Innovation in the Law Firm World

Despite over a decade of widespread discussion of innovation within the corporate environment, innovation within law firms remains a relatively unfamiliar topic. The meaning of the word 'innovation' (often defined as 'the act of introducing something new') remains foreign within the context of law firm services, processes, and operations. Very few law firms recognize the opportunities associated with innovation or the market and competitive pressures that will ultimately drive successful firms toward this important business concept. In many ways, innovation represents an untapped opportunity for law firms ' the next great frontier for firms looking to expand their businesses and improve their competitive positions.

The Business Case for Innovation:
Why Should Law Firms Innovate?

Until recently, firms have seen little need to innovate. For much of their history, law firms have grown and prospered by focusing on the practice of law, but not necessarily the business of law. Legal expertise alone has driven much of their success.

Today, however, this is no longer the case. Competition within the market for legal services continues to intensify. There is an immense and growing rivalry for top talent, resulting in salary inflation that drives up the cost of doing business. Firms are continuing to grow and consolidate, providing larger law firms with greater market share, broader name recognition, and more recruiting power. Clients are more discriminating today than ever before in purchasing legal services, developing a broader understanding of their own legal requirements and a more sophisticated approach to managing legal service providers and their fees. All of these factors are contributing to intensifying competition in the industry and are compelling more and more law firms to look for new processes, new services, and new ways of doing things through innovation.

In addition to its value in combating market pressures, innovation also offers law firms a unique opportunity for differentiation. Most law firms look incredibly similar. Our research and client interviews indicate that clients view many large, commercial firms as highly comparable across a range of service characteristics; pricing, geography, types of services ' even quality. This is not a real surprise given that law firms are constantly measuring, benchmarking and managing their performance based on what other law firms do. By seeking to innovate, daring firms face an opportunity to step away from the median ' to approach their clients and their business in a new and different way. So, what does innovation really mean for a law firm?

What Innovation Means

In the law firm world, innovation translates to opportunities to leverage brand, develop new products or services, redesign client service delivery processes, or restructure internal operations. It involves looking at old problems in new ways, thinking about and doing things differently, adopting new approaches, or developing new opportunities. High-profile examples of innovation in law firms range from the risky launch of gradated associate salaries and billable hour requirements to the astute establishment of the first client extranet. Although neither example proposes overly dramatic change, both represent a new way of doing things within the traditional law firm model.

Firms most successful at introducing new services and developing new opportunities recognize that innovation must be based on a deep understanding of client needs. It also must deliver superior value ' meaning it must go beyond what is already being done. All of this translates into firms focusing on the needs and wants of their clients and basing innovation on what clients value most. Whatever form it takes, innovation represents doing something differently, and when successful, results in long-range, strategic impact on the firm and value delivered to the firm's clients.

Challenges to Innovation in
The Law Firm Environment

Despite the many benefits and potential opportunities associated with innovation, many law firms struggle to effectively innovate. This is a result of the numerous impediments to out-of-the-box thinking inherent in a law firm structure and culture. Industry experts often refer to this as the 'partnership straitjacket,' which is typically characterized by some combination of structural and behavioral elements intrinsic to most law firms ' consensus-based management, a lack of trust, autonomy, independent practices, a lack of teamwork or cooperation, law firm compensation systems, and/or legal training and risk aversion. These law firm characteristics restrict the pursuit of innovation or in some cases, directly contradict elements central to successful innovation.

The contradiction between the typical law firm and a highly innovative environment is easily observed. For example, successful innovation requires making difficult choices, prioritizing and taking aggressive actions and risks ' all of which are at odds with consensus-based management. Teamwork and open sharing of information are at odds with law firm autonomy, independent practices, and a lack of trust. Creativity, originality, and daring to do something different, untested and unproven, contradict a lawyer's legal training and predisposition to avoid risk. And the examples go on and on.

But don't be discouraged. The realization that many law firms are not naturally inclined to think outside of the box or encourage aggressive action does not mean that innovation cannot happen within the law firm environment. Our experience in working with firms indicates that even the most traditional of law firms can innovate ' with only a few steps in the right direction.

Tools for Making Innovation Happen

In seeking to promote innovation in a law firm, courageous law firm leaders will find that the following tools will be critical to achieving innovation.

Talk to your clients ' and then, talk to them some more: Learn about your clients' needs. Get feedback on your services, people, processes, Web site, fees, reputation, etc. Learn as much as you can from them. Then share this information with others ' particularly in the process of developing new client service programs and in adapting services within practice areas.

Develop an innovation process: Innovation rarely happens on its own ' particularly in law firms. In order to successfully innovate, many front runners in this field have developed a process for cultivating ideas ' Google, IDEO, Apple and others. These organizations have developed environments to capture and nurture out-of-the-box thinking within their organizations. By focusing on fostering creative thinking, they institutionalize the innovation process via supportive internal environments.

