The legal system must constantly adapt to changing circumstances and new technologies – this also applies to its local offshoots in companies around the world. Digitization reinforced this need with a flood of disruptive innovations, new realities, and global changes that legal departments must keep pace with.
Our everyday life, our environment and our work have long since been digital – and that will not change in the foreseeable future. In many minds, digital transformation is associated with the absence of analogue documents, but in reality it goes much further than reduced paper consumption: the general networking of devices, people and applications, the broad and affordable availability of high-performance end devices, the comprehensive application of complex technologies such as artificial intelligence or cloud computing, and the collection and processing of huge amounts of data are the cornerstones of these extensive changes.
As these upheavals pour out over us and resistances gradually wash away, different divisions of the company also feel compelled to react to these developments and to adapt their own processes, tasks and often self-understanding. Legal departments and consultants find themselves in a key position that requires them to deal with such developments confidently and to integrate them into their daily work.
Digitisation in contracting
Contracts are the basis of business cooperation and the legal transactions necessary for the smooth operation. It is therefore only logical to design this basis safely, reliably and optimally.
To this end, Contract Lifecycle Management (CLM) provides a system that allows access to contracts, their analysis, communication, revision, auditing, and more—from anywhere. Local unbound became an important factor in the administration of justice at the latest at the beginning of the Covid-19 pandemic and should be included in future considerations.
The testing of such contracts is already carried out by artificial intelligence and the effects are enormous: Due to the extensive data base (millions of contracts around the world can be used as “learning material” for AI), deviations, ambiguities and optimization needs can be reliably detected and marked. The accuracy of the accuracy is astonishingly high – so high that corresponding systems are considered more reliable than human examiners.
According to the (unwritten) principles of digitization, CLM systems are always achievable, can handle any contract and are easier to use than their predecessors were. After all, digital transformation only takes place if real added value is generated by the innovation. In contract management, this is not only due to simplified cooperation, but also to the improvement of work processes and associated optimizations.
Digitalization in data protection
While the importance of data for business success cannot be overestimated, data protection is also taking on an increasingly important place. Compliance with the respective directives is not only necessary from a legal point of view; the company’s image is also in dire need of data leakage.
Hardly any event destroys a company’s reputation as much today as the loss of customer data. When private information is disseminated through a hacker attack or simply carelessness, the damage to reputation by customers and business partners is often difficult to repair.
The modern digital legal department is therefore an internally networked hub that takes care of data security in close cooperation with the other units. Various information is also subject to different guidelines and degrees of necessary encryption.
The collection of data has become a very important pillar of entrepreneurial success in recent years. In times of global connectivity, lightning-fast information gathering, and ubiquitous availability, end customers are no longer willing to accept products and services that they don’t fully agree with. This includes, in addition to providing the perfect performance at the perfect time in the perfect place, also difficult-to-grasp factors such as the social appearance of a company. Only those who know their customers, their opinions and behaviours inside and out have a chance to survive in the modern market. Data processing seems to be the only way to achieve this goal.
Together with IT, the legal department ensures that all locations are known and have been provided with appropriate security measures. In close coordination with customer support, call center, marketing and sales or other units that work directly with customer data, guidelines are developed and employees are constantly sensitized. The HR department checks the security of personnel files and applicant data and even the cleaning of the building is obliged accordingly not to inspect any documents found.
No matter which department it is, it inevitably has close contact with the digitized Legal Department to ensure data protection.
The introduction of the European Data Protection Directive GDPR can be seen as a key event that has highlighted the need for a modern legal department in times of digitalisation. This extensive and draconian regimen presented companies with a tough test. While dubious consultants and self-appointed experts went door to door to offer their services, it was in fact the legal departments of medium-sized enterprises that worked a lot of overtime to implement the requirements.
In this process, many legal experts came into contact with the full force of digitization for the first time: The sheer amount of data and the different locations were a neglected topic, which lawyers and lawyers had to deal with instead of data analysts and database architects. The result was a new awareness of the topic and an increased need for technical solutions, the effects of which can still be felt today.
A new category of software that was created only a few years ago is AI-based data protection systems. Artificial intelligence is used to identify typical patterns that need to be protected in general. This includes, for example, customer names, addresses, credit card numbers, but also contracts, sensitive financial data or strategy papers.
Documents that are typically circulating between the cloud, intranet, Internet, e-mail servers, etc. are examined for this information that is worthy of protection and are detected with extremely high precision. The corresponding files can then be automatically withdrawn from circulation and stored securely. It is also possible to encrypt or mark for submission to a clerk.
