Is “Innovation” a Bad Word in Law Firms?

[This article originally appeared on Slaw.ca]

The legal profession could be improved a bit. Ok, it could be improved a lot. One might say it could use more “innovation.” Yet it seems like the harder one pushes for innovation, the harder others push back.

Despite acknowledgement that the nature of legal services will take time to change it feels we continually need, as Jae Um puts it, “a call for patience (and some perspective).” After the 2008 crash people mused, is this The End of Lawyers? Many saw 2008 as a call to action, driven by fear over the long-term relevancy of lawyers. Somewhat ironically, this has led to short-term cries for “Innovation, now!”

It feels like the term “innovation”, with its connotations of newness and technology, is becoming its own impediment. I understand that “innovation” sounds better sounds better from a marketing perspective (“strategy” sounds like something you should be doing anyway). But I think we’re now seeing the term “innovation” start to hinder progress on the problems faced by the legal community. Heavily influenced by David Maister, here are four ways the term “innovation” is making it harder to achieve the goals that originally brought people under its banner.

 

It’s not really about “innovation”

Improving current ways of delivering legal services is not predominately an “educational” issue in the sense that lawyers need to be “enlightened” to the ways of innovation. Most people, even lawyers, could easily describe several activities that would make them better at their job. We must ask why they don’t already do these things.

If someone already accepts a goal, preaching benefits doesn’t add anything. Making a firm more productive or better at client service is similar to people’s desire to give up smoking and lose weight. Many people know and want the goal, they believe it is worth the effort, they know what to do – but, like all human beings, they are very bad at incurring short-term discomfort to achieve a long-term goal. As Maister explains, “what many firms have yet to learn is that the issue of improving client service is overwhelmingly a managerial one. They, and their professionals, know what good service is, but how do they make it happen?

Making things happen is a challenge – regardless of if it is considered “innovative” or not. If you can make some sort of lasting change – however small – then you can make another and another, and so on. This necessity to make things happen is why Everett Rogers advises change agents to “solve client’s problems instead of advancing your own agenda.” Eventually, you can steer the momentum to where you want it to go. This approach is more effective and sustainable in the long-term pushing and steering a vehicle on your own.

 

It deemphasizes strategy

Innovation is a tactic through which to further a firm’s strategy. The objectives of every firm are basically the same: client satisfaction, skill building, productivity, and getting better business. As Maister puts it: if you’re making progress on these fronts, “you’ve got all the strategy you need.” Innovation doesn’t exist without some overriding objective of the firm. Maister could not be more direct than when he asks, “If it furthers none of the four goals, then what’s the point of technology?”

Of course, firm leadership still has to do its part. People openly discuss how the very people who hired them to make a firm more efficient don’t always want to listen. Though these are frustrating circumstances they are opportunities to lead up the chain of command – “if a plan, a decision or a strategy decided by the senior management doesn’t make sense or cannot work on the field, the people on the field pluck up the courage to contact their leaders or officers requesting to consider the reality they face.”

While it can be a challenge to influence senior management, especially in conservative institutions, focusing on the higher-level strategy can help one find more allies. Marketing, Training, Pricing, or others might not be as interested in a particular #LegalTech item, they could be facing similar challenges in getting lawyer engagement on tasks often considered as “extra”, or in aligning their efforts with strategic goals. Finding a way to team up with others and solve a common problem can lead to greater change.

Closely related to subjecting innovation efforts to strategy is subjecting these efforts to experimental rigor. If you are in a responsible for modernizing a company, chances are you are in favor of new things. This is an important trait for such a role. However, the first principle of the scientific method is that you must not fool yourself – and you are the easiest person to fool. Almost by necessity, those in innovation roles have a pro-innovation bias (I sure do). The challenge is to balance this pro-innovation stance with what the firm’s overriding objectives.

Experimental rigor can also free up innovators to try more exciting things. Yes, law firms can move egregiously slow; but any organization will have a low tolerance for trying new things if they are tried in an unscientific way. Harvard Professor Gary Pisano points out how the companies we think of as being most innovative have a tight relationship between a willingness to experiment and discipline. The more discipline shown in executing innovation projects within scope, on budget, and contributing to the firm’s overall strategy, the more freedom there will be to performing more experiments. In other words, discipline equals freedom.

 

It overvalues newness

The word “innovation” derives from the Latin root “novus”, meaning “new”. Humans are inherently biased toward new things. But the balance between executing on what is right in front of you versus looking at what’s new has skewed too far in the new direction. The connotation of newness with “innovation” is probably exacerbating our already-problematic human tendency.

Focusing on existing processes and tools is analogous to focusing on existing clients. Existing clients represent a higher-probability of getting new business. Similarly, existing workflows represent a higher probability of making a measureable improvement than does all of the effort in chasing something new. Existing workflows are also opportunities for more efficient effort when they require less budget, implementation, re-training, etc.