Promote teamwork and networking: Businesses find that new ideas most often result from group interaction and the sharing of information across diverse teams of people. Innovation requires getting people to work together to share experiences, communicate ideas, and challenge old norms. Building cross-functional and cross-practice teams is one of the most effective methods for creative brainstorming and developing new ideas and opportunities.

Capture knowledge: All too often, firms identify opportunities for innovation, but due to competing priorities or conflicting agendas, ideas are tabled and too quickly forgotten. Successful innovation requires developing tools and processes for capturing good ideas, keeping the ideas alive, and ultimately putting the most promising of ideas to the test. The first step to capturing knowledge involves forming processes or systems that will help firms to encapsulate and evaluate good ideas over time.

Get key opinion leaders on board: Generate buy-in from forward thinking opinion leaders and decision makers. Seek out support from critical players and those with significant influence at all levels within the firm. Leverage and profile your 'early adopters' (opinion leaders who buy into a new idea) to spread the word about innovation opportunities and garner support within the firm and in the marketplace.

Develop real-world examples: Share information and demonstrate ideas in a tangible, realizable way to generate excitement and recognition within the firm and with the firm's clients. Very often, innovation opportunities are abandoned because decision-makers cannot visualize the nature of the innovation or the benefits offered. Physical, tangible examples can be a critical tool in generating support for an idea.

Treat everything as temporary: One of the greatest inhibitors to successful innovation is the fear of change and a predilection to remain at status quo. Firms most successful at cultivating innovation have developed an appetite for change. Change is a frequent and ongoing element of the organizational culture. Change is expected, and there are no sacred cows. A culture more comfortable with change becomes more open to new ideas, more willing to challenge old norms, and as a result, more likely to innovate. In treating things as temporary, firms avoid attachment to a single way of thinking or doing things and promote a culture more open to change and new ideas.

Conclusion

Innovation is a critical topic in today's law firm environment for several compelling reasons. It offers firms an opportunity to remain competitive or even out-compete the market in terms of securing clients and resources. Innovation also offers law firms a viable method for differentiating themselves from their peers and primary competitors ' an opportunity to overcome the 'sameness' that has plagued law firms for decades. Given the structural and cultural norms common in law firms, making innovation happen can represent a significant challenge. However, it can be done. In the coming years, we expect to see a growing number of firms aggressively seek innovation, and through innovation establish a competitive advantage. Innovation represents the next great and relatively untapped frontier for firms looking to expand their businesses and outperform their competitors.

Despite over a decade of widespread discussion of innovation within the corporate environment, innovation within law firms remains a relatively unfamiliar topic. The meaning of the word 'innovation' (often defined as 'the act of introducing something new') remains foreign within the context of law firm services, processes, and operations. Very few law firms recognize the opportunities associated with innovation or the market and competitive pressures that will ultimately drive successful firms toward this important business concept. In many ways, innovation represents an untapped opportunity for law firms ' the next great frontier for firms looking to expand their businesses and improve their competitive positions.

The Business Case for Innovation:
Why Should Law Firms Innovate?

Until recently, firms have seen little need to innovate. For much of their history, law firms have grown and prospered by focusing on the practice of law, but not necessarily the business of law. Legal expertise alone has driven much of their success.

Today, however, this is no longer the case. Competition within the market for legal services continues to intensify. There is an immense and growing rivalry for top talent, resulting in salary inflation that drives up the cost of doing business. Firms are continuing to grow and consolidate, providing larger law firms with greater market share, broader name recognition, and more recruiting power. Clients are more discriminating today than ever before in purchasing legal services, developing a broader understanding of their own legal requirements and a more sophisticated approach to managing legal service providers and their fees. All of these factors are contributing to intensifying competition in the industry and are compelling more and more law firms to look for new processes, new services, and new ways of doing things through innovation.

In addition to its value in combating market pressures, innovation also offers law firms a unique opportunity for differentiation. Most law firms look incredibly similar. Our research and client interviews indicate that clients view many large, commercial firms as highly comparable across a range of service characteristics; pricing, geography, types of services ' even quality. This is not a real surprise given that law firms are constantly measuring, benchmarking and managing their performance based on what other law firms do. By seeking to innovate, daring firms face an opportunity to step away from the median ' to approach their clients and their business in a new and different way. So, what does innovation really mean for a law firm?

What Innovation Means

In the law firm world, innovation translates to opportunities to leverage brand, develop new products or services, redesign client service delivery processes, or restructure internal operations. It involves looking at old problems in new ways, thinking about and doing things differently, adopting new approaches, or developing new opportunities. High-profile examples of innovation in law firms range from the risky launch of gradated associate salaries and billable hour requirements to the astute establishment of the first client extranet. Although neither example proposes overly dramatic change, both represent a new way of doing things within the traditional law firm model.

