Choosing where to host sensitive documents is a recurring decision for law firms. Partners want a smooth experience for counterparties. Associates want to find things fast. IT wants strong controls and a clean audit trail. Clients expect confidentiality and clarity. The tools on the table usually include a virtual data room, SharePoint or Box for external sharing, and the firm’s document management system such as iManage. This guide explains what each option is built for, where each shines, and how to choose without wasting billable hours.
Start with the scenario, not the tool
Before comparing features, describe the job to be done in plain terms.
- A sell-side M&A process with multiple bidders who need read access to a fixed set of documents.
- A lender diligence request with a tight deadline and a small circle of reviewers.
- A regulator or auditor who needs a specific folder, clear provenance, and a record of access.
- A client portal for board materials or a special committee, updated in short bursts.
- An internal investigation where only a few partners and counsel can view source files.
These scenarios differ on two axes that drive the choice. First, how many external people will touch the materials and for how long. Second, how much you need structured workflow, such as Q&A, timed releases, and an auditable index at close.
What each platform is built to do
Virtual data rooms (VDRs) focus on controlled disclosure to external parties with clear boundaries. They provide granular permissions at folder or document level, a simple way for non-technical invitees to navigate, Q&A tied to the materials, watermarks, link expiry, and detailed activity logs. Most are designed for one deal or matter at a time with a predictable beginning and end.
SharePoint or Box are collaboration platforms that firms can configure for secure external sharing. They live inside your tenant, they integrate with your identity stack, and they work well for ongoing collaboration with clients and partners. With the right settings, you can invite guests, restrict downloads, and see basic sharing activity. Microsoft documents how to enable and manage external sharing in SharePoint and OneDrive, which is useful background for IT and matter leads.
iManage and other DMS platforms are the backbone for internal matter files. They are excellent for version control, search across prior work, and integrations with Outlook and drafting tools. They are less comfortable for large groups of external reviewers who expect a lightweight experience that looks and behaves like a short-lived deal room.
Comparison at a glance
Consider five practical questions that come up in nearly every matter.
- External experience: VDRs tend to be simpler for first-time users who only need to read and download a defined set. SharePoint and Box are fine when guests already use them or when the firm can hand-hold a small group through the sign-in flow.
- Permissions: VDRs are built for many micro-boundaries such as bidder-by-bidder folders. SharePoint and Box can do this but take more admin effort and policy tuning.
- Auditability: VDRs usually offer ready-to-export indexes, question logs, and activity reports for the matter archive. SharePoint and Box provide sharing logs and file histories which may be enough if the audience is small and known.
- Workflow: VDRs include structured Q&A and request tracking. Collaboration platforms can mimic this with comments and lists but it is not as tidy under pressure.
- Speed to set up: If your firm keeps a VDR template, you can launch in minutes. If your SharePoint governance model is clear, a secure external site can be just as fast. The slow path is reinventing structure and rules every time.
When a virtual data room is the right answer
Pick a legal data room when the following conditions apply.
- Many external reviewers across separate organisations must be isolated from each other.
- The client or counterparty expects a familiar “deal room” flow with watermarks and timed access.
- You need Q&A that links to documents and exports cleanly at close.
- You plan to freeze uploads, capture an index, archive activity logs, and hand over a ZIP.
- You want to avoid exposing your broader collaboration environment to dozens of one-time guests.
When SharePoint or Box is enough
Stay in SharePoint or Box when the matter is small and collaborative.
- A handful of known reviewers who already work with your firm.
- You need quick co-authoring or live editing on a few drafts.
- The audience is stable and does not require bidder-by-bidder walls.
- You can live with platform-level sharing logs rather than deal-style reports.
- Budget or speed outweighs the value of structured Q&A and exportable activity reports.
If you take this route, align with IT on tenant-level and site-level external sharing settings, multi-factor authentication for guests, and link expiry defaults. Microsoft’s guidance is the right starting point for administrators who tune these controls.
Where your DMS fits
Your DMS remains the source of truth for drafts, negotiations, and final signed versions. Use it to keep the internal record, not to host large external audiences. A good operating model is simple. Draft and revise inside the DMS. Publish stable copies to the VDR or the external SharePoint site. At close, bring back the paper trail, the index, and the activity reports. This protects privilege, keeps internal notes out of sight, and preserves a complete archive.
