Remaking News of the Week: Legal departments lag in digitalisation

Last year beaton published one of the first reports on how corporate clients view innovation as a strategy for themselves and what they seek from their outside BigLaw firms. The extracts from the findings are illuminating and are worth contrasting with Gartner‘s report on digital transformation of law departments.

beatoncompass report on client-led innovation 

1. When asked ‘What makes law firms innovative’ only 15% gave answers related to any kind of technology. To beaton, this is not unsurprising; in the office towers of Australia in-house lawyers grapple daily with many more things where innovations, other than technology, would make a big difference to getting work done in a better, faster and cheaper way.
2. Startlingly, more than one in four of all respondents replied ‘Nothing’ when asked whether they could name any law firm they would regard as innovative
3. And of the firms that were nominated as innovative, two-thirds were not the primary firm for the respondent. It seems most clients need to look over the fence to find innovative firms – and then the question is are these firms amenable to and capable of helping.
4. To test the well-known truism that a professional services provider can only be as good as their client will allow we asked the respondents how important innovation was to achieving their job-related KPIs. One-third said ‘Very important’ and of these eight in ten said advice from outside law firms on new technologies and processes was important. There is pent-up, unmet demand.
5. Yet when asked about the internal innovations of their law departments, only 11% said these innovations were co-designed and implemented with a law firm. There is an obvious need – and opportunity – for law firms to collaborate with their clients that  is not being filled

Gartner 

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% and increase the number of digital projects with appropriate risk management measures in place by 46%, according to research by Gartner.

“General counsel are concerned that existing legal and compliance practices are incompatible with the speed at which digital business operates,” said Abbott Martin, research vice president 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 digitalization.”

Three key challenges 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 centralized 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.”