Previously many firms invested in legal document storage technology to reduce the amount of paper and improve the document management process. However with more sophisticated software now available, the process has evolved into ‘digitising’ documents. Digitisation enables firms to improve their risk management, reduce regulatory capital charges, and reduce infrastructure costs.

New regulatory rules on capital charges and uncleared margin requirements have driven institutions to better understand the terms in their legal agreements. If a firm can access key attributes accurately and quickly then that firm is able to reduce capital charges and optimise the use of collateral. With new technology it is now possible to perform this function more efficiently than the existing process of manually opening and reading a document. As a result, digitising legal documentation using intelligent software is becoming a key focus for major firms.

Our experience is that such projects are not without their challenges. We have highlighted below the top five challenges impacting document digitisation that we have experienced; 

1. Not identifying the key stakeholders at the beginning of the project. 
   • Downstream users of the digitised data must be identified and invited to participate in the project at the functional specification stage. 
   • Different users will require different datasets from the digitalisation output, and so trading, legal, and credit, should all be involved from the outset to ensure that the appropriate fields and key terms of the documentation are set up in the software. Early involvement will avoid subsequent duplication of work.
2. Not developing a well-organised internal document management structure. 
   • At the simplest level; documents must be transferred into the digitisation system, with a robust process for the management of exceptions.
   • Exceptions will arise where a scan fails, or where there is a problem with the document. A process is therefore needed to resolve such exceptions, so the digitisation process can continue without issue.
3. A lack of buy-in from the legal department. Frequently, legal documentation will have been amended to a “house standard”, and what may appear bespoke wording is actually not. It is useful to know this information upfront, as it will make the digitisation process more efficient.
4. Clarity around digitisation scope. For optimal efficiency, and to avoid duplication of effort, it is important to clarify which clients are in scope. The scope should be agreed early on and with all stakeholders. 
5. Appropriate metrics. It is important to develop metrics that provide appropriate transparency into the project, and accurately track progress of the digitisation process. Metrics should be reported regularly to interested stakeholders.