General Counsel And Technology Risks

30 October 2017      

Today’s global upheavals are having a profound impact on the role of the general counsel within the manufacturing sector. To measure the impact of this technological and geopolitical change, and shed light on the new legal responsibilities and challenges facing general counsel, Forbes Insights and global law firm K&L Gates conducted a survey of 200 general counsel, as well as nonlegal senior executives, and engaged in qualitative interviews with general counsel in Germany, the U.K., France, Italy, Poland and Spain.

The full report, “General Counsel in the Age of Disruption,” sponsored by K&L Gates, explores the role that the general counsel plays, as well as future expectations for the manufacturing industry, outlining the trends reshaping this role and the strategies manufacturers are embracing to ensure success in this age of disruption.

The fourth industrial revolution is just gaining steam—to use an expression more suited to the first revolution. Embedded sensors are alerting plant managers to potential machinery malfunctions, eliminating production delays and costly repairs. Cobots, which are computer-controlled robotic devices designed for shared workspaces, are outpacing human co-workers on production lines while reducing design errors. And automated workflows are generating reams of data, enabling manufacturers to optimize their processes. In fact, European manufacturing executives point to cloud computing and the Internet of Things (IoT) as the most utilized technologies.

However, because the manufacturing sector is built around machines, technological advancements are not only an opportunity — they’re a considerable risk. It must be noted that we are just at the beginning of the utilization of the IoT, and its risks will only become more apparent with the introduction of self-driving cars or further use of robotics in the medical field, for example.

By far the biggest risk and legal issue that is being introduced with technologies such as the IoT is cybersecurity. Survey respondents rank it in the top three of the most important trends relevant to the organization from the legal perspective and as the area of legal expertise that will be the most needed over the next three years. For example, in a controlled experiment, researchers at the University of Washington in Seattle managed to hijack a tele-surgery robot. Even surveillance drones and self-driving cars have been successfully hijacked by researchers.

Digitization is affecting not only the business environment but also the legal profession itself. For example, there’s ROSS, an artificially intelligent technology tool created by IBM that can draw inferences from legal materials and provide evidence-based answers to legal questions. Technology is even altering the competitive landscape, as legal departments must make decisions at the same lightning-speed as smaller and more nimble competitors.

And then there’s the impact of technology on the supply chain. New technologies are transforming the supply chain into a digitized, customer-centric, real-time and transparent platform of multiple clients or vendors. While such features go a long way in optimizing operations and distribution, they are a moving target for legal executives. The top transformations that manufacturing supply chains have been undergoing are: improving flexibility, agility and time to market (71%), and creating real-time visibility (60%), which only make it harder for lawyers to stay on top of the issues. In fact, of the functions and departments respondents find the most challenging from a legal perspective, the supply chain ranks third highest (75%).

Myriad legal issues can arise from an agile and transparent supply chain, including the ability to vet all participants or ensure compliance with international labor laws.

In addition to compliance matters, the top two legal issues pointed to by survey respondents as associated with digitizing the supply chain are cybersecurity risks (58%) and data and information protection (54%). Part of the problem is that digitized supply chains make it difficult for general counsel to keep tabs on the safeguarding and whereabouts of data as it traverses multiple, geographically scattered networks.

We’ll revisit general counsel yet again in an upcoming post looking at survival strategies for European manufacturers.

This article, by Hugo Moreno, originally appeared in the Forbes.com Thought Leaders blog.

General Counsel And Technology Risks

Find More Items Tagged As: GCs in the Age of Disruption, Manufacturing