Over the years, many theories have been developed to describe the typical path of innovation in business and to explain why so many change initiatives fail. From Schumpeter’s theory of innovation to Christensen’s discussion of “disruptive innovation.” The path has been depicted as an “Adoption/Innovation Curve” (Rogers) or described as leaping a chasm or as peaks and valleys of a hype cycle. Whether one needs to leap a chasm or climb out of a trough, however, it is obvious that the path toward deep change is neither linear nor simple.
We see that playing out in Big Law. Obviously, there has been much hype about “innovation” in the industry. Some, such as Thompson Reuters/Georgetown Law, argue that the industry is, in fact, being transformed and that the pace of the change is accelerating. (2018 Report on the State of the Legal Market). Using the Gartner Hype Cycle analysis, others of us would argue that we have hyped “innovation” to the point where we have oversold expectations and, because reality is different than the hype, are sliding down into a period of disillusionment and stasis.
Clients and Firms Don’t See Eye to Eye on Innovation Efforts
As in most cases, the truth lies somewhere in between. The most recent survey of buyers of legal services – released by Thompson Hine – belies the belief that broad change is actually happening. According to the survey, about 81% of the respondents said that they saw no or “barely any” innovation in their law firms. At the same time, only 5% of buyers responded that they were satisfied with the status quo.
This gap between talk of innovation and demonstrated results for clients has been similarly delineated over the past few years by the Altman Weil surveys of law firms and general counsel. For example, when asked to rank, on a scale of one to ten, how serious firms are about changing business models to meet client value needs, 38% of responding law firms gave themselves a score above 5. At the same time, in the general counsel response, only 16% gave a score above 5.
There is no doubt but that our industry has been hyping “innovation” for a number of years. Selling vaporware, of course, is industry-agnostic. This happens all the time in business where the hype generated precedes the creation of actual value. Sometimes, the disconnect between hype and reality can cross a line and lead to very unpleasant results – see, for example, the legal issues around Theranos. Typically, however, it leads to skepticism and disbelief that change is real. In an industry that is built on skepticism, this is not a giant step for buyers of Big Law services.
Applied Innovation Requires a Focus on Context and Relevance
This moment provides an opportunity for those firms that truly wish to change their value proposition and differentiate themselves. The key to climbing out of this “trough of disillusionment” is to recognize that real innovation requires more than talking about cool new tech, and pointing out how the legal industry has not kept up (although these things are important) – it is in the application of innovation to solve specific, discrete problems. For those in legal service delivery, this means solving the underlying business problems faced by our clients.
Doing this requires a deep understanding of the client context; the new demands on our clients’ business; faster pace and greater complexity , and the blurring lines across legal, compliance and risk management. It also requires deep experience managing change and the ability to find and focus on the problems that will provide the greatest value for the effort.
This is, of course, easier said than done. In fact, it’s hard work, especially for lawyers who are predisposed to focus on the legal aspects of client problems. We must be careful not to limit our thinking and do a disservice to ourselves and to our clients. The nature of the problems faced by our clients are multi-faceted, and at their core, they are business problems. Our clients now look to us to craft and deliver business solutions – solutions that require a different way of thinking. This is what clients want from law firm “innovation,” and, judging by the aforementioned Thompson Hines and Altman Weil surveys, the vast majority are telling us they just aren’t getting it.
Lasting Change is a People Challenge, Above All Else
One way to bridge this gap is to turn our focus from talking about change, to asking what our clients really need. This means that it is not enough to talk about that great budgeting tool we have developed or bought. It means doing the work to implement the technology in combination with the necessary behavioral change to bring meaningful budget control and predictability for the purchaser. It is not enough to simply describe some type of “AI” technology. It means doing the work to combine the power of emerging technologies with the skill set of the needed team members to actually change the way services are delivered. It is not enough to simply hype project management or similar skills. It means delivering those skills to clients as part of a cohesive redesign of the way the business units work together.
Entering the plateau of productivity – the blissful final stage of Gartner’s hype cycle – requires both institutional and individual change. Ultimately, this is a people challenge above all else. In the end, it will be those lawyers and law firm business people who successfully motivate and change behavior that move our industry forward.