Firms most successful at introducing new services and developing new opportunities recognize that innovation must be based on a deep understanding of client needs. It also must deliver superior value ' meaning it must go beyond what is already being done. All of this translates into firms focusing on the needs and wants of their clients and basing innovation on what clients value most. Whatever form it takes, innovation represents doing something differently, and when successful, results in long-range, strategic impact on the firm and value delivered to the firm's clients.

Challenges to Innovation in
The Law Firm Environment

Despite the many benefits and potential opportunities associated with innovation, many law firms struggle to effectively innovate. This is a result of the numerous impediments to out-of-the-box thinking inherent in a law firm structure and culture. Industry experts often refer to this as the 'partnership straitjacket,' which is typically characterized by some combination of structural and behavioral elements intrinsic to most law firms ' consensus-based management, a lack of trust, autonomy, independent practices, a lack of teamwork or cooperation, law firm compensation systems, and/or legal training and risk aversion. These law firm characteristics restrict the pursuit of innovation or in some cases, directly contradict elements central to successful innovation.

The contradiction between the typical law firm and a highly innovative environment is easily observed. For example, successful innovation requires making difficult choices, prioritizing and taking aggressive actions and risks ' all of which are at odds with consensus-based management. Teamwork and open sharing of information are at odds with law firm autonomy, independent practices, and a lack of trust. Creativity, originality, and daring to do something different, untested and unproven, contradict a lawyer's legal training and predisposition to avoid risk. And the examples go on and on.

But don't be discouraged. The realization that many law firms are not naturally inclined to think outside of the box or encourage aggressive action does not mean that innovation cannot happen within the law firm environment. Our experience in working with firms indicates that even the most traditional of law firms can innovate ' with only a few steps in the right direction.

Tools for Making Innovation Happen

In seeking to promote innovation in a law firm, courageous law firm leaders will find that the following tools will be critical to achieving innovation.

Talk to your clients ' and then, talk to them some more: Learn about your clients' needs. Get feedback on your services, people, processes, Web site, fees, reputation, etc. Learn as much as you can from them. Then share this information with others ' particularly in the process of developing new client service programs and in adapting services within practice areas.

Develop an innovation process: Innovation rarely happens on its own ' particularly in law firms. In order to successfully innovate, many front runners in this field have developed a process for cultivating ideas ' Google, IDEO, Apple and others. These organizations have developed environments to capture and nurture out-of-the-box thinking within their organizations. By focusing on fostering creative thinking, they institutionalize the innovation process via supportive internal environments.

Promote teamwork and networking: Businesses find that new ideas most often result from group interaction and the sharing of information across diverse teams of people. Innovation requires getting people to work together to share experiences, communicate ideas, and challenge old norms. Building cross-functional and cross-practice teams is one of the most effective methods for creative brainstorming and developing new ideas and opportunities.

Capture knowledge: All too often, firms identify opportunities for innovation, but due to competing priorities or conflicting agendas, ideas are tabled and too quickly forgotten. Successful innovation requires developing tools and processes for capturing good ideas, keeping the ideas alive, and ultimately putting the most promising of ideas to the test. The first step to capturing knowledge involves forming processes or systems that will help firms to encapsulate and evaluate good ideas over time.

Get key opinion leaders on board: Generate buy-in from forward thinking opinion leaders and decision makers. Seek out support from critical players and those with significant influence at all levels within the firm. Leverage and profile your 'early adopters' (opinion leaders who buy into a new idea) to spread the word about innovation opportunities and garner support within the firm and in the marketplace.

Develop real-world examples: Share information and demonstrate ideas in a tangible, realizable way to generate excitement and recognition within the firm and with the firm's clients. Very often, innovation opportunities are abandoned because decision-makers cannot visualize the nature of the innovation or the benefits offered. Physical, tangible examples can be a critical tool in generating support for an idea.

Treat everything as temporary: One of the greatest inhibitors to successful innovation is the fear of change and a predilection to remain at status quo. Firms most successful at cultivating innovation have developed an appetite for change. Change is a frequent and ongoing element of the organizational culture. Change is expected, and there are no sacred cows. A culture more comfortable with change becomes more open to new ideas, more willing to challenge old norms, and as a result, more likely to innovate. In treating things as temporary, firms avoid attachment to a single way of thinking or doing things and promote a culture more open to change and new ideas.

Conclusion

Innovation is a critical topic in today's law firm environment for several compelling reasons. It offers firms an opportunity to remain competitive or even out-compete the market in terms of securing clients and resources. Innovation also offers law firms a viable method for differentiating themselves from their peers and primary competitors ' an opportunity to overcome the 'sameness' that has plagued law firms for decades. Given the structural and cultural norms common in law firms, making innovation happen can represent a significant challenge. However, it can be done. In the coming years, we expect to see a growing number of firms aggressively seek innovation, and through innovation establish a competitive advantage. Innovation represents the next great and relatively untapped frontier for firms looking to expand their businesses and outperform their competitors.