Majority of Legal Departments Not Ready for Digitization, Says Report

Businesses are going digital. But a recent report reveals in-house legal departments are struggling to keep up with the digitization initiatives of their companies. Only 19 percent of legal teams are prepared for a transition to digital processes.

Gartner, a research and advisory firm, reviewed the roles of legal departments across 1,715 global digital business ventures in various industries. Researchers also surveyed legal stakeholders, as well as more than 100 privacy officers and general counsel.

The digital preparedness of corporate legal teams is essential for efficiency and risk management. However, the findings of Gartner’s December 12 report indicate that eight out of 10 in-house legal departments are unequipped to support the digitization efforts of their companies. According to the research, digital-readiness resulted in an overall 63 percent increase in on-time delivery of projects and 46 percent boost in projects that implement proper risk management protocols.

The report identified several key challenges that legal departments must deal with, along with recommendations for how to better support digital business efforts. Lawyers should address the necessity of providing legal safeguards to valuable corporate assets such as data rights. In addition, traditional risk management measures need to make way for quicker, decentralized decision making. The third challenge involves having to implement new forms of information governance due to a growing reliance on customer data and trust.

Gartner found that most company legal providers are not prepared to tackle the challenges. The report identified four main areas they can work on to increase their digitization readiness. Clarify the roles of stakeholders to avoid delays. Doing so can help legal teams identify who will be making decisions and define the points at which they should be involved in digital projects.

1. Clarify the roles of stakeholders to avoid delays. Doing so can help legal teams identify who will be making decisions and define the points at which they should be involved in digital projects.
2. Develop rapid-response capabilities to address issues such as time management. Legal teams must be equipped to respond quickly to the constantly changing digital needs of businesses.
3. Cultivate digital skills that reflect a conscious transition from traditional legal undertakings to an approach that is aligned with the new types of legal issues that arise in digital business.
4. Design a “fit-for-business” information governance structure that replaces a rigid rules-centric model with an approach that focuses on decision making and works more effectively with digital projects. Despite the rise in information governance risk, just 37 percent of legal providers said they have implemented a proper information governance model.

“As digitalization spreads across industries, so does the severity and variety of information risks for organizations to manage,” said Abbott Martin, Gartner’s vice president of research. Martin touted the flexibility of the “fit-for-business governance model” when implementing digital initiatives.

Legal departments face the additional difficulty of having to work within the frameworks of new privacy laws across the globe, including the California Consumer Privacy Act and the EU’s General Data Protection Regulation. “Many companies are investing in individual capabilities to manage risks in a data-rich environment, such as building a stronger privacy program or increasing spending on cyber security,” the report stated.

With nearly two-thirds of companies surveyed expecting changes to their business models in the next three years, in-house legal teams must embrace digitization as a driving force. By prioritizing digital preparedness, legal providers can position themselves to better support the efforts of their organizations.