publication of the International Legal Technology Association
Issue link: https://epubs.iltanet.org/i/550988
ILTA WHITE PAPER: JULY 2015 WWW.ILTANET.ORG 29 A conference speaker once observed that the first thing a managing partner is bound to ask when confronted with a new idea is, "Who else is doing it?" This mentality is ingrained in lawyers trained to look for precedents (what happened the last time someone said or did the same thing). Lawyers and their firms do not want to be "the first." To innovate more, we will have to stomach a little risk, one bite at a time. Innovative companies do this by creating environments where it is okay to fail without hurting your reputation. A Focus on Profitability: Innovative organizations focus on solving customers' problems. The really good ones go further by inventing things that customers do not know they want or need until they see it. Law firms are excellent at solving clients' known legal problems, but many fail to look further. Lawyers often are too busy practicing and keeping on top of the law to reflect on the bigger problems their clients might face in dealing with the law firms. Those who see beyond the legal work at hand typically focus on making the work more profitable. Do not get me wrong, being profitable is important and necessary to staying in business. But maintaining profitability does not help your clients or encourage them to stick with your services. A shift to thinking innovatively would mean coming up with a new product line or service your clients — and other firms' clients — will want to buy. To innovate, we need to consider our clients' point of view. Clients are practically begging law firms for new service delivery methods. They want greater value, transparency and predictability. Why, then, are firms not stepping up and delivering? Part of the reason is the maturity of the legal profession; we have been doing business the same way for many decades. Mature organizations typically focus on growing profitability and maintaining margins. According to the Harvard Business Review article, "Why Big Companies Can't Innovate," profitability is how mature organizations measure success. By contrast, startup organizations measure success by how well they can identify a problem worth solving in the market and match a solution to it. Law firms could learn much from thinking like startups. A startup company would go out to where their clients are and watch and listen long and hard. Lawyers must listen more closely to their clients, not to just their legal issues but to broader concerns. This will help lawyers identify what clients find frustrating about the way their firm operates and services they wish their firm could provide. Read industry news, especially corporate counsel surveys, to gain insight into what really matters to clients. Then think about what your firm could do to address their issues. A Lack of Investment: Innovators like Apple, Google and 3M invest time, money and other resources in innovation because they understand that without investment, little innovation happens. 3M pioneered the idea of allowing employees to spend 20 percent of their time on projects they choose for themselves. Google deployed a similar concept with its Google Labs. Most, if not all, technology companies have research and development departments whose sole purpose is to investigate and test ideas that might one day be used in products and sold to customers. All of this costs money, but the investment is made because it is known to pay off in the long run. For law firms to become more innovative, we too need to invest in innovation. Innovation will not happen in people's spare time, especially in law firms where spare time is rare. It will not happen while we expect our lawyers to bill 2,100 hours or without a dedicated innovation budget. A recent poll by the Minnesota Association of Law Libraries revealed that lack of funding and time are the top two barriers to innovation in law firms. A whopping 63 percent of respondents cited lack of funding as the primary reason their firms are not innovating; 38 percent cited lack of time. It's time for law firms to put a substantial investment into innovation. The Law Firm Structure: Financial investment is difficult for law firms because their organizational structure is ill-suited for putting money back into the firm for the future. At the end of each fiscal year, profits are distributed among the partners. Planning tends to be annual, with little midterm (and even less long-term) planning. The coming year's plan might be solid, but the five-year plan is fuzzy (if one exists). Little is put aside for the future. Annual planning leads to short-term, reactive thinking. Innovation involves proactive, long-term thinking and time. THE CHOICE TO INNOVATE IS YOURS