It seems that every law firm is calling themselves “innovative” these days. While you may disagree as to how innovative some of those firms actually are, the prevalence of the word is a key indicator that law firm leaders are recognising the need to change the way they do business.
In the legal context, innovation is sometimes used synonymously with legal tech, but it is much broader than that. To innovate is to “make changes in something established, especially by introducing new methods, ideas, or product.” In a profession steeped in tradition, it is not hard to find organisations who are doing things differently. I have drawn together some commonalities between these firms to identify five traits of innovative law firms.
1. Process improvement
Innovative firms focus on improving processes to streamline service delivery, minimise risk, increase quality and reduce costs. This adds up to more value for clients, a better customer experience and, ultimately, greater profit for the firm.
2. Alternative pricing
Alternative fee arrangements are often the focus of discussions around NewLaw, but they are just one piece of the puzzle. Innovative firms recognise two things. First, for modern consumers, charging methods that represent the true value of the service to the client are essential. Second, from a business perspective, fixed or value pricing can provide a far greater profit than time-based billing, particularly when technology and process are used to their full advantage.
It is not surprising that Wolters Kluwer’s Future Ready Lawyer report found that strategic use of technology is a characteristic of high-performing law firms around the world. Technology enables better outcomes and higher value through analytics, higher efficiency and productivity. Firms who are already technology leaders are realising greater profits, are more prepared to make investments in technology and have far greater confidence in their ability to keep pace with change.
4. Multi-disciplinary teams
Innovative firms recognise that many of the skills required to deliver legal services require no legal training at all, enabling a more cost-effective delivery of services. More than this, however, they recognise the benefits of borrowing ideas from industries other than law. For this reason, many firms now employ people and consult advisory boards strategically comprised of members with a vast array of backgrounds and experience from outside the law.
5. Differentiation based on client experience
Lawyers’ monopoly over the provision of legal services has resulted in us becoming complacent about the way we sell services. This is problematic for traditional firms as, to use the words of Jordan Furlong, “law is a buyer’s market.” Innovative firms find ways to provide a unique customer experience that makes them stand out from their competitors. They sell their services based on the value that they provide to clients, whether that be through process enhancement, use of technology, pricing or service delivery.
Innovate or die?
The practice of law is already undergoing a dramatic transformation. Ultimately, in order to survive the changing legal economy, firms need to be willing to change, break away from the traditional ways of practising law and develop imaginative ways of providing services that deliver true value to clients.
The five traits recognised here are not definitive of innovation, they are simply some of the common themes that emerge amongst firms who are doing things differently. What traits would you add to the list?