Legal departments left behind in digital initiatives

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Legal departments must reorient themselves around digital projects, says Gartner.
Legal departments must reorient themselves around digital projects, says Gartner.

Legal departments are struggling to support digital initiatives in their organisations.

That's according to market analyst firm Gartner, which reviewed legal departments' roles in 1 715 digital business projects globally.

The study reveals eight in 10 corporate legal departments are unprepared to support their organisations' digital initiatives.

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

"General counsel are concerned that existing legal and compliance practices are incompatible with the speed at which digital business operates," says Abbott Martin, research VP at Gartner.

"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, digitisation looms large as a key driver of near-term business change, the market analyst firm says.

It adds legal departments must reorient themselves around digital project challenges that accelerate existing legal and compliance risks.

Three challenges

The three key challenges, according to Gartner, are:

  1. Changing sources of corporate value: Data rights, customer trust and networks are increasingly valuable assets that need legal safeguards.
  2. Faster and less centralised decision-making: This exerts extreme pressure on traditional legal and compliance controls and risk management practices.
  3. A reliance on customers' trust and data: This demands new models of information governance.

The majority of corporate legal departments are not ready to address these challenges, Gartner found. The 19% of legal organisations 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, it says.

"As digitalisation spreads across industries, so does the severity and variety of information risks for organisations to manage," says Martin.

"The good news is that 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."

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