New technology is often far ahead of settled legal frameworks, giving rise to regulatory terrain that can be challenging for businesses to navigate. In the final Insight in our series on the digital future (adapted from an article written for the 2019 Bristol Technology Showcase), we look at how lawyers can help guide a path through this unfamiliar landscape.
As we have explained in the previous articles in this series, transformative technologies can enable new products, processes and services. They can create completely new markets or facilitate disruptive new business models in existing ones. Sometimes we are asked what lawyers have to do with all of this?
The answer is often focused on the data. There is not just the need to handle personal, employee, customer data in a GDPR-compliant way, but broader issues around the contractual frameworks to govern the sharing and use of data, or the licensing arrangements which sit at the heart of generating revenue from data, and which underpin business models where data is seen as an asset. IP rights around data are often limited, which makes the contractual protections, and practical ways of dealing with data, even more important. Greater connectivity and data use may also need careful attention to cyber-risk and preparedness for a data incident.
Lawyers might get involved because the new technology is too new for a settled legal framework to exist around it, and the terrain is hard to read. Some forms of advanced technology are too different to what has gone before to fit readily into established models of liability or risk.
Creative and insightful thinking is needed to navigate uncharted legal territory, to corral risk and structure liability in manageable and commercially workable ways. In this way, legal uncertainties can be managed, rather than leaving them to be fought over should something go wrong in the commercial partnership and the issues crystallise into a full-blown dispute.
New technology and/or talent might be licensed or, where it is core to future strategy, might be acquired. Negotiating tech mergers and acquisitions is a significant way in which lawyers contribute the process of strategic repositioning of a business.
Digital transformation strategy
Sometimes, the answer concerns procuring and developing the software and technology needed to generate the digital transformation. Huge IT projects need terms and conditions and enforceable KPIs. Lack of due diligence, scoping, change control or attention to transitions into and out of contractual relationships are frequent causes of disputes. Cutting-edge innovations need to be protected with intellectual property registrations and licensing, and may need commercial partnerships to launch them out of the research labs and into the revenue-generating wider world.
Ongoing digital connections in the supply chain increase the potential entry points for cyber-attacks on a business, and so liability frameworks need to be agreed and performance expectations documented.
Sometimes the need for legal advice is around the new business model which has been developed. Business-as-usual may have been tipped upside down. New business models typically need to be reflected in new customer terms and conditions and new service levels. They may need different staff with different incentive packages to support them, may need to be financed in different ways, or may involve different tax considerations.
Sometimes legal input concerns the impact of digital initiatives on the workforce – advice might be needed on rights and obligations around redeploying staff, around reskilling them and creating new opportunities for them in a fair and non-discriminatory way, or on restructuring programmes.
The regulatory landscape
Finally, the answer to why lawyers get involved in digital transformation initiatives often turns on regulation, rules and requirements. There may be particular rules for regulated sectors that will shape the project. More generally regulation can impact on product design, health and safety, payment systems, procurement, environmental aspects, the way data is handled, or many other angles. All of these constraints or compliance risks need to be designed into the new processes from the outset, not retrofitted.