5 Reasons Law Firms Don't Innovate

We recently surveyed legal innovation thought leaders, and discovered the top reasons preventing law firms - traditional laggards when it comes to change and technology adoption - from innovating. 

Time and budget constraints, skill deficiencies, and risk aversion were seen as the key drivers.

As Penelope Barr of Allens Linklaters LegalTech Lab put it, “Time, coupled with no compelling need to change, continue as core barriers to real innovation breakthrough”.

Let’s explore these factors.

1 Lack of time provided to focus on innovation

Google famously gave its employees ‘20% time’, effectively giving them one day a week to work on new ideas. But law firms bill by the hour, and so time really is money. When you couple this with the short-termism that partner bonus incentives foster, it’s no surprise that not having time is a key factor. 

But this doesn’t mean that time can’t be liberated. 

Simple tactics lawyers can employ to earn time back include:

• Automating process-oriented and repeatable tasks
• Outsourcing such tasks that can’t be automated
• Having shorter meetings by default 
• Not inviting fellow lawyers to meetings that they really don’t need to attend
• Replacing meetings with emails where possible
  

Making such activities central to a firm’s DNA will free up time, but then it’s a question of where the liberated time gets invested. Back into client work or into innovation?

2 Lack of diverse talent and experts in legal innovation 

Nowadays, when we hear the word diversity, it typically refers to diversity of what we can see - skin color, race, gender, and sexual orientation, as opposed to the diversity of what we can’t see - ideology, cultural, experiential, and skill-based.

But when it comes to innovation and creative problem solving, we want to have diversity of what we can’t see, because it’s at the intersection of different ideas, experiences, and so on, that new ideas emerge. 

This is partly why the artistic and cultural revolution of the Renaissance happened - because Lorenzo Medici brought Europe’s best painters, architects, poets, sculptors, musicians, and so on, to Florence. It was at the intersection of these different domains that art flourished.

If you bring together someone with deep legal expertise, and someone with deep tech expertise, then it stands to reason that they will be far more likely to generate a compelling legaltech solution than two legal experts or two tech experts alone.

An alternative to hiring diverse talent is to work with diverse talent outside the building.

This is something that the NewLawAcademy helped the likes of Mills Oakley and Allens Linklaters do, by way of partnering them with startups and scale-ups.

3 Limited budget available for innovation

As with most professional services organizations, spending on items deemed ‘discretionary’ pales in comparison to more utilitarian expenses. But the reality is that spending on innovation should be far from discretionary, and should be seen as a key to ongoing competitiveness.

However, many leaders seem to think that investing in innovation is going to be a highly risky, highly costly pursuit, which is just plain wrong.

Early-stage innovation is essentially about running lots of low-cost experiments to help identify winning opportunities, the application of which should deliver a compelling return on investment. Innovation horror stories are usually a byproduct of jumping to conclusions and over-investing in the wrong thing. This is where modern innovation methodologies such as the lean startup come in handy - helping law firms take many small bets quickly instead of few large bets slowly.

In addition to this, rather than try to do it themselves, partnering with startups and scaleups, as indicated previously, can typically be a lower cost, lower risk way to fast-track innovation.

4 Risk averse culture and ‘fear of change’

People’s behaviors within an organization are typically the result of the environment they find themselves in. 

This is true in life more broadly as well. If you don’t want to devour that packet of Dorito’s late at night, when you’re spread out on the couch, well it might help if you don’t have any Dorito’s in your house. 

When it comes to getting the kinds of behaviors you want out of people, reflecting upon and influencing your law firm’s policies, processes, and systems can help turn the tide. 

Innovation consultancy, Collective Campus, ran such an audit for mid-tier law firm Cornwalls, to help it develop its own culture of innovation. 

5 No compelling need

What might seem like ‘no compelling need’ today might tomorrow be a rued, missed opportunity.

There was no compelling need to invest in Bitcoin five years ago in 2016, when it was priced at US$434. But a US$1,000 investment then would be worth over US$100,000 today.

The same holds true when it comes to investing in innovation. Sure, we’re doing okay today - in fact, law firms had a bumper year in 2020. But, imagine how much better we could be doing, and how much more competitive we could be in five years if we invested in innovation today. 

As new law firms, ALSPs, and legaltech continue to transform the industry, the cost of not acting is going to be far greater in the long run than the short-term cost of acting.

Download our full report on the 21st Century Law Firm here.