Elusive Innovation: What it Means and How to Capture it

A predominant narrative in legal industry conversations is that while the rest of the business world evolves at warp speed, law firms steadfastly refuse to change – and unless they begin to innovate, they’re in danger of being overtaken by new delivery models.

The reality is that this topic is far more complex than the typical discussion portrays. Some segments of the industry are evolving at a much faster rate than industry commentators and competitors tend to acknowledge. However, with some confusion over the meaning of innovation, it isn’t surprising that the unique innovations that are being implemented in many firms are being overlooked.

The Meaning of Innovation

Innovation within the legal industry is often discussed as if it’s a technical term, subject to a very precise litmus test, such as, “Is X firm using this or that Alternative Legal Service Provider (ALSP) or legal technology?” Though part of the conversation, ALSP and technology usage aren’t synonymous with innovation. Viewing it exclusively through this lens ignores other types of innovation and increases the perception that the entire industry is stagnant and disinterested in evolving.

In speaking with innovation leaders across the Am Law 100, we learned that innovation is much broader and nuanced. Regardless of the context, true innovation should be about better identifying and addressing client problems – which isn’t accomplished exclusively through singular technologies or partnerships with ALSPs. Innovation is more often about establishing more efficient and effective partnerships between clients, partners, associates, legal support professionals, business developments professionals, IT, and anyone else involved in rendering law firm services. The innovation that flows from this as a guidepost can be obvious in some instances, like legal tech or ALSPs, but there is much more.

A Journey For Which There Is No Map

While many firms are making progress, the industry isn’t perfect. In some instances, innovation efforts are greeted with open arms; in others, they face strong headwinds.

Common criticisms of the law firm model include:

  1. Lawyers are programmed to avoid opining without thorough analysis of all information. Innovation requires acting on the unknown.
  2. Risk is viewed unfavorably in a client service industry where high rates are paid to guarantee successful outcomes. Innovation outcomes can’t be guaranteed.
  3. The partnership model can be limited from a management and evolution perspective. Innovation takes time and strategic effort – partners are incredibly busy practicing law.
  4. Tradition often reigns with the belief that “the work” and “the attorney” are to be valued above all else. Innovation often shifts the focus away from this lawyer-centric tradition.

There is at least a kernel of truth to most of these criticisms. But the industry isn’t a monolith; the accuracy of any one of these varies firm-by-firm. Firms that are successfully navigating these unique challenges have implemented a few key strategies that revolve around culture, client buy-in, and identifying what areas are most ripe for innovation.

Invest in innovation: The most innovative firms have shown a willingness to allot money to innovation with an understanding that a certain percentage of initiatives won’t be fruitful. This type of financial investment requires commitment and understanding from firm leadership. To that end, having an innovation officer as part of the C-Suite is helpful. However, merely attaching “innovation” to the title a previously existing function isn’t enough. The individual(s) that oversees this function must be empowered, focused on innovation, and have strong relationships with firm leadership.

Engrain innovation in your culture: Incorporate outside-the-box thinking into the firm’s core cultural values by encouraging employees to participate in the process. To achieve this, Mark Brennan, lead innovation partner at Hogan Lovells (2019 Financial Times Most Innovative Law Firm & Lawyers awards), recommends innovation and change management training at all levels of the organization, from non-lawyers, to summer associates, and up through senior partners. Hogan Lovells hosts hackathons and other innovation competitions to solidify its importance. Similarly, Wendy Curtis Butler – who was named “Most Innovative Lawyer of the Year” in 2018 by the Financial Times – chief innovation officer at Orrick Herrington & Sutcliffe (Financial Times Most Innovative Law Firm 2016-2018), noted that its lawyers receive billable credit for time spent on innovation. Orrick associates are encouraged to submit their ideas to Orrick’s Global Operations & Innovation Center, where their ideas are fostered, implemented, and tracked for effectiveness.

Create a client partnership: Innovation ranks as a top desire among clients selecting outside counsel and fostering client involvement in their own matters (where willing) can lead to innovative results. Instead of one party dictating to the other how a matter should be completed, law firm lawyers and in-house counsel that work closely together can create an understanding of each other’s perspectives. This increased understanding more easily allows for law firms to find new ways of doing things, which can be leveraged far beyond a single matter for that client.

Start with the willing – wholesale change isn’t the best place to start: Naturally, certain partners, practice groups, and clients have a strong appetite for changing things up. Some partners are more receptive to changing how they do things. Some practice areas are more compatible with non-traditional service delivery. It can also be helpful to build within an existing client revenue stream. Focusing on areas of less resistance can help create case studies that demonstrate success and help you sell to others in the firm. Immediate, full-scale adoption isn’t required.

Create opportunity through crisis: We are in a period of extreme change, and with most of us well outside our comfort zones, there is an opportunity to strike while the iron is hot. The pandemic has revealed that many things we thought impossible (such as fully remote work) are, at the very least, feasible. With our present circumstances as an example, there may be opportunities to bootstrap additional changes into this window.

The results of following the above guidance are evident at several firms across the AmLaw 100. In fact, the examples in this piece aren’t exclusive to the firms they’re attached to; innovative firms like Hogan Lovells, Orrick, Perkins Coie, Lowenstein Sandler, Barnes & Thornburg, and Paul Hastings – are each spearheading creative initiatives like those mentioned here.

For instance, Toby Brown, chief practice management office at Perkins Coie (2020 Association of Corporate Counsel Value Champion for Innovative Legal Solutions, 2020 ILTA Transformative Project of the Year), and his team spotted a problem ripe for innovation. After observing that initiating matters from a client spanned 12 emails on average, Perkins Coie created a client portal designed to obtain the most important information from their clients in one communication. At Barnes & Thornburg, the firm has created over 500 scope of work documents for various practice areas, enabling the client and the firm to define the scope of work in advance, and to provide pricing predictability. At Lowenstein Sandler, its chief innovation officer, Victor Barkalov, described that the firm recently hosted a Shark Tank-style innovation competition to encourage outside the box thinking at all levels. At Paul Hastings, the Practice Innovation Department engrains innovation and new ways of working into its culture by training lawyers on a host of topics, including legal technology, artificial intelligence, and legal project management. 

While the legal industry needs additional transformation, a full and complete discussion on this topic should allow for nuance and acknowledgment of the strides being made by an increasing number of law firms. More firms can join this trend. Especially at this moment where substantive change may be more feasible, take the time to listen to all the voices in your firm and search for unique opportunities that can be embraced.

 

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