A&O and Clifford Chance enter the digital age with online deal rooms
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21 February 2014
Ryan Dunleavy reports on the law firms that are setting up websites to provide online documents for clients.
Allen & Overy and Clifford Chance have launched internet "deal rooms" designed to speed up cases.
And now the rest of the magic circle looks set to follow suit.
A&O's brand name for its deal room site is Newchange. The site opens at the end of the month, and access is controlled by the firm and given to specified parties in a transaction.
Parties post documents on the site, which trigger instant email notifications to relevant users who can then add comments and download the documents.
A major advantage of the site is that it can be used in different time zones on any day of the week, speeding up communication. A telephone helpline will also be put in place as part of the service.
Simon Haddock, an A&O international capital markets partner, says: "It is a website that is used as a transaction management tool. Websites creating documents have been done before but this one's interactive aspect makes it unique."
The site is also free, and Haddock insists it is more secure than the current method of handling deals.
Haddock says: "It is as secure as banks' security systems. We have used the security that banks are familiar with, so they understand the level of security we are using.
"It is more secure than current methods like email and fax, which can easily be intercepted." Passwords are issued by A&O to the parties.
It is expected the site will appeal mostly to parties in cross-border cases, particularly banking, corporate and capital markets clients.
Haddock adds that alth-ough deal rooms will save time they will not reduce lawyers' fees.
"This will release our lawyers up to do more value-added work, so initially we will have a competitive advantage," he says.
Documents on Newchange will also be designed with a new approach, available from the end of February. "Clients are involved in their development," says Haddock.
Different clauses can be added and deleted from a contract without the whole document being accepted or rejected.
Haddock claims this is a revolutionary way of drawing up contracts on the internet and that it allows more flexibility for the client than has been the case in the past.
He argues that the all-or-nothing approach of the past generally failed to satisfy clients and that A&O's new method "goes back to fundamentals".
At the same time as the launch of A&O's Newchange, Clifford Chance appears to be starting up a similar internet project.
The firm claims that Fruit Net offers the same advantages as Newchange and a similar deal room. The idea was first used by Clifford Chance's Amsterdam office for the deal management of Project Fruit, a £516m buy-out covering 19 jurisdictions.
Joachim Fleury, the Clifford Chance corporate partner who developed Fruit Net, says: "I was not aware of Newchange. Fruit Net was planned from last summer. Our service will also be free."
He adds: "Other firms will start following suit."
Indeed A&O and Clifford Chance are not the only firms looking at this kind of technology.
Tim Clark, a Slaughter and May company partner, says: "The present position is that we are doing a lot of work on that route. What we are looking at is effectively the ability to do a deal on a website. But I do not know when we will be doing it.
"At the moment we have correspondence, documents and due diligence on the web."
He says that Slaughters has held back so far because of the security risk involved, but that technology is becoming advanced enough to minimise the risk.
Linklaters partner Paul Nelson is in charge of internet development at the firm and is the brains behind the Blue Flag internet subscription site. He says: "The deal room idea is interesting. There is something similar to that which we are working on. We are going to launch it within the next few weeks."
And Freshfields is already using the web to correspond with clients on narrower level. "We have done many transactions using the spoke extranet. Our clients have been happy with the response and we will do many more tailored extranets in coming months."