“Practice Innovations” is a quarterly, online newsletter that examines best practices and innovations in law firm information and knowledge management. In this installment, the author discusses the true process of innovation within a law firm.
Stretched between the innovations that law firms are building and the innovations clients want is a service delivery chasm. In late 2017, just more than half of respondents to Altman Weil’s Law Firms in Transition survey were “actively engaged in creating special projects/experiments to test innovative ideas or methods.” By late 2018, that number had grown to 61% and three-quarters of respondents were at least moderately confident that they were “fully prepared to keep pace with a changing legal market.”
Yet, when Thompson Hine asked 183 in-house counsel, it found that “70% of clients could not cite a single example of ‘significant’ change over three years of working with their law firms,” and 96% had seen nothing more than “a little” service delivery innovation. When asked what they most wanted to see from their law firms, clients responded in unison: better budgeting, better legal project management, and better staffing.
At the same time, the majority of respondents had not seen any specific improvements from law firms in better budgeting and management, streamlined processes, or more appropriate staffing. The evidence is clear: while law firms clamor to build markets for moonshots like AI-powered drafting tools, blockchain technologies, and legal robots, clients are signaling they need better basics: budgets, legal project management, and lower-cost resources.
Law firms tend to ignore pragmatic and less exciting improvements in favor of chasing and amplifying the successes of a very small vanguard, celebrated for game-changing solutions that usually have extremely low adoption (monoware) or exist only in theory (vaporware). Because there are no industry awards or headlines for steady, practical improvement, to earn any industry recognition as innovative, law firms need to chase all the moonshots — efforts to radically change the bedrock of how legal work is produced and delivered.
The evidence is clear: while law firms clamor to build markets for moonshots like AI-powered drafting tools, blockchain technologies, and legal robots, clients are signaling they need better basics: budgets, legal project management, and lower-cost resources.
That is, they must implement decentralized ledgers for contract negotiation (blockchain!) and use IBM’s Watson to research a bankruptcy brief (AI!) and build an automated legal advice query and response system for website visitors (chat-bots!). Due to the immensity of these targets, the chance of getting widespread user adoption in just one market segment for even one of these efforts is prohibitively small.
When they successfully land, moonshots change the world. But they’re also risky, difficult, and exceedingly rare, suffering from extremely high rates of failure. A startup can weather this failure because it can fail repeatedly and succeed once and still become a unicorn, making up for all the costs of its failures. A business model built on reputation and risk management — such as a law firm — simply can’t fail repeatedly without damaging its reputation.
If the barriers to delighting the client are so low, and the barriers to dazzling the market are so high, why are so many law firms building the tallest ladder in the land of low-hanging fruit? Innovation isn’t and shouldn’t be so exotic.
Law firms that are locked in a bid to outshine each other end up ignoring the needs of clients today, in service of future, theoretical client needs. They do this because many of them misunderstand or ignore three crucial realities about innovation:
- what it actually means;
- whose status quo it should actually change; and
- how it should actually work.
What It Means: Renewing what already works is innovation, too
Innovate means to alter or renew; a change in kind or size, and refers to invention or investment. Innovation can look like bolstering a current project’s capital budget, broadening its application to capture more of the market, or easing its usability to increase adoption. Renewing the investment of a working service or product — something law firms do more often than creating a new solution from scratch — is itself an innovation and should be celebrated as such. Understanding this renewal is essential to creating a law firm culture of sustained innovation. Including prudent investment growth as innovation creates a ready bulwark to the intransigent stakeholders fearing, “This is just more change for its own sake!”.
To grow, an innovative culture needs to celebrate a steady cadence of successful innovations — one or two just won’t be enough. By restricting what counts as “innovation” to game-changers and moonshots, law firms artificially limit what can be a win. Smaller wins may each yield little efficacy alone but taken together will seed the law firm with the crucial DNA of habitual innovation and, more importantly, actually change in the way lawyers work.
Whose Status Quo? Innovation should solve client problems
Innovation is measured and compared by calculating how solutions introduce new liberties into the status quo. Before the Gutenberg bible, much of the public couldn’t access written works. Before ridesharing apps, pedestrians waved their arms wildly about to hail a driver. But status quo is a relative state. When I learned that I could replace my wallet with a binder clip (!) my status quo and back pain completely and irrevocably changed, but yours probably didn’t.
If yesterday the client and case team were collaborating using a checklist prepared in Microsoft Word but today are using an enhanced checklist with conditional formatting and data validation created instead in Microsoft Excel — which allows for easier aggregating and clearer insights — then we can credibly say an innovative checklist altered the client’s status quo by heightening the matter’s business intelligence. We won’t win any innovation awards from the industry arbiters, but that doesn’t make the solution less innovative, nor does it — moving to the heart of the matter — make the innovation any less useful to the client.
The nasty by-product of charting what the “industry” is doing by marking only the successes of the vanguard, is that we lose track of the appropriate baseline. If innovation is the distance from the status quo, then the reasonable question is: from whose status quo should we measure. The answer ought to be: from the client’s. Building moonshots to chase buzzy headlines and alter the most expansive status quo possible means the client’s status quo — which loudly calls for better basics — gets ignored.
How It Works: Following a framework of renewing, altering, or ending a product or service creates a continuous improvement program centered around client business goals
The idea of innovation itself contains instructions that can serve as an improvement program. Embracing a more practical and useful definition of innovation (as described above) surfaces a ready-to-use renew-alter-end (RAE) framework. (See Figure 1)
The RAE framework starts with the question, “Does the current service or product get the results the client wants (business goals)?” If the answer is “Yes,” then we should build on the win and renew it by increasing the investment we put into it, the audience we’re attempting to reach, or the adoption we have.
However, if the answer is “No, the client doesn’t get the results it wants,” then we’re directed to alter the process by identifying and then focusing on what doesn’t work, proposing structured improvements, quickly testing those improvements, and then integrating the improvements into the existing product or service.
If the service or product is not getting the desired results, and we’ve proven that altering the process will not get those results, then the product or service should be ended. By embracing a more fulsome meaning of innovation — renew, alter, or end — law firms can set the following, critical mission:
“For any product or service, we’ll determine if it achieves its business goals. If it does, we’ll double-down on a good thing and try to renew the investment, adoption, or audience. If it doesn’t, we’ll measure what doesn’t work, alter — then quickly test — what we believe will make it work, and integrate what actually works. If neither renewing nor altering have an impact, then we’ll do what’s right and end the service.”
By using the simple business logic of practical innovation as a blueprint to build better budgets, legal project management, and lower-cost resources, law firms can easily and immediately design a system that produces a string of small wins — each more ambitious than the last — that will ultimately build a culture rooted in working a little differently to solve real problems and deliver service in a way that delights clients.