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81% of Legal Departments Aren’t Ready for Digitization: Gartner

Despite the efforts of Legal Operations legal tech adopters and advocates, and the many expert voices raised about the need to evolve the legal industry?  A Gartner, Inc. report finds the vast majority of in-house legal departments are unprepared for digital transformation.

In compiling the report, Gartner reviewed the roles of legal departments in no less than 1,715 digital business projects. They also conducted interviews with over 100 general counsel and privacy officers, and another 100 legal stakeholders at large companies.

The reveal? That 81% of legal departments weren’t prepared for the oncoming tide of digitization at their companies. That leaves them at a disadvantage when one considers the results of Gartner’s CEO Survey.  Two-thirds of its CEO respondents predicted their business models would change in the next three years, with digitization as a major factor.

Digitized projects and workflows move at an accelerated pace. So it’s crucial that legal and compliance processes manage to stay in step – or else risk becoming operational bottlenecks for the rest of the organization.

Demanding a “new legal framework” involving legal tech

As the report makes clear, the benefits of digital readiness and legal tech transformation of Legal Operations are well worth the amount of commitment and investment they require from an organization:

Legal departments that are ‘digital-ready’ — 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…

It’s apparent that legal leaders at these enterprises aren’t guilty of turning a blind eye to the possible consequences of lagging behind the rest of their organizations when it comes to digital transformation, either:

“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.”

When legal successfully achieves digital readiness, it can better support business agility while maintaining rigorous governance. In this way, legal reduces the potentially crippling risk to an enterprise of failing to act quickly enough to capture the new market and business opportunities of digitisation.

What’s the groundwork for legal department digitization?

Gartner provides a list of key changes a GC and legal department can make in order to become more digital-ready. Those involve clarifying stakeholder roles, building rapid response capabilities, and developing digital skillsets. They’re all relevant, but we’d add another: Establishing the right legal technology foundation will also be central to this evolution.

That requires building a technology adoption roadmap, which begins by asking yourself three questions (courtesy of Kevin Clem of HBR Consulting):

  • What are your goals when it comes, not just to legal technology, but to how your legal department is aligning with your overall company strategy? Finding synergy between Legal and the rest of the enterprise is fundamental to the success of any digitization/legal tech transformation initiative. Simply “modernizing” by adopting new tech tools can do as much harm as good if they’re not in service to enterprise goals, or even fail at technical integration with the transformation path of the rest of the organization.
  • Where are you on the path towards achieving these goals? It’s essential to understand your actual current level of legal tech maturity if you’re going to make decisions about the road forward.
  • What are the major influencers driving you to seek change? Whether it’s internal or external pressures at work, properly addressing them demands dictates appropriate legal tech adoptions choices. In the case of the legal departments in Gartner’s report, one driver is obviously the need to complement the agility and flexibility of the rest of their enterprises. But what are the specific general business requirements as well as Legal Ops needs that you’ll have to satisfy?

As our own Brian McGovern, who lived through this scenario when he led a Legal Operations transformation, explained in an Interview:

“Building a roadmap encompasses all sides of the legal operations process. While ultimately, your technology roadmap for legal management solutions must address pressing legal needs, it has to address business concerns too.”

Transforming from follower to leader

Today’s most advanced, SaaS-based legal technology platforms and solutions make it far easier than ever for an enterprise to address the implementation side of legal department transformation.  Yet charting a prudent technology roadmap toward Legal Rising, and preparing a legal department for the cultural and attitudinal shifts that will accompany that evolution, are the first moves a legal department has to make to ensure success.

Making them means they can more than stay in step with the rest of the organization, but even lead the way forward.