Digital White Papers

I L T A W H I T E P A P E R | K N O W L E D G E M A N A G E M E N T 6 R - E - S - P - E - C - T : R E F R A M I N G H O W W E A P P R O A C H I N N O V A T I O N I N A L A W F I R M departments investing internally to control outside legal spend, and competition from the Big Four. I will also not provide an empirical overview of all examples of legal innovation. Because of the fast-paced nature of legal innovation, even if I were to take the time to research and write that overview, it would be outdated and of no use! Law Is a Unique Profession: Law is a deferential field: in a law firm, we defer to partners or more senior attorneys; we defer to clients; we defer to precedent; and we defer to rules. Law is a practice: an ever-expanding collage building off previous work and experience. In many situations, it can be malpractice, or at the very least bad practice, to not use precedent as a starting point. Law is rules- based: attorneys are subject to a complex system of state bar rules, ethics rules, firm policies, and client policies. This ecosystem of rules, regulations, and practices can make innovation efforts within a firm difficult. Lawyer personalities must also factor into innovation plans. Lawyers are generally a lower resilience group. They are highly skeptical, risk averse, will find flaws and poke holes in ideas and statements at a higher rate than the general population. 2 Law firms largely operate under a partnership model meaning that strate and management are achieved by consensus (among lawyers!) since each partner is an owner of the firm (there are different partnership models that skew the decision-making duties, but the core concept remains). All decisions, including strategic plans, are made by consensus, which can result in a lengthy process to determine direction and action. Law firms pride themselves on their culture and often hire for culture fit in addition to skills. With this uniqueness in mind, and the mounting competition and pressure from within and outside of legal, how do we create meaningful, impactful, and sustainable change in a way that respects and includes the work of the attorneys who make up the firm? A Five-Cent Tour of Current Innovation Examples: Before I get to the how, I want to provide a very brief sampling of what types of innovation within legal are getting attention. I have broken them down into two categories: • Non-legal entering legal: The Big Four have entered the legal market offering international managed legal services, partnering with ALSPs to provide outsourced legal work for corporations, and acquiring legal technolo companies to compete with law firm vendors. State bars still largely prohibit nonlawyers from owning or operating law firms or sharing fees with nonlawyers 3 and the Sarbanes-Oxley Act limits the services accounting firms can provide in addition to auditing services. 4 • Innovation within firms: There are several flavors of innovation efforts that law firms are sampling. These efforts can be broken down into two categories: creating brand new business models as an affiliated entity or innovating within the firm to transform the delivery of legal services. Examples include: partnering with tech companies to form joint ventures or spinning off technolo-based subsidiaries that build and sell products to clients; creating subsidiaries that provide consulting, solution-building and managed legal services to clients; launching legal operations departments that focus on efficiency and streamlining the delivery of legal services; serving as incubators for tech start-ups; forming innovation committees or departments; 1 See Greg Satell, "The 4 Types of Innovation and the Problems They Solve," hbr.org, June 21, 2017. 2 For more information on lawyer personalities see Larry Richard, "Herding Cats: The Lawyer Personality Revealed," lawyerbrain.com. 3 For further information see the ABA's Status of Multidisciplinary Practice Studies by State, available at https://www.americanbar.org/groups/ professional_responsibility/commission_multidisciplinary_practice/mdp_state_action/ 4 John Fitzgerald, "The Big 4: An Existential Threat to Law Firms?" law.com, March 18, 2019

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