When Innovation meets ROI: Innovation in Focus at ILTACON 2018

Topics: Artificial Intelligence, Automated Contracts, Blockchain, Client Relations, ILTACON, Law Firms, Legal Innovation, Legal Technologists, Thomson Reuters

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WASHINGTON, D.C. — The annual meeting of the International Legal Technology Association provides a pretty good barometer of the state of legal tech every year. Not always a barometer of the actual state of legal technology, perhaps, but at least of the aspirational state of mind of conference participants.

On the aspirational side, the theme of innovation was all over the conference this year. In fact, the three morning keynotes were all about change and innovation.

Futurist Lisa Bodell’s Monday keynote started strong with a call to “Kill the Company” (even if it ended in a somewhat mundane series of tips about cutting down on meetings and email time). The Tuesday and Wednesday keynotes got more specific to the legal industry with conversations about the structural changes going on within the industry and the stories of persistence and perseverance coming from some leading industry innovators. The educational sessions were full of innovation around how technologies such as artificial intelligence and blockchain are becoming mainstream, and the emphasis on the importance of people and relationships to the innovation processes was ubiquitous.

On the more tactical and practical side, however, there are signs that parts of the industry are moving off the aspirational hype and on to real, measurable gains. A three-part Innovation Series looked at organizations that start out with an innovation initiative; others with hard-won success stories; and a third panel of Chief Innovation Officers who are leading mature innovation initiatives and are grappling with the measurement and evaluation of their efforts. That panel included Wendy Butler Curtis of Orrick, Katie DeBord of Bryan Cave Leighton Paisner, and Pratik Patel of Elevate.

In a conference that was long on examples and stories about innovation, this latter panel stood out with some key metrics. Moderator Jo Summers of Acritas presented some sobering data from the Acritas SharpLegal dataset, derived from surveys of senior-level in-house legal pros worldwide. Acritas is a key source for insight on how clients view law firms, and a recent round of research included data on firms’ attitudes towards levels of innovation shown by their suppliers.

The first startling data point: any innovative practices that suppliers may using seem to be largely invisible to clients. The Acritas data shows that only 3 of 10 clients could identify suppliers demonstrating innovative practices — and two of those three were alternative legal service providers (ALSPs), while only one was a law firm.

What really got the panel of innovation leaders excited, however, was two data points that go to the heart of return on investment (ROI) for innovation efforts: share of spend and Net Promoter Scores.

  • Clients spend more with innovative firms. Clients who perceive a firm to be more innovative typically allocate two-thirds higher share of spend to that firm. They allocate 35% of spend to innovative firms and only 21% to those perceived not to be innovative.
  • Clients are more likely to recommend innovative firms. Net Promoter Score is a commonly used measure of a customer’s willingness to recommend a provider’s service or product to others. The Acritas data shows that clients who perceive a firm to be innovative awards twice the Net Promoter Score to that firm than to others (57 vs. 28).

Taken together, the Acritas data tells a great story of ROI for innovation efforts by legal services providers.

First, the data shows that innovation is an important branding play, and not enough visible innovation is reaching clients. Even firms that are innovating may not always be good at communicating about it, getting partner buy-in so that they can spread the word with clients, or cultivating and collaborating with clients who embrace innovation.

Bryan Cave’s DeBord was especially adamant about the importance of putting operations and innovation staff in front of clients. Relationship partners — who are a great asset in in firms’ ongoing understanding of client needs and maintaining business relationships — can also leverage the other allied professionals in the firm. If a pitch involves new technology or a new way of structuring or resourcing legal work, the pitch team needs to include the people who are skilled at executing on those innovations.

Second, the Acritas data shows that improved perceptions of innovative savvy does translate into financial results. Orrick’s Butler Curtis was adamant about emphasizing measures of success that can be traced to dollars, like the NPS score. DeBord mentioned two kinds of valuable metrics: i) those that can directly show benefits to clients, for example a contract lifecycle management solution with faster contract cycle time, or lower contract value leakage; and ii) the financial measures that can quantify better revenues or margins, better retention, or access to new clients and markets through, for example, new tech-based products.

While much of the innovation discussion at this year’s ILTACON is still focused on changing an industry’s mindset and identifying the innovation toolkit, the conversation does show signs of maturing, especially around issues like measuring innovation and results. That emphasis on measurement, and the extent to which it is embraced by individual players, will likely be what separates successful innovation efforts from the rest.