Benefits of Virtual Data Rooms for Law Firms

9 min

Essentially, a virtual data room (or VDR) is an online storage space. It’s a place where companies can safely deposit their data. But it’s not just an archive — unlike their drab, dusty, musty counterparts, VDRs also double as a sharing center and communication platform. 

Given their unique security focus, it’s easy to see their appeal for law firms. Any company or individual dealing with large quantities of sensitive or confidential data can benefit from extra data protection. Especially law firms. And lawyers.

In fact, one of the main foci of data rooms is facilitating M&A deals — a big theme in corporate law.

But VDRs offer many other advantages to the lawyer looking to optimize his workflow, speed up transactions or increase overall security. Let’s find out more about them.

What are the advantages of data rooms for law firms

The benefits of a virtual data room for lawyers can be neatly divided into a few categories: accessibility, privacy, security, sharing effectiveness, and cost-efficiency. 

Add up all these aspects and you get the ideal platform for a lawyer’s professional needs.

Accessibility and automation

Think of a virtual data room and this is the first thing that comes to mind. 

Because they work with cloud-hosting, virtual data rooms offer a much greater degree of accessibility than not just the classic physical archives, but also than computer- or disk-based storage.

Any VDR worth its salt can be accessed from a laptop, tablet, smartphone — you name it.

Besides, virtual data rooms are structured so that information is easy to access. To that end, most VDRs include features such as:

  • detailed search function
  • file indexing
  • keyword listing
  • easy-to-scroll interface
  • new upload notifications
  • and a good deal more

Add to that the benefits of automation — things like bulk uploading or notifications related to file views or new documents being added to a monitored folder —, and you’ll have a clear image of why companies big and small are finding it hard to do without a VDR.

Privacy and confidentiality

As a lawyer, it’s a given that a lot of the files you work with are better kept out of general circulation. Without even getting into the needs of client privilege or of high-confidentiality fields such as trademark law, it’s just safe to say nobody wants their workflow pried on by competitors or opposing parties. 

Now, the good thing about VDRs is that, unlike other cloud storage services (such as Drive or iCloud), they are built with a strong focus on privacy and security. First of all, data rooms are impossible to access without permission — users need an account with access given by the admin. 

But that’s not all. Other options go a long way towards keeping off any unwanted attention:

  • access levels: within a data room, files can carry different levels of confidentiality. Some may be viewed by anyone with access to the data room, while others will require a special permission.
  • download restrictions: certain files can be made available in view-only format, helping minimize risks such as someone downloading them and forgetting them in their laptop.
  • screenshot blocking: with this option enabled, viewers are unable to take screenshots, which tends to discourage sharing even further. Sure, they can still take a picture of the screen, but if you ever tried that you know it’s laborious and impractical, with poor-quality results at best.
  • screen timeout: while not all platforms include this function, it’s an important one. If you leave your computer on while you go to the cafeteria for an extra dose of energy, the platform will time out, ensuring your files stay protected from curious glances.
  • grid view: when shared in grid view, a document can only be viewed partially. This serves to give the viewer a good idea of its contents while rendering pointless any attempt at reproducing it.


Any degree of privacy is only as good as the security that backs it up. That much is clear. But how can you tell a data room is secure enough for your needs? 

“Make sure whatever data room you choose has the proper certificates,” recommends Michael Melfi, an IP attorney based in Michigan.

Certificates such as SOC 2 indicate the data room has been tested and found reliable and secure by a competent external authority. Typically, a security-certified data room will offer:

  • data encryption: 256-bit encryption, SQL server encryption
  • data breach detection: alerts can be set up for accesses from new devices
  • easy user removal mechanism
  • access expiry date for specific files
  • permission groups: users’ access to files is determined by the groups to which they are added

It’s important to protect user accounts, too. Personal injury attorney Michael Grumprecht has a good tip: “Fortify your own access with two-factor authentication, such as a time sensitive rotating PIN to accompany your password when you log-in.” 


While virtual data room subscriptions can vary considerably according to number of users, data usage plans, and range of available features, they all have one thing in common price-wise: they stand a world apart from their physical counterparts.

That’s a no-brainer, of course. No physical file-hosting means there’s no need to pay for a physical space. No need to pay security, either. 

