Technological advancements, client empowerment and non-traditional competition are pressuring law firms to explore new opportunities, in relation to the practice of law. Law firms have to make the choice between adopting change, or slowly moving in to obsolescence. The law firms that do decide to embrace change will have to approach this carefully. As the business of these firms are centered around their clients, it is only natural that change and innovation in the firm should also evolve around the client. To do so, law firms will have to understand the benefits of client-driven innovation, the client as a contributor for change, and how to effectively engage clients for innovative purposes.
Benefits of Client-Driven Innovation
Client-driven innovation means actively utilizing the client in a firms’ internal development process, from idea to implementation. The benefits of doing so have been proven to be substantial, and among these benefits are an increased success rate for innovation, increased market share of new products, and in general, the development of more original or ‘new’ innovations. What makes client-driven innovation significantly more interesting specifically for law firms, is the increase in client loyalty and the stronger diffusion of innovation throughout the firms that manage to capture it.
When a law firm co-creates with clients, these clients will automatically take ownership in the innovation. By taking ownership, the client will not only choose the product or service themselves, they will also forge a stronger bond to the law firm, increasing the loyalty of the client who will share knowledge of this new product or service with others inside their industry. By utilizing client-driven innovation correctly, a law firm can seek to obtain strategic goals such as expansion of practice areas for key accounts, or new market penetration through collaboration with dominant clients in those new markets.
Further, law firms struggling to overcome resistance to change internally can also utilize client-driven innovation as a catalyst for change, as the requests of clients will often have significant traction with lawyers, partners and firm management.
Understanding the Client as an Innovator
In order to leverage client-driven innovation in a law firm, an understanding of the client as an innovator has to be established. Law firm clients can roughly be divided in three groups depending on the amount of value each client can contribute to a given innovation process. These three groups are:
- Mass Clients — Consists of clients who have a purely transactional relationship with the law firm. These clients have a limited understanding of the firms’ operations and contribute little value individually in the innovative process, and will therefore have to be engaged in larger numbers to create value.
- Collaborative Clients — Consists of clients with a deeper understanding of the firm and its operations. The group will include key clients who have a relationship beyond the transactional. These clients will be utilized as co-creators throughout the entire process of innovation, and therefore bring a higher value per client than mass clients.
- Lead Clients — Comprise of very few clients who develop, diffuse and test an innovation prior to collaborating with the law firm. These clients often are able to introduce a complete service or product, and asks only for the firm to deliver better service by using it.
These three groups represent the overall client contributors to the law firm innovation process. Each group has specific characteristics in the way they add value, what value they add, and how a law firm needs to leverage them to maximize their impact on a given innovation.
Utilizing Client-Driven Innovation
To begin utilizing client-driven innovation, a firm must first develop a process through which it identifies and implements innovation. This is done in order to identify exactly what value the client is expected to contribute, and at which stages in the development process. Once the entire process of innovation has been mapped, the firm is ready to apply client-driven innovation. In order to choose which clients should be in-sourced in a given process, several key questions need to be answered:
- Want — What value do you need the client to contribute to the given innovation process?
- Find — Where do you find the client who can contribute the value you want?
- Get — How do you plan, structure and negotiate the collaboration with clients?
- Manage — Who will have the primary client contact and responsibility to manage client involvement?
It is important to develop a structured process of innovation prior to the incorporation of clients. A basic development process such as Scrum or Stage-Gate is a good start, and can be altered to fit the characteristics of specific law firms.
To leverage client-driven innovation successfully a law firm must define the goal of an innovation, the process of reaching that goal, and what value the firm expects the client to contribute throughout the innovation process.
The blog post was taken in part from the Executive Summary of the author’s Master’s thesis on client innovation and management.