Remember the case of British Airways in 2018 when it suffered a data breach that compromised the personal data of more than 400,000 customers? The breach exposed the names, addresses, payment card numbers (including CVV), login credentials, and travel booking details. The attackers were able to harvest data by diverting users to a fraudulent website.

Upon investigation, it was found that the company had violated Europe’s General Data Protection Regulation (GDPR) and faced a hefty compliance fine.  

And it’s not just a one-off incident. As of March 1, 2025, regulators tracked around 2,245 GDPR fines, totaling roughly €5.65 billion. This shows how urgently businesses need to improve their compliance efforts.

This is where legal compliance software comes into play. Instead of waiting for a crisis to strike, modern regulatory compliance software employs smart automation to help businesses stay ahead. With the right GDPR compliance tools, legal and compliance teams can monitor risks, automate checks, and avoid manual mistakes. This shifts their approach from reacting to being proactive.

In short, using legal compliance management software or a legal and regulatory compliance platform helps businesses manage data protection more efficiently, reduce risk, and build customer trust. 

What is legal compliance? 

Legal compliance means following all the laws, rules, and regulations that apply to your business. It ensures that every action your organization takes, whether handling customer data, signing contracts, or managing employees, meets the standards set by regulators.

For GDPR, legal and regulatory compliance focuses on how personal data is collected, processed, stored, and shared. Organizations must show that they protect people's privacy and respect their rights.

Using legal compliance management software simplifies this process. Instead of manually checking policies or tracking multiple regulations, companies can use technology to automate compliance checks, keep accurate records, and respond quickly to new rules.

In simple terms, legal compliance protects your business from risks while building trust with customers and regulators. In the GDPR era, the right legal compliance software can be a strong ally in achieving this.

Read more: A Guide to Intelligent Compliance and Regulatory Monitoring

Why is legal compliance important?

Legal compliance is more than just following rules. It is about protecting your business and your customers. Ignoring privacy rules like GDPR can seriously hurt your business, both financially and in terms of reputation. Here’s why it’s so critical:

• Heavy fines: When organizations don’t comply with laws like GDPR, they have to face heavy penalties. For example, by January 2025, cumulative EU fines under GDPR reached approximately €5.88 billion, a clear signal that enforcement is intensifying.
  
• Reputation damage: Customers lose trust quickly if they feel their personal data isn’t safe. A 2023 Cisco study found that 94% of organizations said their customers would refuse to do business with them if they believed their data wasn't safe.
  
• Operational disruption: Investigations, audits, or lawsuits can slow down business operations and create unnecessary stress.

Strong legal and regulatory compliance gives organizations a competitive edge. When you show customers and partners that you respect data privacy, you strengthen relationships and build lasting trust.

This is why many businesses are using regulatory compliance software and GDPR compliance platforms. These tools help reduce the risk of errors. They also make compliance faster, easier, and more reliable. In short, being compliant is not just about avoiding fines but also about creating a business that people can trust.

How can legal tech help in data privacy and GDPR compliance

Modern legal compliance software makes it much easier for businesses to meet GDPR requirements. Rather than relying on manual checks and disorganized documents, modern technologies provide legal teams with the efficient tools to work faster, smarter, and with fewer mistakes. Here's how:

• Automated compliance monitoring: Tracks GDPR requirements and alerts teams when updates or regulatory changes occur.
  
• Centralized record-keeping: Stores contracts, policies, and processing agreements in one place for easy access.
  
• Data mapping and reporting: Supports GDPR obligations by linking contracts and data flows to specific business processes.
  
• Audit readiness: Provides detailed logs and reports that can be shared with regulators during inspections.
  
• Faster response to Data Subject Rights (DSRs): Speeds up searches for relevant clauses on retention, deletion, or sharing.
  
• Cross-border compliance checks: Ensure contracts and policies account for international data transfer rules.
  
• Integration with workflows: Connects with HR, IT, and security tools to ensure consistent compliance across the organization.
  
  By using regulatory compliance software or legal compliance management software, companies can move from manual, reactive work to proactive compliance. This also helps companies to save time, minimize costs, and reduce risk.

Capabilities legal compliance software should have

The right legal compliance software should do more than just check boxes. It should help businesses manage risk, stay up to date with changing rules, and respond quickly to privacy requests. Below are the essential capabilities that a strong legal compliance management software or GDPR compliance platform should provide:

1. Vendor Management & Data Processing Agreements (DPAs)

Every business works with multiple vendors, such as cloud providers, HR platforms, or payment processors. Each vendor that handles personal data must sign a Data Processing Agreement (DPA). This ensures they follow GDPR standards on how data is collected, stored, and shared.

