What to Look for in an Alternative Legal Services Provider
ComplianceApril 23, 2024

What to look for in a corporate service provider

Corporate legal teams are under constant pressure to keep pace with business change and new demands. They must be adaptable, agile, and steer the business through complexity.

That's not always an easy needle to thread. It's also one reason why many firms have decided to work with a corporate service provider.

When work is outsourced, legal teams can begin to differentiate themselves and increase capacity – without additional overhead. Time-consuming and repetitive tasks can be delegated, freeing teams to focus on high value, business-critical activities. As a result, productivity is increased, cost efficiency is realized, and important tasks and projects are completed faster.

While choosing to work with a corporate service provider can help departments meet the demands of the business, it's important to choose the right service provider for the job. To accomplish this, it's a smart idea to review some basic considerations during the screening phase.

Evolving regulatory landscape

Keeping up with emerging corporate regulations and reporting requirements is a major burden for in-house legal teams and it falls upon general counsel to uphold robust governance, transparency, and accountability.

For example, the number of state data privacy laws has doubled in the past year. Without a uniform federal law, states have enacted a patchwork of data privacy laws. This means that general counsels must continually monitor new legislation and ensure the business complies.

Another example is the Corporate Transparency Act (CTA). The CTA has a big impact on legal teams who must adopt a proactive approach to entity management and compliance. This includes establishing mechanisms for collecting, verifying, and maintaining beneficial ownership information (BOI). In-house counsel must also implement procedures that ensure the security and privacy of any sensitive BOI information they handle.

How cost influences choosing a corporate service provider

While the notion of saving money is always attractive, cost should not be the primary metric used to evaluate a corporate service provider. As in many other fields, the old axiom that "you get what you pay for" often holds true regarding business service providers.

Low-cost providers often must make concessions in key areas such as availability, security, timeliness, and accuracy. They often do not offer the same robust education, training and consultation services found with experienced, high-quality corporate service providers. Though it may cost less upfront to work with the least expensive service provider, the services offered by a quality corporate service provider may be a greater benefit in the long run.

The service provider should offer a broad range of features, so that the corporation does not have to hire multiple service providers to handle a variety of niches or specialties.

Which services does a high-quality corporate service provider offer?

A corporate service provider can assist with corporate regulatory requirements imposed on corporations, LLCs, and other statutory entities. Many of these requirements impact a company’s “good standing.” Failing to maintain good standing can lead to tax liens, an inability to pursue new business, loss of access to the courts, and more.

Below are some areas a corporate service provider can assist with:

Entity management: Managing a large amount of information about different entities can be challenging, especially because this data is a strategic asset and changes over time. To be useful, this data must be accurate and easily available to everyone in the organization who needs it. If the corporate entity information is missing or wrong, it can lead to costly delays and penalties when filing documents.

Business licensing: Managing business licenses can be complex, whether the company is acquiring a new company, operating a subsidiary, entering a new market, or expanding across state lines. Rules vary by industry and geography.

Annual reporting: A company with multiple entities across jurisdictions must pay careful attention to annual reporting requirements. Legal teams must comply with different due dates, filing procedures, and fees by state (all of which are subject to change).

Registered agent: While all registered agents should ensure that company notices and legal documents are received and forwarded promptly, a commercial registered agent is better equipped to meet the necessary business hours for this role and will be committed to serving your company nationwide.

Service of process: Legal teams must handle service of process (which includes wage garnishment orders, subpoenas, liens, etc.) accurately, reliably, and promptly to minimize the risks associated with default judgments and non-compliance. Legal documents delivered through service of process initiate crucial timelines and legal obligations that must be met.

Beneficial ownership information reporting: BOI filers must have the means to store sensitive BOI. They must also ensure any updates are reported via a BOI report filing each time company or ownership information changes.

Due diligence: Another area in which a corporate service provider can help is due diligence. The difference between a successful deal and a failed one can boil down to a single critical detail. Performing thorough and effective due diligence helps to ensure that informed decisions are made related to  transactions.

Next Steps for Your Business

Is your company required to file a beneficial ownership report?

Many business service providers offer core offerings in this regard. A high-quality corporate service provider, however, goes beyond the basics and offers more comprehensive due diligence services. These additional service categories include the following:

By looking for a corporate service provider that offers all the preceding key services, legal departments can help ensure that due diligence processes are comprehensive, rigorous and effective.

Nine ways the right corporate service provider can create value

In addition to evaluating how outsourced services can help support and improve the due diligence process, legal departments should also closely examine how a prospective corporate service provider can help their internal personnel meet their own organizational objectives.

