements, so the information surrounding legal entities and what they report is much more important today than ever before. Using entity management software allows CEOs to track their corporation and subsidiary business, particularly large multinational companies.
Similarly, because of increased regulatory requirements, more company departments need access to legal entity information. For instance, in the wake of SOX, many companies have either added an auditing or regulatory function or have augmented their existing functions. These departments need access to important entity dates, formation information and documents. Additionally, treasury departments often use entity management applications to track important bank and investment dates, contact information, loan agreements and other documents.
Company tax departments also are eager to tap into jurisdictional information to determine where an entity is incorporated and licensed to do business, and the critical dates regarding tax filings for each of those jurisdictions. Tax departments also use entity management applications to track important tax identification numbers and related information.
Because of this increased need for access, paralegals working in legal entity management deal with many different professionals and are legal liaisons to just about everyone in the company at one time or another. Selinger said the office of the corporate secretary is the central location for keeping legal entity data. “This department is constantly bombarded by other departments, such as tax, finance, audit, intellectual property and others asking for that data,” he said.
Management Tools in Action
Today, the world’s companies have many legal entity management applications from which to choose (see “Legal Entity Management Technology” on Page 66 and 67). The breadth, depth, capabilities and cost of these applications vary. However, at a basic level, these applications all are designed to assist a company’s law department with the task of managing legal entity information.
Many legal entity management applications available are Web-based. The importance of having these applications accessible over the Web using a standard Internet browser illustrates one additional reason companies have turned to legal entity management solutions — distributed access and distributed data input.
“One of the reasons we needed a Web-based solution is because we have offices all over the country,” said Ann Spitler, manager of corporate information for General Growth Properties Inc., a Chicago-based shopping mall development and management company. “People at the property level [where the shopping malls are being managed] need regular access to the legal entity information we maintain.” Spitler also said her department is looking to phase in access to legal entity information via its Web-based solution, Datacare’s Global Corporate Manager, to several other parts of the company, including the tax, treasury and contracts departments.
According to England, a Web-based solution works well for him because the questions he is asked from tax, audit, accounting, regulatory, treasury and other company departments on a recurring basis are much more complex than those he was asked just a few years ago. With online availability, England now has standard reports at the ready for common requests for information, such as when a particular company was formed, when a company became part of AIG and legal entity history. Instead of copying and snail mailing or e-mailing these reports, the data is online and requesters can generate the reports themselves.
Cheryl Gardner, a senior paralegal with the New York-based Brown Raysman Millstein Felder & Steiner, uses NRAI’s Corporate Compliance Manager to maintain a database of all of the legal entities formed by the firm’s clients. “I use the application to look up agent information, when the entity was formed and other basic entity information the firm’s clients periodically want to know,” she said. “Using NRAI’s application, the information is literally at my fingertips.”
Using state-of-the-art technology is key to successfully tackling legal entity management, England said. He was one of the early adopters of the technology and began using Bridgeway’s Secretariat in 1993. “I have seen [Secretariat] grow and evolve, and it’s so much more sophisticated than it was,” he said. “Almost every part of it is customizable.”
Jobs and the Future
While legal entity management is not new, the regulatory and legal environment, along with new technology and Web-based solutions, has increased its visibility. These factors have opened the door for new career opportunities for corporate legal assistants who want to work in the office of the corporate secretary.
Spitler said legal entity management is a new and evolving career for paralegals. “At General Growth Properties, it evolved out of an effort to bring all the corporate work in-house,” she said. “I was hired on as a senior corporate paralegal and it grew into this position.”
Gardner said 24 years ago she became a paralegal-litigation liaison between clients and out-of-state counsel in her brother-in-law’s firm. She had a master’s degree in biochemistry, but no formal paralegal or corporate training. However, the firm quickly recognized Gardner’s organizational skills. Slowly she learned the legal aspects of her job, from litigation to bankruptcy, and finally corporate. The past nine years, she has focused on corporate transactions, corporate housekeeping and the Uniform Commercial Code.
According to Tisdale, a position in corporate governance is not always attained through traditional channels. “It’s a funny field to get into,” she said. “I don’t know if there is one single way to prepare for this type of position. It takes corporate legal experience. You need to know about title work. You need to know about legal transactions and contracts. It’s very diverse, down to transcribing the transactions of the company for the IRS and SEC. Everyone wants to know what you are doing when you are a public company.”
While the career paths to finding a job in legal entity management vary with each company, all companies have a growing need to better manage legal entity information in a more timely and efficient manner. Selinger said if companies are not yet using legal entity management software, they are missing out on an opportunity to become more efficient in terms of supporting their internal and external business partners and proactively maintaining subsidiary compliance.
As regulatory requirements continue to grow, so will career opportunities in the field of legal entity management. Paralegals who are well versed in corporate law and willing to learn new technologies will have a leg up in this burgeoning job market.