Tracking these agreements manually is time-consuming and prone to errors. That’s why regulatory compliance software is so helpful. It keeps all vendor contracts in one place, reminds teams when agreements are due for renewal, and makes sure no DPA is missed.

SpotDraft takes this further by automating DPA creation. With its inbuild customizable templates and smart workflows, legal teams can draft agreements faster, cut down on repetitive work, and ensure contracts always meet GDPR requirements. This reduces compliance risks and saves hours of manual effort.

Read more: Protecting Personal Data under GDPR

2. Record-Keeping & Audit Trails

GDPR requires organizations to prove compliance, not just claim it. Articles 5 and 30 specifically emphasize accountability and record-keeping. Businesses must show how data is processed, who has approved contracts, and what changes were made.

A strong GDPR software compliance solution creates detailed audit trails automatically. These trails capture every edit, approval, and sign-off, so nothing gets lost. They also help with Records of Processing Activities (RoPA) by linking contract clauses and metadata to specific compliance requirements.

With SpotDraft, legal teams can maintain immutable logs of contract activity. This means that when regulators ask for proof, the evidence is ready—clear, traceable, and trustworthy.

3. Data Subject Rights (DSRs)

GDPR gives individuals strong rights over their personal data. They can request access, corrections, or even deletion of their data. Businesses must respond quickly—usually within 30 days.

Handling these requests manually can slow down legal teams. Contracts often contain retention terms or clauses that affect how data can be deleted or shared. Searching for these details by hand wastes valuable time.

With legal software for compliance, teams can integrate Data Subject Access Request (DSAR) workflows. This makes it easier to search contracts for relevant terms, verify compliance, and respond on time. SpotDraft simplifies reviews by letting teams instantly locate key clauses, so responses to data requests are faster and more accurate.

4. Regulatory Change Management

GDPR is not the only regulation that businesses have to deal with. Data privacy rules are continuously changing in different regions, and it can feel overwhelming to keep up with them manually. Missing an update can result in non-compliance. 

A good regulatory change management software tracks changes in laws and alerts teams when policies or contracts need updates. This ensures organizations stay proactive instead of scrambling at the last minute.

5. Secure Access & Permissions

Protecting personal data doesn’t stop at contracts; it also includes controlling who can access sensitive documents. If too many people have access, the risk of data misuse increases.

That’s why legal compliance software should include role-based permissions and secure access controls. This makes sure only the right people can view, edit, or approve compliance documents. It adds an extra layer of protection and helps businesses demonstrate good governance.

6. Centralized Repository & Smart Search

Compliance checks often become slow and risky when contracts are scattered across email, shared drives, or multiple tools. It can lead to missing important clauses. Therefore, companies need a platform that can store and manage contracts, policies, and Data Processing Agreements (DPAs) in one secure platform.

With SpotDraft’s contract repository, all contracts are stored in one secure place. Its AI-powered smart search and metadata extraction let legal teams find key contracts or clauses in seconds, cutting down on manual searches and reducing errors. This makes GDPR compliance reviews much faster and more reliable.

7. Reporting & Analytics Dashboards

Legal teams not only manage contracts, but they also need to track performance, spot risks, and prove their impact to leadership. So, businesses need a legal compliance software that can create clear, regulator-ready reports for GDPR and other compliance requirements.

SpotDraft’s contract reporting makes this simple. Teams can create custom reports, schedule recurring exports, and share actionable insights instantly. On top of that, the Contract Analytics dashboard visualizes contract lifecycles, approvals, and bottlenecks. This helps organizations to minimize action delays, optimize workflows, and also clearly demonstrate compliance progress.

8. AI-Powered Contract Drafting & Review

Drafting and reviewing contracts manually takes time and carries the risk of missing critical GDPR clauses. Every contract needs to be precise to protect the business.

SpotDraft’s AI tool speeds this process up. It helps generate contracts, review documents against company playbooks, and even integrates directly with Microsoft Word. This ensures GDPR-related terms like data processing, retention clauses, etc., remain accurate and consistent across every agreement.

Role of AI in data and legal compliance 

AI is becoming a key tool for legal and compliance teams. It can process huge amounts of data much faster than people. This makes it easier to find risks, spot errors, and make sure policies match the law.

