Why do we need innovation in law?

Digital signals flying over highway. Digital transformation. Internet of Things.
Why do we need innovation in law?

(Originally published in Lexis Nexis’s ‘Advancing Together’ report: https://www.lexisnexis.com.au/en/insights-and-analysis/rule-of-law/2019/advancing-together-december-2019)

There are some degrees of cynicism when another law firm issues another press release regarding the next step on their innovation pathway. The latest foray into “Blockchain”, “Artificial Intelligence”, “Design Thinking” and “Smart Contracts” are touted as game-changers placing their firm at the forefront of the re-invention of the profession. The truth is that the profession isn’t being re-invented. Firms are delivering record profits, but with lawyers’ job satisfaction at an all-time low, and declining customer net-promoter scores, something must change.


What is innovation

The “innovation by press release” mantra indicates that firms understand the benefit of innovation and clients are seeking enhanced service delivery. So where are things breaking down?

The inhibiting factor may be a lack of understanding of the term “Innovation” and what it means to be innovative. To innovate is to explore creative ways of improving an existing process as opposed to “invention” which is to create something new. The art of innovation is to focus on self-improvement which in turn provides a richer client experience. Legal services are transactional in nature, and many law firms see innovation as a single event. “We create something innovative and we charge you for it”. To focus on innovation as a transaction fails to realise the broader opportunity that is presented.


An approach to successful innovation

Law firms are starting to understand that innovation is a mindset that needs to be embedded culturally into the organisation for it deliver real benefit. Lawyers are beginning to open their minds to the opportunity and engage a mix of skills to achieve a tangible outcome. Streamlining ways for clients to engage with firms may represent a significant opportunity to increase client satisfaction. Importantly, the opportunity to co-create solutions with clients can deliver untold benefits to the client/firm relationship. An exercise leveraging multidisciplinary skills such as legal, process, user experience, product and technology to create a streamlined solution may result in clients choosing to brief your firm rather than competitors. “If you make it easy for clients to come to you, they will come to you more often” is the hypothesis for this approach.

That’s one example, but the point is that there are some fundamental points law firms should consider when approaching their innovation strategy:

1. Identify a known client pain point. Including clients in this discovery process is critical to obtaining the right perspective.

2. Ascertain multiple options to help mitigate the pain points, before agreeing the right one to take forward. Importantly some of these options may involve simple process changes, rather than complex technology implementations.

3. Ensure a multidisciplinary approach to ideation to broaden the perspective. Don’t be afraid to bring “non-lawyers” into the room.

4. Get the right validation of the solution. Don’t presuppose the solution you have created will be well received by everyone. Get feedback and iterate.

5. Ensure you see the most optimal solution through to execution. Too often the focus of events like “hackathons” are restricted to idea generation. The benefit is in the successful implementation of the solution, not the idea.

6. Ensure there is a KPI for the initiative. There should be something measurable to evaluate success to ensure it is delivering value.


Realising the value of innovation

Defining the value of an innovation initiative is something that law firms are starting to grasp as a measure of success. Recognising that clients do not come to law firms for their innovation expertise is an important point. You shouldn’t charge for innovation the same way your charge for legal service delivery, innovation should be seen as a way to enable your customers to more easily do business with you. If you succeed in delivering on this, clients will come to you more readily than go to competitors. This, of course, is the true value of an innovation initiative. There are several ways firms can provide streamlined services to clients to deliver real value:

1. Matter on-boarding and management services. Make it easy for clients to brief you on a potential matter and allow them to manage budgeting expectations in a transparent manner

2. Creation of digital advisors to allow clients to self-serve routine information for such things as contract approval and execution advice, legislative compliance, marketing campaign approvals and data handling and breach advice. These automated tools can allow your firm to be front-of-mind when there is an element of nuance, requiring specialist legal skills.

3. Provide reporting and data tracking for transactional services such as Litigation and M&A projects. Empowering clients to control their project status and spend management creates an increased level of trust between client and firm.

Firms should also seek to create solutions that are re-usable across multiple clients or sectors. For example, “A Marketing Approvals Advisor” is a generically applicable solution. The subtleties of the approval checklist will differ across clients, but the broad approach is the same potentially increasing the value of the solution created.


The way forward

True innovation is an important competitive advantage for any law firm. Recognising that the art of innovation needs to be culturally embedded into the firm and not just sit with an “innovation manager” will help ensure success. A multidisciplinary approach is an important component of the innovation process to connect pain points to the right outcome. Understanding how to derive value from your innovation initiatives will help determine the investment required, both in terms of money and time. Those firms that have a strategy incorporating these key elements will better position themselves for the future of legal service delivery.

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