With that in mind, even if you decide to spend that extra buck for one of the highest-quality data rooms, you’ll still be saving. And that’s not to mention that, with VDRs, data-sharing and meetings save you time while entailing zero travel-related expenses. 

What areas of legal practice benefit the most from VDRs

While you can find a good use for data rooms in pretty much any field of law, the nature of some specific areas renders VDRs particularly useful for them.

Corporate law

In online data rooms, corporate lawyers find a powerful tool for a variety of operations, among which:

  • mergers and acquisitions
  • managing IPO 
  • debt financing
  • capital raising

A data room proves invaluable in managing the data flow for legal due diligence, as well as helping mediate between the selling side and potential buyers during auctions and other M&A transactions.

Read more about buy-side M&A process using a virtual data room

One particularly useful feature is monitoring user activity to gauge the level of interest of different parties. As Matthew Reischer, CEO of says, you should ensure that there is a “full audit trail of user and document activity.”

An integral feature of a good VDR, to him, is “the ability to track and review all participant actions.”


A significant portion of a litigator’s effort can go into investigating the specifics of the case at hand. That includes gathering documents for evidence — and here, once again, a litigation data room can prove immensely useful.

Given their emphasis on security and data privacy, virtual data rooms are the perfect environment for a law firm or litigation attorney to collect and examine important files with the least possible risk of leaks that breach client-attorney privilege.

Real estate

For a real estate attorney, the task of preparing and reviewing documentation is made immensely easier with a VDR. Again, not only does a virtual data room for real estate allow you to manage all your work projects on the same platform, but it also:

  • allows you to give clients access to documents relevant to their case, without exposing the rest of the data room
  • helps organize purchase- or construction-related documents so they are easy to find and scan through
  • allows you to run virtual presentations with features such as video calls and screen sharing

According to a poll by Lawyer Monthly, 48% of real estate professionals reported a positive impact of virtual data rooms in their workflow; 16% saw an extremely positive impact, and 32% still felt a moderately positive impact.

Intellectual property

VDRs are of course useful in the hosting and sharing of files for patent due diligence. But they are also a key tool for trade secret lawyers seeking to protect client copyrights, trademarks, and patents. 

Besides offering a high level of cybersecurity capabilities, a good data room will allow you to protect trade secrets by blocking options for download or screenshot-taking. You’ll also be able to know exactly who accessed given files, and when and for how long they were viewed.

For an IP lawyer, a virtual data room is also great for collecting, organizing, and sharing with clients documents such as licensing agreements, NDAs, and the like.

How to find the best virtual data room for your law practice

If you’ve decided it’s time to start reaping the benefits of data room technology for your law firm, an important question remains: how to choose from the sea of options available out there?

A few criteria can help you decide.

Know your needs

When you buy a laptop, you know what you want it for: gaming, photo editing, business. You know whether to prioritize portability, a fast processor, good graphics, or an HD camera. And guess what: the same goes for a virtual data room. 

Look for industry leaders

As with any other market, no company is well-considered without a reason. The top data room providers are where you find the best bang for your buck, whether it be in data hosting, level of security, breadth of features, or customer support.

Ease of use

A recent survey of Australian lawyers found that one of the biggest barriers to incorporating new technological solutions into their practice was not understanding how to use them. 

“Most lawyers are not technologically advanced”, says Braden Perry, a partner in a Kansas City law firm. Importantly, he points out, data room users include “senior partners who may not have much experience with virtual data rooms.”

With this in mind, when scanning a provider’s reviews, look for comments about the solution’s ease of use: is it intuitive? Does it have a simple interface?

Other important features to keep in mind are user onboarding presentations and tutorials, as well as live assistance. Big VDR providers may even assign you a dedicated manager, which may certainly be an option worth considering and paying for.

Free trial

A free trial goes a long way in determining whether a service really is the right one for your law firm. Most providers will offer a ready-made trial plan. Alternatively, you can always write and ask for a custom one.

Stellar customer support

Not even the best data rooms are immune to technical issues, and for a lawyer having immediately-available support can make all the difference. 24/7 support is key, especially when it includes a live chat option.

To sum up

By now you can see why virtual data rooms are such a popular tool with lawyers. 

How do you store large quantities of sensitive data in one central place? How do you share the data while answering the needs of security and ensuring everything is easy to navigate?

The data on that seems clear.

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