Lawyers are not known for being particularly quick to innovate, particularly when it comes to client service delivery strategies like alternative fee arrangements or legal project management.
SpaceX, on the other hand, is famously (perhaps even infamously) innovative, with their reach exceeding their grasp so frequently that NASA had to order them to stop making changes to their innovative Crew Dragon spacecraft so it could be certified for spaceflight.
So why write about one in the context of the other? Because there are potential lessons to be learned in how SpaceX approaches innovation and the appurtenant failures.
For those who may not be aware, late last month, SpaceX successfully launched their Demo 2 mission in what is only the fifth time in American history a new manned spaceflight system has been used, the last being the Space Shuttle in 1981. In the 18 years since the company’s founding, SpaceX grew from a small startup funded by a lone billionaire, to the company that bested the vaunted Boeing to become the first private company in history to fly American astronauts into space.
How did they accomplish this? Frankly, on the debris of a lot of exploded rockets. The first three launches SpaceX ever attempted all met their final fate in what company founder and CEO Elon Musk has euphemistically called a “rapid unscheduled disassembly.” Learning from each of those failures, SpaceX penultimately launched their Crew Dragon vehicle in an unmanned flight in March 2019 to rendezvous with the International Space Station (ISS) in one of the final stepping-stones toward approval for manned flight.
However, less than a month after returning to earth, the very same capsule that had travelled successfully to the ISS exploded during a ground test. After an investigation, the problem was identified and remedied. SpaceX engineers viewed the explosion as a positive, rather than a negative, saying that because of what they learned from the explosion investigation, they were going to make the entire space industry safer.
SpaceX has adopted an attitude toward innovation that would make most lawyers understandably uncomfortable if applied to their own businesses. Musk has been quoted saying, “Failure is an option here. If things are not failing, you are not innovating enough.”
The failure dynamic
But do lawyers need to be so concerned about failure? To give the classic lawyer answer, it depends.
When it comes to the work done for a client, perhaps the words apocryphally attributed to Gene Kranz, a former NASA flight director, during the famous Apollo 13 mission are more apropos: “Failure is not an option.” (Kranz later admitted that he never actually said this, but he really liked it when actor Ed Harris, playing Kranz, said it in the 1995 movie.) Work done on behalf of a client must be a no-fail effort. The reputation of the firm and the lawyer are on the line, not to mention the lawyer’s ongoing ability to practice law.
When it comes to other aspects of a lawyer’s business, however, failure that results from attempts at innovation can and should be an option. Many lawyers have begun to innovate with how they produce and price their final work product, for example. Alternative fee arrangements such as fixed fees, phase pricing, collars, and the like gained favor throughout a large portion of the 2010s, but reached a plateau by 2017.
Many experienced law firm pricing professionals I’ve spoken to attribute the stagnation to a return to comfortable priors, because both law firm and in-house lawyers have been long conditioned to think primarily in terms of billable hours. However, these same pricing pros tell stories of how partners came around to the idea of how an effective pricing strategy can help improve the firm’s overall business model and even have become evangelists for the pricing team within the firm.
Changing how work is done
Legal project management provides a different set of challenges. It’s an old saw that the greatest impediment to innovation is success — yet, this is certainly true in terms of legal project management.
Law firm partners have become quite wealthy people doing their work a certain way. So, why should they change? In fact, legal project management may give attorneys a perception of even greater risk than innovation in pricing. With the latter, only money is at stake; while the former treads much closer to how work is actually completed. Theoretically, legal project management has the potential to impact the outcome in a way that could adversely impact the client.
But apprehension about innovation in service delivery likely exceeds the reality of the potential threat. If the pricing is wrong, for example, just adjust it for next time and communicate clearly with the client about what worked and what didn’t. They are learning as they go as well, and they certainly will appreciate the shared experience and insight.
Similarly, a failed project management strategy does not need to lead to catastrophe. A project plan should not be set in stone. In fact, an effective project plan requires iteration and adjustment. The firm and the client need to be in much more frequent communication than has ordinarily been the standard, which provides a plethora of opportunities to evaluate progress and scope, revising as needed to ensure optimal outcomes for both the client and the firm. It should be nearly impossible to get to the end of a matter using a project plan before realizing it was off target.
Increasingly, clients not only appreciate a law firm that is willing to think outside the box, they are rewarding innovation. As the market sees even more upheaval in light of the sudden changes brought on by the pandemic, law firms that offer something different will stand out.
When carefully and thoughtfully employed, neither revamping pricing strategy nor adopting legal project management is likely to result in a “rapid unscheduled disassembly” of a lawyer’s practice or even an individual matter.