In most companies, much institutional knowledge exists within the legal department. Many companies are not large enough to engage a chief knowledge officer, an executive responsible for coordinating knowledge management programs. So, often the functions of a chief knowledge officer reside de facto within legal.

The reasons should be obvious: The members of the legal department have been involved with the company's key corporate transactions, the principal agreements under which the company has acquired or transferred assets, the litigation resulting in rights that have been gained or liabilities that have continued, and the intellectual property-licensing transactions that affect how the company conducts its business. They understand the relationships with third parties with whom the company has conducted business.

Basically, they have the practical knowledge about how the company arrived at its current position. Therefore, armed with all of this knowledge of the company's history, the legal department should have a plan to collect and retain the information that transcends a company's day-to-day operations.

When companies go through frequent changes of corporate counsel and legal staff, the business can suffer from the loss of the legal department's institutional knowledge. In some instances, that loss can increase a company's exposure to claims from third parties.

Maintaining institutional knowledge requires that the matter or event be memorialized as contemporaneously as possible. There are several ways to accomplish this goal:

• Corporate meetings and resolutions: Prepare dated summaries of each meeting of the board of directors or shareholders. These should be kept with the corporate records. They should also be preserved in a separate book and in an electronic file for easy word search accessibility.
• Contracts: Maintain a contract database that contains summaries of the company's agreements. These contract databases have become much more powerful and user-friendly over the years. Many allow a scanned copy to be attached to the database record for the specific agreement.
• Litigation: Institute a litigation database that contains the key elements of each matter. This is important even when outside counsel is handling and monitoring litigation. When all of the information regarding pending litigation is gathered in one place, responding to auditors becomes a much easier process.
• Intellectual property: Maintain a database that summarizes the company's intellectual property licensing rights and obligations. Licensing arrangements should be kept separate so information regarding licensing rights and obligations can be routinely provided to the businesspeople.
• Major corporate transactions: As soon as a transaction is consummated, provide the key business partners with a brief memorandum that details the main business points of the transaction. If the directors have taken an action that will have a direct impact on the day-to-day or long-term business of a company, memorialize it in a memorandum to the key business partners. These memoranda should be kept in chronological order in hard copy as well as electronic form.

It is well worth devoting the energy and time to maintaining the information as described above. Such steps enhance the value that the legal department brings to the company in general, and will motivate the business team to rely upon legal as a primary resource in planning and structuring the company's business.