The right service provider should be able to do the following nine key things to add value and help ensure greater efficiency and efficacy.

1. Customized workflow

Legal departments should search for a corporate service provider that offers customized charts capable of pulling accurate data across jurisdictions with no re-keying needed. The right service provider should be able to conform to a company’s preferred hours and be able to provide evidence when it's requested in the format in which it is needed.

This customization discussion should occur upfront in the evaluation process. The right provider can enter a company’s specifications into a repository so that their preferences with regard to how documents, data, evidence and invoices are received are readily accessible. The right provider should also be able to provide a company with suggestions and solutions if that company is unclear about any customization issue.

2. Quick turnaround

The right service provider can provide accurate document-processing turnaround for any jurisdiction, while also supplying the necessary personnel and resources to support any project. Additionally, a high-quality corporate service provider works with researchers spanning the nation and has a vast network of connections at major filing offices. These attributes can be critical in terms of expediting document turnaround and ensuring that transactions are closed smoothly.

With Entity Managed Services you can consider it done

Keeping entity records up to date is essential but time-consuming. Every year you’re under pressure to do more with less, while constantly balancing multiple demands. Entity Managed Services provides resources and expertise to keep your company data accurate.

3. Accuracy

Speed is only one part of the equation for a successful deal; accuracy is equally important. Discovering an error at closing that somehow eluded the due diligence process is one of the most disheartening things that can happen during a transaction.

A high-quality service provider can greatly minimize the odds of such a nightmare scenario occurring thanks to its deep expertise. A reputable service provider is always there for a consultation, ready to provide smart and helpful guidance.

4. Willingness to follow up

These days, most of us are asked to do more with less. This mandate can conflict with the demands of big legal projects, which often require daily documents and updates.

It can be difficult for low-cost service providers to provide this level of service. They may instead ask legal departments to accept evidence according to their own preferences and timelines.

A high-quality service provider, however, can be more attentive to a client’s needs and can provide frequent updates as situations arise — while also proactively asking how and when information should be sent.

5. A focus on relationships

Relationships are what drive the legal business. This extends to the relationship that legal departments have with their service providers. A closer collaboration benefits both parties, and the right corporate service provider will try to discern the preferences, needs and objectives of their partners, ultimately saving them time and money.

6. Robust security

In an age of ever-increasing data breaches, security is a top priority for legal departments. This is reflected in the fact that CIOs and IT managers are now part of the strategic decision-making process.

This means that it's essential to inquire about security protocols when evaluating service providers.

When evaluating providers, it's imperative to know their security protocols. Legal departments should ask for detailed information about how they safeguard entity management data, contracts, and UCC filing and search data. The right provider will be able to show commitment to data security and backup.

7. Electronic tools and products

The right suite of tools and products can make life much easier for paralegals and other legal personnel. This means that when reviewing service provider candidates, it's important to inquire about the tools they offer.

Common tools include annual report management tools, charting tools, entity management systems, and corporate and financial document creation and searches. Additionally, service providers should offer training for these tools and products. Here are some of the key questions to ask when comparing product and tool offerings:

  • Do you enable e-filing of UCC documents?
  • Do you offer shared systems?
  • Do you have an advanced charting tool that can create UCC-3 documents?
  • How do you keep up with jurisdictional and form changes and communicate such changes to clients?
  • Do you offer entity managed services?

Ultimately, reviewing e-tools and products requires weighing cost vs. ease of use, to some degree. These tools can create much greater efficiency in the office, so a closer examination is warranted.

8. Education

Education and training are also key areas to evaluate, as CLE courses and non-CLE training can help burnish a company’s brand while keeping the company apprised of all new legal legislation, relevant case law, and jurisdictional nuances. Service providers can offer access to CLE and legal training opportunities.

9. Governmental relations

Relationships with government agencies are foundational for any successful corporate service provider, as these service providers should work closely with state and county agencies and departments. These relationships are often instrumental in ensuring that a partner law firm receives highly efficient or expedited services.

To discern whether a provider makes close governmental relations a priority, general counsel should ask about their affiliations. Are they, for example, involved with groups such as the National Association of Secretaries of State (NASS)?

In conclusion

By making a proper evaluation of a prospective corporate service provider that's focused on the ideas outlined above, legal departments can meet their objective of doing more with less, while delivering better and more consistent.

Learn more

To learn more about how CT Corporation can help, contact your CT representative.

The CT Corporation staff is comprised of experts offering global, regional, and local expertise on registered agent, incorporation, and legal entity compliance.


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