I was invited to attend a presentation on "Innovation in Legal Service Delivery"
last Wednesday at Allen & Overy’s New York offices, where the conversation
was kicked off by four speakers:
- Ward Bower of Altman-Weil discussing their Legal
Transformation Study; - Rosemary Martin, newly minted General Counsel of the Practical
Law Company and as of two weeks ago General Counsel of Reuters; - Paul Lippe, CEO of Legal
OnRamp; and - Michael Will, partner, Derivative Services LLP.
Unfortunately, the only public
coverage the event has gotten to date focused on the common wisdom that law firms are allergic
to innovation ("Innovate or Die Still the Message to Law Firms" is the headline
of the piece), that they’re "conservative to a fault," and "slow to embrace
change."
What’s wrong with that? Simply that it misconstrued not only
the creative and diverse approaches of the four panelists on the program, but
most importantly did not comment upon or reveal the tonality and purpose of the event, which were exploratory,
open-minded, inquiring, and refreshingly prepared to admit the speakers (and
the questioners) didn’t have all the answers.
Where to start?
I suppose as good a place as any is to go right back to the mainstream media,
where, it bears reminding, Allen & Overy won the Financial Times annual
award last year as "The
law’s best and boldest innovator." (I understand this FT competition
will be broadening its reach to include a separate US category this year; that
should be interesting….)
Another starting place might be to reflect on the conversation about the billable
hour, regular scourge of those evangelizing for innovation. What struck
me about this part of the conversation was that the law firms seemed weirdly
less wed to it than the clients. After all, how is a GC necessarily to
defend a bill to the CFO for $850,000 "for services rendered." One
imagines the conversation if it went well: "Why not $750,000?!" And
if it went badly: "You were trying to save money?! This was
a million-dollar-plus case!" But on the billable hour model, with
activities itemized down to the 1/10th of an hour for the paralegals at the
document warehouse, the GC is bulletproof. "Well, yes, you see, but the
work was actually done, to the tune of $902,347.25"
Yet another might be to look at the actual framework of the Altman-Weil sponsored Legal
Transformation Study, which looks out to the year 2020 and projects
four potential scenarios, based on your view of whether legal service delivery
will become more aggregated or more disaggregated, and on whether regulation
will become heavier and more intense or looser and more laissez-faire. This
produces the following 2 x 2 matrix:
The dimensions are "aggregated/disaggregated" across the horizontal axis from
left to right, and "highly regulated/laissez faire" down the vertical axis
from top to bottom.
None of these four scenarios is meant to represent an exclusive view of the
truth, as combinations and permutations may be (according to your view) the
most realistic. Similarly, none is meant as a "prediction." Rather,
scenarios are tools for critical thinking about how your firm (your practice
group, your office, your own book of business) may fare in the future depending
on what you think is plausible as the industry evolves. Here are the
four quadrants in summary form:
- Mega Mania
- Consolidation
- A conflicts-prone world
- A traditional model dominated by giants
- Client loyalty is low, frustration high
- Expertopia
- Rise in litigation
- Expertise at a premium
- Numerous niche players driven by regulatory breakup of large providers
- E-Marketplace
- Major economic downturn leads to deregulation and harmonization to
spur growth - Flurry of new providers
- Commoditzation
- Major economic downturn leads to deregulation and harmonization to
- Techno-Law
- Peaceful world dominated by desire to enhance trade relations
- Harmonious regulatory systems offering "lawyers in a box"
- Clients demanding interoperable technology to pare costs
- Global sourcing
Again, none of these, nor all of them together, is meant to be a blueprint
for the future; they are meant to spur reflection, analysis, and strategic
agility and nimbleness. Take issue with them as you will, but do not
take issue with the reality that the status quo is not an option.
Meanwhile, Rosemary of the Practical Law Company talked about her background
of a dozen years at Rowe & Mawe followed by nearly a dozen more at Reuters,
and her conviction that outfits such as the Practical Law Company are preparing
the way for how law will be practiced in the 21st Century. Hers was not
a message of "innovate or die," it was more a message of, "look around and
see how the other departments of corporations have been transformed. And
dare to think you might take a page from their books."
Rarely recently have I sat in a room with as many senior, high-caliber inhouse
and law firm practitioners discussing openly their thoughts, their suggestions,
their speculations, their doubts, their hopes and their fears for how our industry
may evolve. That leads me to my own devout hope, which is how to continue
to advance this conversation.
One of more insightful remarks came from Paul Lippe of Legal OnRamp, who said
that he believed there were "immensely strong pockets of innovation" in law
firms, driven by individuals with vision and a commitment to their idea of
a different future, but that "law firms have no way of institutionalizing those
visions," and thus they tend to wither away after the spearheading individual
departs. Corporate America, you may have observed—at least the
best of it, places like Google and Intel and the new HP—have ways of
nurturing and spreading these individual pockets of innovative excellence. But
I fear our colleague’s remark was true, that we have no such practices.
About this time you may be saying to yourself, "Sure, and I’ve heard all this
innovation stuff discussed for the last 10 and 20 years and I’ll hear it for
the next 10 or 20." That, permit me to suggest, is the problem. That’s
the problem our faithful American Lawyer reporter succumbed to in
trying to cover the event, and I admit it can be all too appealing to fall
prey to a type of intellectual exhaustion, a feeling that all the energy has
been drained out of the issue of "innovation" in legal services.
But I have news for you: No one in this room on this evening believed
that. To those of us there, innovation is a vital, demanding, pressing
challenge. On the demand side, clients are increasingly seeking alternatives
to the billable hour and annual 6—8% increases in fees, while on the
supply side, associates are increasingly unwilling to stomach annual
increases in billable hour expectations for episodic starting salary bumps.
Actually, I believe the attitude of "I’ve heard this already" is just fine. For
90% of firms.
But 10% will change, and that 10% will explore alternatives, some successful
and some failures. The failures we can chalk up to Darwinism (and failures
need not be fatal), and the successes we can chalk up to Darwinism. If
there are tremendous successes, however, the logic of the competitive marketplace
tells us something else: Best be a fast follower.
So I ask you, dear reader: How shall we continue these discussions? Are
they best conducted in law firm-sponsored colloquies such as this? Under
the auspices of a legal publication such as The
American Lawyer? At dispassionate fora and conferences put together
by and hosted at a law school? What are your thoughts? Let
me know.
Or else, adopt the tone of the press coverage and decide it’s ten years on
and "still the [same old same old] message."
