19 December 2018

81 percent of legal departments unprepared for digitalisation

Eight in 10 corporate legal departments are unprepared to support their organizations' digital initiatives, according to Gartner Inc.

‘Digital ready’ legal departments, those properly prepared and positioned to support digital business efforts, can increase on-time digital project delivery by 63 percent and increase the number of digital projects with appropriate risk management measures in place by 46 percent, according to research by Gartner.

Compatibility concern

While 81 percent of legal departments are unprepared for digitalization, those that are increase on-time project delivery by 63 per cent, the research reveals. Abbott Martin, research vice president at Gartner, says ‘general counsel are concerned that existing legal and compliance practices are incompatible with the speed at which digital business operates’’ and ‘most attempts we have seen to remedy this don’t strike the right balance between responsiveness and appropriate risk management; few legal departments have developed a comprehensive framework for digitalisation.’ With two-thirds of respondents to Gartner's ceo survey expecting their business models to change in the next three years, digitalisation looms large as a key driver of near-term business change. Legal departments must reorient themselves around digital project challenges that accelerate existing legal and compliance risks, researchers say.

Challenges and recommendations

Three key challenges are changing sources of corporate value, faster and less centralized decision making, a reliance on customers’ trust and data, and, the majority of corporate legal departments not being ready to address these challenges. The 19 percent of legal organizations that are digital-ready deliver three-and-a-half times fewer projects with inappropriate risk taking and two-and-a-half times fewer delayed projects. Mr Martin says general counsel seeking to make their organisations digital-ready should prioritise four key changes to their department's processes: clarify stakeholder roles, build rapid-response capabilities, develop digital skills, and, design ‘fit for business’ information governance. He says a ‘fit-for-business’ governance model ‘is flexible enough to account for the type of real-world trade-offs inherent to digital initiatives. It is not merely checking the boxes of regulatory requirements.’