By Jolanda Rose and 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.
We cannot simply copy frameworks that apply to every business. Rather, we need to design a responsible innovation framework adjusted to legal workflows. The responsibility of (legal) companies is not limited to the digital, ecological, or social dimension. To responsibly drive innovation and progress in your organization, a holistic view on the upcoming challenges is required. This can be referred to as the ‘missing element’’ in the current strategy discussions on technology deployment, responsibility and new business models: Responsible digital innovation.
Corporate Digital Responsibility (CDR) is an important topic for all business leaders worldwide and has gained tremendous momentum in recent years. CDR, as a business requirement, has not yet been adequately addressed by the legal sector. Other domains, or domain-agnostic areas are much more advanced regarding these topics. In 2015, the United Nations published 17 Sustainable Development Goals (SDGs), which was a milestone of a process that was ongoing for decades (https://sdgs.un.org/goals). These SDGs cover highly relevant areas of our daily life, such as
Good Health and Well-being’,
Gender Equality’ and
‘Peace Justice and Strong Institutions’.
More specifically to the area of digitalization the High-Level Expert Group on Artificial Intelligence (HLEG AI) of the European Commission published seven key requirements (https://digital-strategy.ec.europa.eu/en/library/ethics-guidelines-trustworthy-ai), such as:
‘Technical Robustness and Safety’,
‘Transparency’ and
‘Privacy and Data Governance’.
However, the legal sector can only be inspired by those principles and try to align their strategies with initiatives like UN SDG or the HLEG AI.
What do we need to work on? CDR Framework for Legal.
In order to successfully achieve the transfer, the creation and the integration of digital responsibility principles in the legal sector we identified three main areas:
We, as legal professionals, need a common understanding of Corporate Digital Responsibility for the legal sector.
We, as legal professionals, need a holistic CDR Framework for the legal sector reflecting our needs by taking the private sector, public authorities, and legal scholars into account.
We, as legal professionals, need a framework that is created, managed, and improved by the legal community to avoid being led by others on this important topic.
In order to get to the relevant assets we need to act on different levels and work on different areas, namely CDR for Legal:
Framework - A set of principles and dimensions of responsible innovation for the legal sector.
Together, we aim at developing a framework to promote the integration of CDR principles in the legal sector. The CDR Framework consists of principles, guidelines, recommendations, and benchmarks for the different dimensions, which need to be discussed and identified, and it shall be made publicly available for the legal sector.
The framework combines a digital ethics code with a practical ethical legal innovation roadmap. It provides clarity on the different levels of CDR for the legal sector and allows for thorough discussion and deep-dives on certain topics as an overarching framework. The ethical legal innovation roadmap enhances the framework with integrated benchmarks and methods for practical implementation makes research accessible and change easy.
To support legal professionals and institutions in achieving their responsible digital innovation goals, the Liquid Legal Institute and its members will put their collective wisdom to work and create this CDR Framework for the Legal sector reflecting both, chances, and risks.
Insights - A set of specific and actionable guidelines, benchmarks and best practices for successful CDR implementation.
We plan to apply this framework to different legal contexts and focus topics and tailor it to various areas of use. To enable collaborative learning from these practice cases, we will make the experiences, relevant data and obstacles to implementing CDR for Legal available on a digital platform. We are creating a unique, constantly growing collection of insights that map practical insights for further, broader research on the development of CDR in the legal sector. It will include important measures, checklists and guidelines on how to make the topic operationalizable.
Resources - A comprehensive overview of related, complementary projects and information.
We are developing a digital collection of informative articles, websites and partner projects providing easy access to the topic.
Furthermore we will share scientific publications and data to allow a deeper understanding of responsible innovation and CDR.
To achieve these goals, we need to define the role and responsibility of the legal community on the various dimensions of CDR. As a starting point, we have identified several relevant dimensions, such as
Health and Well-being: How can technology be used to fight the declining mental well-being of legal professionals and how can we actively control the health risks inherent to digitalization?
Diversity and Inclusion: How can digitalization promote – and where does it hinder – the advancement of minorities in the legal industry? How can we improve accessibility to Legal for handicapped people?
Digital Systems and AI: Does legal need a code of conduct for the usage of AI systems in their profession? How can legal operations support routine, time-consuming, and low-value activities?
What do we need to get there? A Community.
Ultimately, it comes down to one thing: we need a community of professionals advocating for CDR for the legal sector. The community must not necessarily consist of legal professionals only. On the contrary, an interdisciplinary, diverse, technology-affine and open-minded community would be best. The community needs to act decisively and must be willing to go into tough debates, because the topic at hand is complex and needs to be discussed controversially.
The Liquid Legal Institute (LLI) has decided to start this discussion for the legal sector and to offer its collaboration platform to discuss and define the role and responsibility on the various dimensions of CDR. We at the LLI are an open platform connecting leading experts from different areas such as legal innovation, software industry, digital ethics, compliance, and corporate digital responsibility. We are excited to develop a common CDR framework for the legal sector, which can be integrated into the strategies of law firms, legal departments and public authorities. It should be useful for everyday decision making in complex environments and support the exchange of insights. In addition, the CDR framework is constantly evolving to be up to date as circumstances change and the CDR guidelines need to be adjusted. During the last months, and several successful projects, the LLI has proven to be an ideal platform to establish this community, to work on this topic, and to drive the CDR transformation for the legal sector.
“Let’s create a cohesive approach to lead the CDR transformation for legal – together!”
About the Authors
Jolanda Rose is leading the ‘Corporate Digital Responsibility - for the Legal Sector’ project at the Liquid Legal Institute. She is working as a junior initiative manager for the global legal technology initiatives at KPMG International and as an associate in legal process and technology at KPMG Law. She has been writing about law, tech, ethics and business for many years on lawtechrose.com and other publications to advocate for responsible innovation.
Dr. Bernhard Waltl is board member and co-founder of the Liquid Legal Institute, a German based think tank for legal innovation. He is a computer scientist and has been working at the intersection of law and digital innovation for many years. He did his PhD at the Technical University in Munich and was a visiting research fellow at Stanford University (CodeX - The Center for Legal Informatics) in 2017.
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