Technology bundling, metaverse and internet regulation: Deloitte Legal’s Predictions for 2022

Introduction from Andrew Joint, lead partner for legal advisory: “We come to the end of a year that has seen some truly generation-defining events. These include an ongoing global pandemic, the fragilities of world-wide supply chains being laid bare, the increasing friction between regulators and big business regarding the control of our digital worlds, and material climate change impact dominating newsfeeds, to name a few.

“The influence of this unique set of disruptions can be seen in both the variety and potential impact of the predictions made by some of the Deloitte Legal team for the year ahead. They touch upon our online and real worlds, and how we work, rest, play, and even pay. For the legal practices, we also see an ongoing period of transformation for the profession – something that has only accelerated in the last 24 months.”

Legal Technology

More legal front doors to open for business

Bruce Braude, chief technology officer, Deloitte Legal: “2022 will see a continuation of trends that we’re already seeing in the self-service space. More GCs and Legal COOs will turn their attention to improving their 'legal front door’ in order to make it easier for a business to access its own legal department. Artificial intelligence, machine learning and natural language processing technologies have improved enormously in recent years, meaning that self-service portals are now much more intuitive for users, going far beyond simply responding to requests.

“Not only does this significantly enhance the service experience that a business receives from its legal department, but it also enables the legal department to become more insight-led within the business, delivering material improvements in service levels and efficiency. All this means that inhouse lawyers will be freed up from having to respond to routing queries, allowing them to focus instead on tackling more complex issues.

“Another trend that we’re likely to see grow next year is in relation to technology being bundled together with legal advice. When a business requires external legal counsel, increasingly law firms are incorporating sophisticated technology solutions as part of their advice. This can take the form of managed services, data analytics or knowledge management technology, and it just goes to show how the delivery of legal advice has evolved dramatically in recent years.”

Legal advisory

The metaverse and the intellectual property battleground

Rachael Barber, partner and IP specialist: “The metaverse will be a key battleground for intellectual property law in 2022. With the promise of virtual ‘worlds’, consumer brands are carefully looking at what to do in the metaverse and assessing which platform - or whether to create their own - will achieve the best consumer reach or targeted demographic for them.

“Brands are clearly seeing the metaverse as an opportunity to reach new audiences or to engage with their current client base in a new way. Not only can they now sell a physical handbag in a bricks-and-mortar store, but they can also sell a virtual one in a virtual store.

“However, the metaverse reveals a matrix of legal implications, particularly for intellectual property. We are already starting to see brands extend their trade mark protection to cover the metaverse and begin to consider patent, copyright and design right implications of this shift to the virtual. For some consumer brands, they are already recognising the significance of these new revenue streams. It is therefore crucial for brands to ensure they have an appropriate IP strategy in place, to capture the IP they create and have full ownership of it in the virtual world.”

Internet law and regulation: Getting it right in 2022

Joanna Conway, partner and internet regulation specialist: “A key legal trend in 2022 for digital businesses - and a priority for General Councils - is how can their teams stay on top of the internet law changes that are on the horizon? Legal functions need to support their business client to understand, prepare for and comply with this mass of new laws and to operate in a higher legal and regulatory risk landscape. Getting this right can constitute a key competitive advantage. Getting it wrong has legal, commercial and reputational ramifications.

“The Digital Markets and Services Acts and Online Safety Bill aim to address a key issue of our time: how do we regulate and legislate for the internet? Unquestionably, businesses need to prepare for the new legal landscape and closely monitor the progress of these legal measures through the legislative process.

“Content law is like GDPR but bigger. Trust and Safety functions at digital companies need to address the complex and fast-moving area of content laws and risk. That is not easy and legal teams will be required to assist with difficult issues such as: (i) content law is not singular; it comprises all the different legal measures and principles which apply to specific harms and which vary by jurisdiction; (ii) determining what constitutes ‘harmful’ - but legal - content is challenging; (iii) future proofing for laws that are currently in draft, including the EU’s Digital Services Act and UK’s Online Safety Bill, which will legislate for unlawful or harmful content at an overarching level. These issues, coupled with requirements for transparency on content moderation, rights for users to challenge decisions and obligations to maintain rights to free speech, make this a challenge for the legal teams of any digital business.”

Employment law: ‘Resourcing up’ to face the “Great Resignation”

Marian Bloodworth, partner and employment law specialist: “The race for talent will continue to be the prominent employment trend going into 2022, as employers focus on ‘resourcing up’ and building skilled workforces. Whilst the employment market is good, employees will have greater influence. This means we will continue to see challenges over contractual terms that purport to restrict employee moves, such as non-compete covenants, and non-solicitation restrictions. Businesses looking to attract staff may also find that they are more likely to be held to account over the benefits they offer, or challenged on how they address ESG issues and diversity and inclusion in the workplace. The increased employee activism over the course of this year is only set to continue in 2022.

“Concurrently, employers are also revisiting the benefits packages they offer in order to retain the best talent. We’ve seen examples this year of employers looking at the support measures they offer around bereavement leave, or how they can provide a supportive working environment for those experiencing menopause or pregnancy loss. These are the issues that really matter and, whilst many businesses won’t be able to accommodate every request, defining the businesses’ purpose and reflecting this in reward and values will, ultimately, help achieve competitive advantage.

“Finally, the mental health and wellbeing of employees will be a continued focus into 2022 as workers have juggled home responsibilities with day-to-day work. Businesses may still be finding their way in the post-pandemic world, but it remains crucial to listen to their workforce and understand what matters most.”

