In this month’s column we talk to well-known and respected legal technologist Dennis Kennedy. Dennis has just published a new book, Successful Innovation Outcomes in Law: A Practical Guide for Law Firms, Law Departments and Other Legal Organizations. His book could fill multiple columns with insights on legal services innovation, so for this column we’ll do our best to get his most practical advice and tips on how lawyers and firms can future proof themselves.
March/April 2020
Future Proofing
Using Innovation to Future Proof Your Law Firm
Dan Pinnington and Reid Trautz
What is innovation, and is it different for small firms than it is for big firms?
I encourage all lawyers to spend less time trying to reach the perfect consensus definition of “innovation” and more time working on the solutions to problems that lead to innovation. My approach is to use a very standard definition of innovation: applying creativity in practical ways to create or enhance customer value. I also think that innovation should force a rethinking of business models. Innovation is a funny concept in that it’s usually determined by looking backward. The “innovation” usually comes from trying to solve a specific and frustrating problem. Only later is the solution labeled “innovation.” For example, FedEx used bar codes to track packages to solve some specific problems it had. Only later was the use of bar codes considered the innovation in shipping it became. As for big and small firms, I tend to see big firms more focused on efficiencies and process improvements than small firms are. Small firms, on the other hand, will look at both enhancing customer value and changing business models— subscription models, online meetings for rural practices, micro niche practices and much more. Small firms can move fast.
Lawyers have a well-deserved reputation for being resistant to change. Where does this resistance come from, and what steps can be taken to overcome it?
Law is a conservative profession where following precedent is a key principle. Resistance is individual, organizational and institutional. Also, lawyers do not like to fail. Legal training and incentives in legal practice create a perfect storm for hindering innovation practices used in other industries in which experimentation is common. The steps are simple to name but difficult for many to do. Study what’s happening in other professions. Understand the current and future pressures on the profession, your business and your clients. Talk to your clients. Take some risks. Try to experiment. Measure results. Obtain and study data. Get some coaching and help. No mysteries. But getting started and maintaining momentum is hard.
What can law firms do to identify and empower individuals who will lead change?
Unless the top leadership of the firm is heavily involved, the odds of meaningful success are small. I suspect that in most firms it will be obvious who should be part of the effort because they are the ones who keep bringing up the topics of change and innovation. Innovation groups in firms seem to arise out of a number of sources—the IT team, the knowledge management team, a practice group leader, the head administrator, the business development group. Once you have a vision or mission for your innovation group, you can start to fill that team or see what outside help you might need. Not to be too simplistic, but you empower the individuals by providing sufficient budget, top management involvement and visible support of the effort.
What are the essential technologies lawyers should be using to future proof their practices?
The technologies that clients need and want you to use. Most of the world outside of legal has moved to cloud technologies, so accelerate that process for yourself. Any technologies that will help you analyze and work with data should be a priority. Lawyers as a group are terrible on cybersecurity—get really good at security. Otherwise, you want to look at standard platforms that will let you connect everything that you and your clients are doing. Pick technologies that make it easier for clients to use and keep using your services. Don’t focus as much on the technology per se as you do on what it will do for you and your clients.
Is there a new business model that will help firms future proof themselves?
I read an article that described 137 existing business models. You really don’t need to find a “new” one. Just pick an existing one. You have to consider a portfolio approach on business models and use several that make sense for you. In other words, even if you decide that the standard “billable hour” approach will work for you, you’ll want to experiment with several other models. I usually think that subscription-based services, productizing services and creating adjacent information businesses are business models most lawyers should be considering. Whether anything will really make any of us future proof is another story. Diversification can only help as we move into an era of accelerating change and unpredictability.
What is the hardest thing that firms will face when they innovate, and how do they overcome this challenge?
Just one? I’d pick the misalignment of efforts and incentives. If you have to do innovation work and still meet minimum billable hours, it’s not likely your innovation program will work. If you create an innovation that generated a lot of new revenue for the firm and you don’t share in the new revenue, you’ll be less inclined to work on your best ideas. You overcome this by clear communication, asking the hard questions and making adjustments as you see what happens. Unfortunately, these are the things that many firms are not so good at doing.
What is the first step a law firm should take to start a journey to a reimagined future?
Innovation is a discipline. There are a lot of resources out there from other fields. I wrote my book to collect what I thought was most useful to lawyers, but I point lawyers to what already exists. The key point in the literature is that you have to talk seriously with your customers and learn what would create or enhance value. Start having those conversations. Get out from behind your desk, solicit new ideas and look for places to experiment.
What is the one thing every lawyer should do to future proof themselves?
Don’t assume that there is a single magic bullet. You have to experiment, analyze the results and experiment again. You want to be curious, willing to keep learning and open to ideas from people with different perspectives and backgrounds. Innovation, in many ways, comes down to finding techniques to help you use your creativity in your work and make your days both more fun and more profitable than they are now.