DAOs have proven to be an effective way to build organizations without leaning on rigid hierarchical systems. However, the fact that they are somewhat uncharted territory means they may not receive the legal recognition that more traditional entities might enjoy. The result is increased scrutiny from governing bodies such as the SEC.
For this reason, sound governance practices are necessary when creating a DAO. Drawing on traditional models and adapting them to a decentralized entity can add legitimacy and stability to your organization while potentially decreasing liability.