• Jolanda Rose

Responsible Innovation, CDR and the Legal Sector

Let’s create a cohesive approach to lead the CDR transformation for legal – together!

By Jolanda Rose & Bernhard Waltl

Why should the legal sector care? Responsible use of innovation.

Since the beginning of the Corona pandemic, at the latest, there has been no doubt that legal tech and legal operations are no longer a matter of theory, but must be implemented in all areas of the legal industry. Management of legal departments, managing partners of law firms, executives in government agencies and the judiciary are under pressure to do more and more work in less time. Many have had to switch to digital working overnight and have mastered this change more or less successfully.

This change is also reflected in the sharp increase in the volume of investment in legal technology. According to Gartner (https://www.gartner.com/smarterwithgartner/5-legal-technology-trends-changing-in-house-legal-departments), for example, the majority of GCs expect the technology budget of legal departments to increase by more than 200 percent. At the same time, appropriately skilled professionals are becoming scarce and the pressure on the industry to work more efficiently is growing.

Legal innovation is no longer a trendy topic for design thinking challenges, it has become a hard business reality for many legal organizations. Those who do not invest now and drive digital transformation will be left behind. So it happened that the use of technology has become not only a topic which requires operational excellence but also strategic planning. Technological innovation has arrived at the very heart of legal business be it in automatizing internal processes, improving existing business models, or enabling new business models.

In addition to the advancements and technological improvements of the last years in legal tech and legal operations there is an increasing discussion about ethical considerations of technology and their usage. In connection with this, many new questions must be addressed such as:

  • How do we want to use technology?

  • What ecological implications do we need to consider when developing new business models?

  • Does our service delivery model really serve human and societal needs?

Responsible digital innovation will play a central role in modern strategies of legal tech and legal operations within the above mentioned organizations. The trend towards responsible digital innovation is fostered by recent approaches and drafts of new regulations for the digital society. In Europe this is not only due to data privacy and GDPR, but also to the recent draft of the Artificial Intelligence Act, the Data Governance Act, the German Supply Chain Act and the Digital Services Act. The list of new regulations is long and the sanctions proposed in those acts are remarkable. In order to adequately respond to the foreseeable regulations of a digitized society, the implementation of code of conducts is playing a central role. (https://cdei.blog.gov.uk/2021/05/11/the-european-commissions-artificial-intelligence-act-highlights-the-need-for-an-effective-ai-assurance-ecosystem/).

The above-mentioned regulations, even if some of those are not enacted yet, shed a light on the lack of responsibility of companies in the digital world. At the same time, the pressure on the industry to work digitally and efficiently continues to increase. The fact that the two topics are inextricably linked seems to have received little attention to date. Legal experts in particular are likely to be aware that the use of technology carries many legal, social and environmental risks. Whereas in times of the pandemic, the discussion focused on the data protection implications of using video conferencing tools, the corporate responsibility for the use of technology goes even further. Some people are already familiar with the topic under the terms CSR (Corporate Social Responsibility) and CDR (Corporate Digital Responsibility).

However, compared to other industries, the legal industry lags behind when it comes to creating awareness and recognition of the importance of responsible digital innovation. For the legal sector, two areas of application of responsible innovation can be differentiated.

  • Internal: Ethical and responsible optimization of processes for internal purposes If you want to optimize the internal structures in legal departments, law firms and the judiciary and bring them into the age of digitization, it is helpful to think about responsible innovation in all dimensions right from the start of the process optimization. After all, a technology strategy without a corresponding data or responsibility strategy will not do adequate justice to the tasks of this industry and its position in society.

  • External: Ethical and responsible portfolios and (legal) advice In addition, the regulations already in place in the area will be further expanded. Those who act ahead of developments now will have a market advantage and save themselves double investments. At the same time, the topic as a whole offers an exciting field for legal and technological consulting for law firms and management consultancies. Also the judiciary and the corresponding governmental bodies have to deal with its implications in order to develop adequate regulatory guidelines.

Thus, responsible innovation as a concept is relevant for internal processes as well as a crucial future topic for regulation and consulting.

Read our suggestions for solving these issues in our publication at Legal Business World

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