Legal innovation needs to learn some new tricks

There's just too much legal in legal innovation.

The legal sector talks a good game when it comes to innovation, but it’s struggling to move beyond incremental improvements and the innovations being delivered aren’t perceived that way with clients. Is it a case of too much law, not enough perspective?

I’ve spent many years working in the legal industry and now that I’m working with clients in a diverse range of companies and industries, something has become increasingly clear.

Law is missing a trick. It’s missing it so much that it’s leaving the door wide open for disruption — not just from the new kids sprouting start-ups all over the place but from your biggest competitors. It’s all going to depend on who realises it first.

I’ve been speaking to magic circle firms, those further down the pecking order, start-ups and scale ups… but the penny really dropped when I started speaking to our broader clients about law. The customers of law firms.

This is what has crystallised for me over the last few months. In short I think we’re at a point where there is unprecedented opportunity for innovation in law, and equally at a point where big law may finally falter if it doesn’t get its innovation agenda right.

Focussing on legal design and legal tech and legal everything else is getting in the way

Over the last few months I’ve been speaking to some incredibly talented and clever people inside law firms and in the legal tech sector. In that time I’ve noticed something that is becoming increasingly common and gives me real pause. Legal innovation is becoming very insular.

Insularity naturally curbs innovation and stifles the behaviour it is trying to encourage. It’s a concept we’ve talked about before — you can’t see the label from inside the jar. Most innovation roles in law are asking for extensive legal industry experience, if not a background in law itself. While there is obvious benefit in being able to speak the same language, it’s also an enormous drawback.

Shared experiences naturally lead to assumed knowledge, which in turn means that you don’t uncover the areas where innovation is most impactful and far-reaching. This plays out in a multitude of ways: missing points of opportunity, failing to identify future customer needs, limiting the generation of new ideas, overlooking emerging business models, and so on.

Accessing expertise and experience from outside the legal echo chamber — gaining perspective from people who’ve worked in a range of competitive landscapes — will put you far ahead of your competitors and help you access innovation learnings from unrelated industries who have learned many of the lessons law is now learning about innovation long ago.

Modernisation and innovation are not the same thing

True innovation changes the course of a company, or even a market. It shifts the mindset of the business and its customers, offering something truly new. Most of what we hold up as innovation is really just modernisation; modern, streamlined efficient ways of doing what is done already. That’s not to say that modernising is not a good thing — continuous improvement is digital-age business 101 — but it’s not going to give you the edge in your competitive landscape. The firms that start to own that change in language, and own up to what is really innovative versus what is simply essential modernising will separate themselves from the rest of the pack.

The problem is, as I’ve found out recently, clients are starting to notice. Here’s one of a series of examples from the last couple of months.

I met with a senior in-house counsel at a major corporation a few days ago. She’d just come out of an ‘innovation session’ that morning at one of their panel firms. She told me she didn’t think what she was seeing was anything more than standard value-add. Not innovation, but standard value-add. The real shocker? It was at one of the law firms held up in the industry as a leading innovator.

Legal design isn’t innovation, it’s service design with a legal lens — with all of the self-limiting concerns I outlined above.

Accelerator programmes rarely drive true innovation, because they don’t often take advantage of a broader-than-law mindset either. They don’t focus enough on how to produce different products and services.

Even venturing is not leading to much innovation, because law firms running ventures arms are simply inexperienced VCs with a narrow sector focus.

Most firms who say they’re innovating are really just modernising, and those efforts are not landing with customers in the way they think they are.

The perception of law firm culture puts non-lawyers off

Firms consistently underestimate the impact that culture has on the success of recruiting the innovation talent you need. I’ve met a number of great people from other sectors who wouldn’t consider innovation roles in law because their perception of law firm culture turned them off.

Law is not usually an informal, relaxed working environment where flexible working patterns are standard, ambiguity and experimentation is normal and failure is common… where your difference is valued at the highest level of the business. Most digital strategists, product professionals, designers, researchers and developers are working in environments where their value is equal to or greater than the old guard.

Culturally, a firm where the role of the fee earner is championed over contributors who keep the wheels turning, unlock new revenue streams or introduce new business models will struggle to prove to an innovation expert of any kind that they’ll be given the license they need to excel.

Sudden title or role shifts don’t work either: you can’t be a designer or product manager when you’ve only delivered a project or two. Or even a handful. Experience and judgement comes from time and breadth of exposure to a subject.

(Oh, and for the record, success isn’t the delivery of a project, it’s in its successful adoption by customers and their continued appetite to increase their engagement.)

To recruit innovation professionals who have spent years learning, gaining experience and a good number of scars, to compete for them in the wider marketplace, demands that a law firm is an even more attractive place to work. That’s attractive via culture, not via price tag.