Such systems, such as those distributed by major manufacturers such as Microsoft or IBM, provide permanent protection against unintentional or criminal data loss. With an ever-increasing amount of data and a variety of locations, the task of data protection can quickly become unmanageable. Technical solutions such as these can provide great services here.
Digitization in patent and trademark law
Patents are certainly not equally relevant for all companies. However, those who rely on them to protect their property or acquire rights of use are quickly confronted with the complex and frustrating reality of patent law.
Blockchain technology is facing an unprecedented revolution in this area of law: the system of decentralized, tamper-proof exchange of information offers the possibility of a single, worldwide database for patent and trademark matters. In this, requests can be looked up and immediately checked for authenticity using the hash code.
Anyone who acquires a new patent or has a trademark name, logo, etc. for registration attaches this information to the chain in the form of another block. The advantages lie in the worldwide, unambiguous assignment of rights, since the creation time was clearly recorded in the blockchain. Later claims of other people can be easily and finally refuted – the database is right.
The testing of terms regarding brand status is also simplified with such a blockchain. This allows you to resolve uncertainties in the use of terms in seconds. For years, the term “webinar”, for example, has been the subject of the legendary legend that it is a registered brand name. With a brand blockchain, this theory could be stopped in a mouse click.
However, these changes would make a large number of people employed in patent law superfluous, which is why, despite the many advantages, a strong lobby argues against the use of blockchain technology. Unfortunately, therefore, the actual implementation remains questionable for the time being.
By the way: “Webinar” IS a registered brand name. However, the unlawful use is not currently being prosecuted.
Fear of digital change
Employees of legal departments, like many colleagues from other fields, fear the implications of digitization in their field. It is also in the professional nature of lawyers and co. to examine and critically examine the corresponding dangers of new technologies. This is a circumstance that has already led to great resistance in the past.
This fear of digital transformation is usually based on two pillars:
On the one hand, the general fear of many workers (regardless of industry and qualifications) that new technologies and the working system will transform their own activities to the point of being unrecognizable or simply become superfluous. These are, in principle, legitimate concerns; however, they fail to understand the long time it takes for these changes to take place. New tasks are added to the previous ones in easy-to-digest appetizers and slowly displace old, monotonous activities from everyday work. This happens over several years, so that even unmotivated workers can easily keep pace with further training and minimal openness to new developments.
The second basis of fear and rejection, especially in legal departments, is the focus on looking at the risks and problems inherent in the field. Through the everyday handling of the negative consequences of change, there is hardly a way to avoid becoming suspicious of innovations in general. And there is no shortage of horror scenarios in terms of digitalization!
Because this is a global phenomenon and literally billions of people are affected by the digital transformation, there are also plenty of examples of failed tech integrations, running customers or employees. Similar to the media concept that almost only negative news makes it into the news, negative examples have a much wider reach here and remain in our minds longer and more strongly. In absolute, realistic terms, however, these fears cannot be kept: digitisation creates incredible optimizations and does not cause a noticeable increase in unemployment.
The realization that digital technologies allow enormous simplifications in the everyday life of a legal department is unfortunately only slowly beginning to triumph over the deep-seated – but ultimately unrealistic – fear scenarios.
The classical legal department is an area with a high proportion of manual activities, such as contract reviews and general review of documents. So it benefits to the greatest extent from the changes brought about by digitalisation.
In addition, since it also has filing cabinets of historical data, the field is excellently suited for the use of artificial intelligence, as its results become better and better as the data base increases. It is therefore not surprising that numerous new software is available that fundamentally simplifies and automates the everyday life of the Legal Department.
On the other hand, the implementation and general receptivity to new technology and work processes usually still looks rather bleak. Whether because of the culture of law or because of the specific positions held by those departments within an enterprise; in many cases it is one of the least digital areas of a company.
As a cause, numerous innovations have accumulated in the recent past, all of which are now waiting together for implementation. As it becomes time by piece impossible to refuse to accept these changes, many legal departments suddenly face several deep-to-do innovations at the same time. A difficult situation – more difficult, for example, than in departments that are generally more interested in new technologies and constantly renewing themselves.
However, the digital transformation does not stop there. Legal departments are facing major upheavals that will not be easy to deal with. The good news, however, is that the results will be felt in the form of increased productivity and simplicity of everyday work, opening up new, interesting fields of activity.