Jenner & Block

TechLaw: How to Handle Deals of the Future Online

How to successfully close the electronic deal was the first topic to be discussed at the TechLaw Group’s one-day conference on cutting-edge technology advances that benefit transactions and litigation.

Held at Jenner & Block’s Chicago office, panelists for “Deal Making in the 21st Century” especially focused on the use of data rooms for document review and the use of electronic signatures on key documents, without ever putting pen to paper.  Also analyzed were the advantages and pitfalls of “metadata,” i.e. the hidden data captured by software that can be discovered in documents exchanged online.

Panelist Brent E. Kidwell, Partner and Chief Knowledge Counsel at Jenner & Block, gave the attendees an engaging “cyber-tour” of the metadata that lurks behind the scenes in an average electronic document, spreadsheet, or email.  For instance, Mr. Kidwell noted that a document’s author and company are often stored in computer files, as well as information on specific edits to earlier versions of the document that may have been made by multiple members of a legal team.  Never meant for public scrutiny, and once revealed to the public, he said such metadata could be damaging to a deal and/or contain privileged information.

Mr. Kidwell also noted that recent ethical opinions by the American Bar Association and state bar associations are only beginning to address the ethical considerations lawyers may face when hunting for metadata in opposing counsel’s files, most advising practitioners to be careful when digging for metadata, and to treat such information as the equivalent of opening an errant privileged letter.

“You need to be careful when being a detective,” he cautioned. “and not only with what you send, but with what you receive.”

Mr. Kidwell provided the audience four guidelines that in-house counsel should follow to minimize the risks inherent in working with metadata:

  • when possible, send a properly created PDF format file
  • scrub all non-PDF electronic documents before they are sent
  • think about the ethical considerations before you hunt for metadata
  • always keep in mind the e-discovery value of metadata.

In addition to Mr. Kidwell, Allistair F. Bird of Simmons & Simmons, Tony Crosby of Merrill Corporation, Craig C. Thorburn of Blake, Cassels & Graydon, and Wolter Wefers Bettink of Houthoff Buruma served as panelists.  Stephen M. Andress of Nutter, McClennen & Fish moderated the discussion.

Data Rooms for Document Review
According to the panelists, data rooms, which can house the thousands of documents needed by buyers, sellers, and investments banks as they perform their due diligence on a proposed transaction, are increasingly going online.  While physical data rooms – a room with several computers containing all the available documents – are still the norm, they observed, in-house counsel and their law firms advisors are favoring the online data “rooms,” as such secure websites can be made available to various parties in a transaction simultaneously and at a lower cost.

Electronic Signatures for Sign-off
Meanwhile, the panelists advised the nearly 100 attendees that recent legislation in both North America and the European Union that allow for the approval of transaction terms via a simple email can be a great aid to those seeking to close a deal quickly.  Yet, those same laws also mean that in-house counsel should be wary of giving approval to terms, even informally, via email as the message could be considered as a “signature” agreeing to a deal in a court of law.