Travel industry: Passenger refund delays prompt Air Travel Organiser's Licence (ATOL) reform

Farina Azam, partner and travel law specialist: “Prompted by the pandemic and refund delays experienced by holidaymakers during the last 21 months, 2022 is set to unveil the direction of travel for ATOL reform. The consultation, launched in 2021, is expected to ringfence consumer money, preventing travel companies from using it as working capital until a trip has been completed.

“This rule change rewrites how travel companies operate and from which funds they are permitted to pay suppliers, or fulfil other contracts between the time of a booking and when it is complete. From a legal perspective, this throws up a number of questions, be it the review of supplier contracts, financial advisory around the ringfencing of funds in a trust account, or how the technology required to automate the payments process is overseen.

“First responses are expected in early 2022, but it will be later in 2022 that we’ll have more of a steer of where any policy is heading. Until then, travel companies are gearing up for the multitude of legal changes that they will likely need to make.”

Legal Managed Services

Perfect storm driving B2C demand for legal managed services

Emily Foges, global lead partner for legal managed services: “In the aftermath of the financial crisis, legal teams working in financial services were met with a raft of regulatory and operational changes that monopolised lawyers’ time and energy. This resulted in a significant growth in demand for legal managed services, with day-to-day legal tasks outsourced to help teams focus on complex legal work.

“History will repeat itself in 2022, but this time for consumer-facing organisations. Over the next year, inhouse legal teams in retail, consumer goods, hospitality, leisure and travel will have to focus their energy on tackling the huge strategic challenges that have emerged in response to changing consumer habits post-pandemic, continued supply chain disruption and rapidly evolving employee working conditions.

“This ‘perfect storm’ of macro-economic events is already driving a period of intense activity for legal teams working in B2C sectors. As a result, a key trend will be the increased outsourcing of day-to-day legal tasks including contracting, employment, marketing copy clearance, IP and trademark compliance, to name a few.”

Provider consolidation top of risk management agenda for GCs

Laura Bygrave, head of commercial for legal managed services: "Organisations often have a multitude of providers and suppliers but with this can also come exposure, lack of control, or transparency and this is a growing concern amongst inhouse legal teams. Some businesses can have hundreds, or even thousands, of third-party suppliers handling sensitive data, sometime operating across many jurisdictions.

“Provider consolidation is therefore likely to be a key trend in 2022. Not only will this happen organically, with procurement teams increasingly opting for ‘one-stop-shop' providers to mitigate the risk of having a raft of different suppliers, but it is likely you will also see some organisations outsource entire portfolios of external providers as part of a single managed service. This means that inhouse legal teams will have greater clarity and transparency when it comes to risk management, through having a single, holistic view of their organisation’s risk exposure across a global footprint.”

Legal Management Consulting

Digital transformation opportunities right under your nose

Jack Diggle, global lead partner for legal management consulting: “Something that is already happening, and will be even more prominent in 2022, is the convergence of inhouse legal technology transformation with the business’s existing enterprise technology programmes, tools and platforms.

“Business leaders recognise that investment in digital transformation is necessary, but it can also be expensive. As a result, inhouse legal departments are being encouraged to make use of the solutions that may be available with their organisation’s existing enterprise technology to meet their legal transformation goals. This means that the efficiency and productivity gains can be achieved more quickly and, crucially, legal requests are streamlined and can work seamlessly with other functions across the business.

“This is a trend that is also apparent on the supply-side; we are seeing convergence of enterprise legal management and contract lifecycle management platforms, as well as enterprise technology providers, investing more into legal and contracting modules. It is a critical way we are seeing GCs improve the integration of legal with business areas.”

Proof-of-concepts, proof-of-value

Craig Conte, lead partner for contracts legal management consulting: “It is well established that digital transformation is happening right across the legal and contracts landscape. We are seeing a renewed focus with AI and machine learning advancements driving demand in smart or ‘touchless' contracting as well as self-service and alternative sourcing. However, CFOs and COOs understandably want to be able to have a good grasp of what the return on investment would be before they entertain the idea of implementing a new technology or solution. And quite frankly, a generic 'better' just won’t do.

“Modelling data, predictive technology and the maturity and sheer number of use-cases, have all reached a level of sophistication where it is now more possible than ever to illustrate the return on investment that an organisation can realise in one, three or five years after a particular technology and/or transformation has been landed. In 2022, C-suite decision-makers will continue to demand fact-based business cases for change and more 'try-before-you-buy' approaches that will require not just proof-of-concepts, but also proofs-of-value approaches across services and technology in this space. This goes double for CLM as this is something that touches the whole organisation and that level of change and investment requires a higher standard than platitudes or straplines.”

End

Notes to Editors

About Deloitte Legal

Deloitte Legal means the legal practices of Deloitte Touche Tohmatsu
Limited member firms or their affiliates that provide legal services. In the
UK, Deloitte Legal covers both legal advisory (regulated by the Solicitors
Regulation Authority) and non-SRA regulated legal consulting services. For
legal, regulatory and other reasons, not all member firms provide legal
services. 

About Deloitte

In this press release references to “Deloitte” are references to one or more of Deloitte Touche Tohmatsu Limited (“DTTL”) a UK private company limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity.

Please see deloitte.com/about for a detailed description of the legal structure of DTTL and its member firms.

Deloitte LLP is a subsidiary of Deloitte NSE LLP, which is a member firm of DTTL, and is among the UK's leading professional services firms.

The information contained in this press release is correct at the time of going to press.