Security and ethics in plain language
Clients do not buy acronyms. They want to know that only the right people can view the right folders, that activity is recorded, and that the firm will stand behind the process later. Two references can anchor your policies.
- ABA Formal Opinion 477R reminds lawyers that “reasonable efforts” depend on the sensitivity of the data and the risks in play. Use this when you explain why a bidder may view files online only or why a spreadsheet download is allowed for modelling.
- NIST SP 800-53 Rev. 5 offers a widely used catalogue of controls, including access control and audit and accountability. You do not need to implement it wholesale. You can, however, map your logging and permissions to these families and reference them in internal playbooks.
Keep controls understandable. Say what the safeguard does in one sentence and link it to an outcome. Example: “Audit logging captures who accessed which document and when, so we can answer questions later with evidence.”
Cost, support, and the real bottlenecks
The biggest cost is often time. If lawyers struggle to find “recent uploads” or if invitees fight with logins, the friction shows up as extra emails and calls. Support matters. A VDR with responsive help is worth more than a cheaper one that leaves teams waiting. The same logic applies to SharePoint and Box. If your firm has a clear external-sharing playbook and an admin who can fix issues quickly, the total cost can be low. Without that, even free tools feel expensive.
A short decision framework
Answer these questions and the choice usually becomes obvious.
- How many external organisations will access the materials, and do any need to be walled off from others.
- Do you require structured Q&A with exports, or will a simple comment log be enough.
- Will reviewers need offline copies for modelling or only online viewing.
- Who must certify what happened after close, and what evidence do they expect.
- How sensitive is the data and what does “reasonable efforts” require for this matter.
- How much hand-holding can your team provide to guests during sign-in and first use.
If you answered “many”, “yes”, “offline”, or “formal evidence”, a VDR fits. If you answered “few”, “no”, “online”, and “informal evidence”, a well-configured SharePoint or Box site may be faster.
Implementation playbook for either path
If you choose a VDR:
Set up a shallow folder tree and agree a naming format on day one. Create groups by counterparty, not by individual, and grant at the folder level. Turn on watermarks, link expiry, and two-factor authentication. Add a one-page welcome note that explains where to start, how to ask questions, and what the download policy is. During heavy diligence, run a weekly permissions review and export an interim index to spot mis-filing. At close, freeze uploads, export the index and logs, archive the final ZIP, and remove external users.
If you choose SharePoint or Box:
Ask IT to confirm tenant and site-level external sharing settings, guest MFA, and link expiry defaults. Create a dedicated site or space for the matter rather than using an existing team site. Keep the structure shallow and mirror your DMS categories. Use named guest accounts, not anonymous links, unless you have a specific reason approved by the matter lead. Avoid co-authoring on documents that will later sit in the VDR or go to a regulator. Document exceptions to the download policy and record who approved them. Microsoft’s external sharing overview explains the administrative levers you will rely on. Share that background with the matter manager so everyone knows which settings exist and why they matter.
For both paths:
Write down the archive plan before the first upload. Decide who will save the index, the activity report, and the final copies into the DMS. Keep a short run-sheet that lists the roles and contacts. Small bits of process reduce stress when the timetable compresses.
Common traps and how to avoid them
- Permission creep: granting access at the root and forgetting to tighten it later. Start with least privilege and elevate only when needed.
- Version sprawl: letting drafts circulate outside the DMS. Publish stable PDFs to the external space and keep drafting inside the firm.
- No single owner: splitting responsibility for structure, invites, and Q&A across too many people. Name one manager and one backup.
- Late policy fights: arguing about downloads after bidders have already started. Share the policy in the welcome note and stick to it, with logged exceptions.
- Weak close-out: forgetting to export the index and logs or leaving guest accounts active. Schedule a short close meeting and run the checklist.
Bottom line
There is no universal winner in the VDR versus SharePoint or Box debate. There is a right tool for each matter. If you need isolation between many outsiders, structured Q&A, deal-style reporting, and a clean archive, choose a virtual data room. If the group is small and collaborative, and your tenant is ready for guests, a well-configured SharePoint or Box site can be faster and more comfortable. Throughout, keep ethics and evidence in view. The ABA’s guidance on reasonable efforts and the NIST control families provide a simple backbone for your policies and checklists.