Solutions looking for problems

Most firms have adopted at least some ‘shelfware’. Shelfware is the shiny, impressive-looking software that is completely under-utilised in the firm.

The sales pitch was amazing — it might even have been from an ex-lawyer-turned-entrepreneur at his very impressive start-up with plenty of funding behind him. He knows what you need as he used to be a very successful lawyer. It all sounds really great and the productivity and profit figures that are wafted about are tantalising. So it gets purchased.

The problem is that it’s a solution that didn’t match any specific problems you’d identified, it just made sense that it would make the firm better. It sits there, over-valued but under-worked, waiting for its moment to shine — which will never come.

It was probably chosen because the wrong people were pitched to and made the decision, or the wrong criteria were used to assess it. Shelfware gets judged on the theoretical functional benefits most of the time; all the things it can do. But what about the really important considerations?

How good is the user interface, measured against the services people use every day? If it’s found lacking, people won’t use it well, or at all. What is the ease of integration with your existing technology stack? If it’s not simple you’re in for a world of pain, time and expense. How about future upgrades — will each new deployment take a lot of effort? Can you roll out a small pilot and evaluate it without committing to it fully? If not, you risk buying a turkey for a dinner party of vegetarians.

Does it solve a problem that your employees are telling you is holding them back from delivering on your strategy? No? What about a problem your customers have identified as important? I’m guessing that’s a no too.

Whilst the financial hit from buying shelfware is obvious, the monetary loss is often not the issue. The fall-out will be wider and much more damaging than that. Let’s see it from the perspective of a typical lawyer.

The first time new software rolls in the door, our lawyer is probably quite enthusiastic. She gives it a good go, attending the training, and actively trying to use it day-to-day to unlock the benefits she was told about. Then it proves to be painful to use and is slowing her down. She starts to revert to the old way of doing things as she realises that it’s not getting her home any earlier and her work is not improving.

Six months later another new solution comes along. This time our lawyer is a bit less enthusiastic… and the same thing happens, except sooner — because she didn’t invest as much in trying to make it work. This one was actually quite good, but never got a proper shot. Onto the virtual shelf it goes.

By the third time, it doesn’t matter if the new product is brilliant or not, the lawyer is so fatigued and fed up of investing in this stuff that they actively resist trying it at all.

To be fair, there are two sources of responsibility here. Law firms need to be in tune with the real needs and problems that their employees and clients face and actively look for innovative ways to address those needs. This requires them to think from the perspective of their customers, and that means getting close enough to them to identify what those needs are and not assuming they already know.

The second source of responsibility sits squarely with the legal tech firms. Friends in magic circle law firms with robust experience in this area have told me their frustrations at the new (and old) vendors knocking on the door without any telling customer insight and plenty of sub-standard product management. There’s no excuse for it — plenty of other industries do a far better job.

It comes back to the same problem of not investing in professionals with experience who know what they are doing. It might not be that hard to start gathering insight and putting a product roadmap together, but it’s really hard to do it well if you’ve not had years of experience doing it. There is an art to this that you can’t find in reading a textbook or being a potential user yourself, and if you don’t do this well it will always come back to bite you.

This is hard to hear and hard to write

Having worked in law for a long time, I’m seeing it with outside perspective more and more clearly as I work with clients from different sectors and a team with diverse experience. It’s frustrating as this is an industry full of brilliant, driven people — but the legal industry is not moving with the speed and trajectory it should be.

Law needs to broaden its mindset properly to gain some of the advantages that other sectors have enjoyed. Make no mistake, even the biggest law firms will be disrupted eventually, and anyone who wants to avoid that needs to start changing their behaviour quickly.

The upside of a genuine programme of innovation is future growth and security for the firm via increased satisfaction and fee income from customers. The risk of carrying on at the current pace is a threat of profound and rapid decline as customers do more themselves and look for new solutions.

I doubt the customers I’ve spoken to are the only ones feeling like nothing much is changing (at least not what they would find useful anyway). A dozen or so saying it probably means many more are thinking it.

Any one of the factors I’ve touched on here could be limiting your ability to innovate successfully, but the critical aspect is delivering innovative services that have identifiable value to clients which are then adopted by them enthusiastically. No innovation is going to benefit your business unless you can get them to land well with customers.

Tap into your customers growing sense of unease to identify true opportunities for innovation, tackle those opportunities with a broader-than-legal lens and you’ll succeed. Ignore, or simply remain ignorant of, your clients’ real needs and tackle every challenge in a legal echo-chamber and you may find that law is not the safe haven it used to be.

Written with Rae Morgan