Furthermore, improving the firm’s ability to capitalize on current abilities acts as a force multiplier. As Maister explains, “The better the firm is at marketing to existing clients, the higher will be the value of its new client marketing activities.” Just as a firm can increase the lifetime value of a client, it can improve the return on investment in a process or technology by ensuring that it can optimize what it currently has. A dollar earned through existing clients is just as valuable as a dollar earned from new clients. Gains from improving existing processes help the bottom line just as much those from new technologies.

Perhaps the biggest problem with focusing too much on the new is that it keeps relationships shallow. Maister explains that “the pursuit of new business from existing clients requires an intimate involvement with the client and his or her business: It requires getting ‘close’ to the client, and developing a high level of interpersonal trust.” The strength of a relationship can often be the limiting factor on how much change is possible. As Geoffrey Moore explains, “Relationships bear the shock of change.” The more one’s efforts focus on the new, the more they will only develop shallow relationships and thus limit the potential for change.

The continued rise of design thinking in legal services does reflect an understanding that lasting improvements require a commitment to know one’s clients (e.g. the lawyers at your firm). Those (like myself) with a pro-innovation bias need to resist seeing design thinking as an opportunity to push for something new. As Maister explains, the desire for feedback must be seen as a sincere desire to help that client – the “feedback and the selling tasks must be separated.” Creating accountability and delivering on it builds more credibility and momentum toward change. You can eventually steer the momentum toward where you want it to go.

 

It alienates most people

As I’ve previously discussed, not everybody cares or even wants to be an innovator. It would be inefficient for everyone to be an innovator all the time. There are many areas in our lives where even we legal innovators are probably laggards. And yet the push of legal innovation seems to try turning others into what they are not. Creating a culture of innovation is not about converting everyone in the firm to be an innovator but to have lawyers open to looking more astutely at their work and the market where they ply their skills.

If we think of legal innovation as a product in itself, it is having its own “crossing the chasm” moment. It is probably not a coincidence that legal innovators still feel like outsiders in the legal market. In labelling ourselves as “innovators”, we are labelling ourselves as being outside the mainstream and thus creating a self-fulfilling prophecy. Advancing one’s innovation agenda isn’t so much about getting others to value efficiency and new functionality as much as you do; it’s about making aspects of innovation more palatable to a mainstream audience.[1]

Furthermore, focusing on “innovation” puts a lot of pressure on achieving a certain kind of result. But if firms want people to try new things they need to reward lawyers efforts to do so. Even if the majority of benefits don’t appear until a change becomes the new standard practice, Maister warns that “rewarding results only is no way to encourage [innovation] novices to participate.” Some firms are already figuring out how to reward effort. If we want attunement to changing legal market trends to become like marketing, where it is just something everybody does, too much focus on “innovative results” will be problematic. Lastly, while encouraging effort is a crucial first step, it’s important to remember that innovation (change management, process improvement, etc.) represents brand new skills. Maister warns that “If people are to learn new skills, it is not enough to set goals and monitor them… One-on-one supportive coaching is needed, a critical role for each team leader.”

 

Conclusion

Many law firms look closely at what their competitors are doing in an attempt to “out-innovate” one another. While staying relevant is important, some very smart business don’t focus on the competitors. It’s more useful to think about what’s staying the same. This sort of thinking is less hashtag worthy, but undeniably the safer bet. A lot of things have to go right in order to capitalize on what’s going to change. So even if you’re an innovator it’s probably worth spending 70% of our time on things that won’t change (building relationships, core functions, etc.) Indeed, some well-known “innovators” are very strong advocates of incremental innovation & forgetting about the sexy robots; and GCs of the most agile, fast-moving tech companies are predominately focused on process.

Despite what people on the inter-webs might be saying, law firms do have time. Change moves much slower than the #LegalTech news cycle. (E.g, while 2018 was a watershed year for legal startup funding it driven almost entirely through deals for early stage companies. These companies will take years (as many as 15!) to become market leaders.) And if you get too caught up with what is happening now, there’s a chance of missing the forest for the trees. Too much “innovation speculation,” with its emphases on newness and technology, encumbers one’s ability to think long-term. Which is a shame, because the biggest competitive advantage in business—either for a company or for an individual’s career—is long-term thinking.

[1] I’m still working out exactly what this would look like. Geoffrey Moore’s explanation that innovators are interested in product-centric attributes while the mainstream is interested in market-centric attributes might be a starting point:

Product-Centric Market-Centric
–          Fastest product

–          Easiest of use

–          Elegant architecture

–          Product price

–          Unique functionality

–          Largest installed base

–          Most third party supporters

–          De facto standard

–          Cost of ownership

–          Quality of support

 

 

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