Don't Let the Digital Tail Wag the Transformation Dog: A Digital Transformation Roadmap for Corporate Counsel
61 Pages Posted: 10 Feb 2022 Last revised: 23 May 2022
Date Written: February 6, 2022
Due in part to the COVID-19 pandemic, enhancements in technology, as well as shifts in the macroeconomic and socioeconomic dynamics of globalization, Digital Transformation (DT) has become an enterprise-wide imperative for most multinational companies (MNCs). As a result, legal departments are being challenged to embrace enterprise DT and start their own departmental DT journeys. Despite these trends, there is little scholarship and research about how MNC legal departments are addressing the DT challenge. How are General Counsel (GCs) currently approaching DT? Is what they are doing effective and value-accretive? And importantly, how should GCs approach DT to best generate value?
This Article attempts to fill the literature gap. Based on interviews of 25 GCs and Chief Digital Officers of S&P 500 MNCs along with the authors’ professional experience and secondary research, we explore how legal departments are responding to and approaching DT. We identify a Three-Phased Digital Maturity Framework that maps the typical MNC legal department DT trajectory. We argue that this trajectory is suboptimal because it emphasizes technology at the expense of the foundational, non-technological elements of DT that are critical for success. Too often, GCs appear to let the digital “tail” of DT wag the transformational “dog”. The legal department must itself be fully transformed before the digital elements can add full value. By failing to ensure that the non-digital foundations of their departments are fully transformed in collaboration with the business before they introduce new technologies, GCs are leaving the most difficult aspects of DT—the organizational and structural, behavioral, and cultural changes—for last. This post-hoc approach (that leaves client-centricity and change management last) is disruptive, adds unnecessary cost, and threatens the credibility, viability, and timing of the entire DT effort on a go-forward.
As an alternative to this typical three-phased approach, we articulate a Best-Practice 5-Step for how GCs should approach DT. Ours is distinctive in that technology is only considered and applied after the service delivery model has been designed and processes have been optimized in accordance with the broader strategic and organizational contexts of both the legal department and the MNC itself. Moreover, our is iterative. Ours is also distinct in that throughout this process, change management principles are thoughtfully and consistently applied in each step. Contrary to standard depictions, we contend that if deployed correctly, DT can significantly transform how a legal department operates and can enable legal departments to add value in ways that go beyond generating efficiencies, reducing costs, and increasing speed-to-market. Our model provides a roadmap to help GCs better execute DT and leverage DT-generated data and insights, moving the legal department away from its standard depiction as a cost center to that of a revenue generator and value creator that is seamlessly integrated with the rest of the MNC.
In addition to filling some of the gaps in the literature, this article provides a vision that has broad applicability beyond the MNC legal department context and can be used as a model for law firms and other legal services providers to harness DT in their own contexts, so as to keep pace with—and better serve—their digitally transforming client base.
Keywords: Digital Transformation, Innovation, digitize, legal department, corporations, corporate legal department, law firms, legal, ESG, AI, blockchain, legal technology, alternative legal service providers, lawyers, general counsels, law firm partners, data analytics, corporate purpose
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