A 4-pronged approach prepares legal departments to support digital initiatives while still managing risk.
“Our organization is increasingly virtual, a network of services and third-party providers core to the business we will become,” says one general counsel (GC), pointing to the challenge for GCs everywhere as organizations transform to capture digital opportunities.
“For the GC, digitalization means new sources of value to protect, more complex operating processes to support and more information-related risks to manage,” says Abbott Martin, Vice President, Team Manager, Gartner.
How legal departments build capabilities to govern risk within digital initiatives matters more than the legal advice they provide
In an effort to support digital business, most legal departments focus on early visibility and direct client support on individual projects. But this approach often trades risk management for speed.
“Our research shows that how legal departments build capabilities to govern risk within digital initiatives matters more than the legal advice they provide,” says Christina Hertzler, Practice Vice President, Gartner.
4 ways legal should support digital projects
Legal departments that are “digital-ready” — properly prepared and positioned to support digital initiatives — can increase on-time digital project delivery by 63% and increase appropriate legal and compliance risk taking by 46%.
To be digitally ready, legal departments must shift their approach to manage specific changes created by digitalization — more stakeholders, more speed and iteration, and the increased technical and collaborative nature of digital work, as well as new information-related risks.
Clarify the role and accountability of stakeholders
A typical digital project has six team members, 10 stakeholders and a wide network of partners on whom value capture relies. Many of these stakeholders have unclear mandates and ill-defined roles. To drive project execution, the legal department needs principles for when it should be involved, a method for stakeholder coordination, and a system for reducing legal back and forth. To clarify stakeholder roles, establish cross-functional decision rights across stakeholder groups and remove unnecessary involvement in digital projects.
Build rapid-response capabilities
The needs of a digital business change rapidly and legal must be able to respond quickly and at scale. But staying reactive to client needs will never enable the necessary shift toward proactive process and client self-service. General counsel must build a department capability for service model change and innovation by addressing common obstacles (such as lack of time, poor change management skills and poor understanding of client need) that prevent rapid response.
Foster digital skills and competencies
As company strategy and business technologies change, so too will the work of the legal department. As such, it’s not surprising that legal skill development is viewed as a priority. But addressing the long-term needs of the business can’t be resolved by simply hiring an expert on digital law or routinely using outside counsel. General counsel must understand where corporate needs are heading and invest in platforms for continued development.
Ensure a business-focused approach to information governance
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 cybersecurity, but these investments don’t address the fundamental issue: Decisions on data require cross-functional coordination to balance risk and reward.
Most organizations lack a coordinated, cross-functional approach that addresses how data can be used (what is the law?), how it should be used (what do we do with gray-area decisions?) and how to allocate decision rights to balance multiple perspectives (such as risk functions, business leaders and data analytics experts).
Read more: 3 Shifts by Legal to Meet Business Needs
Gartner for Legal & Compliance Leaders clients can read General Counsel’s Guide to Enabling Digital Business Transformation.