Firmex is in the business of providing M&A advisors, lawyers and corporate executive staff a secure online data room for sharing critical operational, legal and financial documents with 3rd parties. Not surprisingly, as the company’s CEO, I run into resistance from senior partners and executives about putting critical and highly confidential company information on the Internet. They are worried that it’s not safe.
Meanwhile around the advisors offices are file folders of confidential documents on shelves, on chairs, organized in piles on the floor! Somehow they are safer scattered around an unlocked office. Recently, a group of lawyers were convicted for trading insider information which was gleaned from picking through other lawyers client documents. Below is an excerpt from the story:
First at Sullivan & Cromwell in the United States and later at Dorsey & Whitney in Toronto, Mr. Cornblum used a practice he called “spelunking” to gather information, which involved showing up at work in the early hours of the morning and wandering the halls and offices of other lawyers in search of documents inadvertently left on desks and in photocopiers. [Read More]
Typically, your risks revolve around business disruption with local computer infrastructure rather than criminal malfeasance. A local document server gets corrupted, a hard drive fails or the system goes down and meanwhile 10 deals are going on, the firm is under tremendous time pressure and no one can access documents! Ivo Nikolov, Director of Technology at Davies Ward Phillips Vineberg, says:
“If local systems go down in a disaster scenario using our virtual data room is the only way we can ensure the deals don’t get disrupted.”
The most unlikely scenario of documents being unsafe is of flood or fire or some other highly unlikely calamity. But it happens. In July 2009, the offices of a company that had just filed for IPO went up in flames.
Fortunately, they had put all their critical documents safely in their law firm’s Firmex virtual deal room two weeks prior!