AI also reduces the need for repetitive manual work. Tasks like reviewing contracts, searching for clauses, or checking compliance rules can be automated. This saves time and lowers the chance of mistakes.

Another benefit is real-time monitoring. AI can track regulatory changes and alert teams when new laws are introduced. This helps companies stay compliant without always playing catch-up.

In GDPR compliance, AI can support data mapping, check retention periods, and help respond to Data Subject Rights (DSR) requests. It can also ensure contracts are consistent with privacy requirements across different regions.

SpotDraft puts these benefits into practice. Its AI tool, VerifAI, reviews contracts, flags risky terms, and suggests safer alternatives. It also speeds up contract drafting, enforces company playbooks, and improves reporting. With SpotDraft, legal teams get accuracy, speed, and peace of mind—without the heavy manual effort.

Common challenges and how to navigate through

Even with the right tools, GDPR compliance comes with real challenges. Two of the biggest are cross-border data transfer and organizational change.

Cross-border data transfer

GDPR puts strict limits on how personal data can move between countries. Businesses must make sure they have legal safeguards like Standard Contractual Clauses (SCCs) or Binding Corporate Rules (BCRs). The challenge is that laws often change, making it hard to keep track.

Legal compliance software helps by centralizing all contracts with cross-border clauses and flagging risks early. Tools like SpotDraft allow you to update and standardize DPAs across regions, so teams can adapt faster when regulations shift.

Organizational change and governance

Compliance is not only about technology; it is also about people and processes. When companies grow, merge, or restructure, compliance rules often get overlooked. Miscommunication between teams or a lack of governance can create gaps. 

Regulatory compliance software makes governance easier by creating clear audit trails, automating approvals, and enforcing policies. SpotDraft, for example, keeps a complete history of changes and sign-offs, so leadership can maintain accountability and reduce risks during transitions.

Other challenges like managing vendor contracts, responding to Data Subject Rights (DSRs), and keeping up with regulatory change also need attention. With the right legal and regulatory compliance software, businesses can minimize these risks. Moreover, core teams free up from  fixes and focus on compliance.

GDPR and the role of contract lifecycle management software

Contracts are the backbone of GDPR compliance. They set the rules for how an organization can collect personal data, process it, and share it. That makes contract management software crucial. Without effective contract management, it becomes tough to demonstrate compliance.

This is where Contract Lifecycle Management (CLM) software comes in. A GDPR compliance platform powered by CLM tools ensures that every contract, including vendor agreements, data processing addenda, etc., follows legal and regulatory requirements. It also makes sure changes are tracked, deadlines are met, and risks are flagged early.

SpotDraft adds another layer of value by combining AI with contract workflows. Its VerifAI tool reviews contracts for risks, while its reporting and analytics dashboards give compliance teams visibility into obligations, risks, and performance. This helps organizations not just follow GDPR rules, but also build trust with customers and regulators.

In today’s data-driven world, GDPR compliance is not a one-time project. It’s an ongoing process. Using regulatory compliance software like SpotDraft makes it easier, faster, and more reliable.

Interested in knowing how we can help you? 

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Frequently Asked Questions (FAQs)

1. What is legal compliance software?

Legal Compliance Software helps organizations follow laws and regulations, such as GDPR. It automates compliance checks, keeps records, and reduces the risk of human error.

2. How does GDPR software compliance work?

GDPR software compliance tools track data privacy requirements, manage contracts, and ensure that policies align with GDPR rules. They provide audit trails, reporting, and alerts to help businesses stay compliant.

3. Why should businesses use regulatory compliance software instead of manual processes?

Manual compliance is comparatively slow, error-prone, and hard to scale. Whereas regulatory compliance software automates tasks such as monitoring rule changes, managing vendor agreements, and generating audit reports. This saves time, lowers risk, and improves accuracy.

4. Can legal compliance management software help with Data Subject Rights (DSRs)?

Yes. These tools make it easier to locate clauses on data retention, sharing, or deletion. They speed up responses to Data Subject Access Requests (DSARs) and ensure businesses meet GDPR deadlines.

5. What is the role of regulatory change management software?

Regulatory Change Management Software tracks new or updated laws. It alerts teams when contracts or policies need changes, helping organizations stay proactive instead of reacting at the last moment.

6. How does SpotDraft support GDPR compliance?

SpotDraft centralizes contracts, automates DPA creation, and maintains detailed audit trails. Its AI tool, VerifAI, reviews contracts for risky terms, while its reporting dashboards provide visibility into compliance performance. Most importantly, SpotDraft does not use customer data for AI training.