Innovation in Law Firms
Caroline Poynton
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Innovation in Law Firms
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Innovation in Law Firms
Caroline Poynton
Published by
In association with
Contents
Executive summary.............................................................................................................VII
Part One: Strategies and tactics for innovation
Chapter 1: To innovate or not to innovate…........................................................................ 3
Is legal innovation really necessary?........................................................................................ 4
Round peg, square hole......................................................................................................... 6
The seven sources of innovation.............................................................................................. 6
Heedless chickens?................................................................................................................ 9
Chapter 2: The case for innovation................................................................................... 11
A tale of two law firms.......................................................................................................... 11
Trouble at the heart of the legal profession............................................................................ 12
1. The competitive environment............................................................................................ 14
2. Clients............................................................................................................................ 16
The challenges ahead.......................................................................................................... 17
Lunatics running the asylum.................................................................................................. 20
Chapter 3: Innovation in funding...................................................................................... 23
Funding option #1: The banks............................................................................................. 23
Funding option #2: The partners.......................................................................................... 26
Funding option #3: Innovate................................................................................................ 28
Chapter 4: Innovation in the face of competitive pressures................................................ 35
The changing in-house department....................................................................................... 35
The innovation opportunity................................................................................................... 37
The impact of outsourcing.................................................................................................... 38
Innovation in pricing............................................................................................................ 39
The problem of innovation in large firms............................................................................... 41
Chapter 5: Innovation and people..................................................................................... 45
A recruitment model in trouble.............................................................................................. 47
An alternative way: The contract model................................................................................. 48
On the brink of innovation................................................................................................... 49
III
Contents
Chapter 6: The innovative leader...................................................................................... 53
Part Two: Case studies
Case study 1: Addleshaw Goddard LLP – The pricing differential....................................... 59
Finding answers................................................................................................................... 60
Complementing change....................................................................................................... 60
Case study 2: Advent Lawyers – Innovation in new markets............................................... 63
The underlying model.......................................................................................................... 63
The rise of the fixed-fee business........................................................................................... 64
Case study 3: Baker & McKenzie – Innovation in people management............................... 67
Baker & McKenzie’s people agenda...................................................................................... 67
Employee engagement......................................................................................................... 68
Social mobility and diversity.................................................................................................. 69
The launch of BakerOpportunity........................................................................................... 70
Senior/board level commitment............................................................................................ 70
An honest approach............................................................................................................. 70
Case study 4: Berwin Leighton Paisner LLP – Enabling innovation...................................... 73
A leap of faith..................................................................................................................... 74
Taking charge of innovation.................................................................................................. 74
Case study 5: CMS Cameron McKenna LLP – Transforming the ‘back office’...................... 77
Case study 6: Eversheds LLP – Making a name for itself in innovation................................ 81
Striking out on the path to innovation.................................................................................... 81
The lessons of Tyco.............................................................................................................. 82
Into the future...................................................................................................................... 83
Case study 7: Marque Lawyers – Starting from scratch...................................................... 85
Deciding what we wanted to be............................................................................................ 85
An utterly different philosophical approach............................................................................ 87
Case study 8: Riverview Law – Shaking up the legal market.............................................. 89
The training ground............................................................................................................. 89
The right time to move......................................................................................................... 90
The fixed-fee proposition...................................................................................................... 91
Case study 9: Simmons & Simmons LLP – Delivering legal expertise the
innovative way.................................................................................................................. 93
IV
Innovation in Law Firms
Expert analysis: Totum – Enabling innovation – the rise of the business
services professional......................................................................................................... 95
The trend to outsource......................................................................................................... 95
Increased specialism enabling innovation.............................................................................. 96
Index................................................................................................................................ 99
V
Executive summary
Innovative law is an oxymoron.
Innovation is the outcome of taking chances,
being bold and standing apart from the
pack. The great innovator must first be the
bold risk-taker – for whom success is far
from guaranteed.
On the contrary, the whole legal system
is predicated on certainty and risk-aversion.
By their nature, lawyers look backwards,
using precedent to advise clients on how to
avoid risk, or get out of dangerous situations.
And who wants a law firm to be
innovative anyway? When a client chooses a
law firm, it is not to enjoy the marvellous array
of new service lines. It is to get the most solid
track record of proven expertise delivered by
lawyers with top-ranked credentials.
Some compromise may be necessary
to accommodate budgetary constraints, but
‘reassuringly expensive’ has long been the
foundation stone for many a law firm’s client list.
But, wait…take a look around and there
is something strange happening with this
most traditional of professions.
Innovation calls
New firms are appearing, boasting slogans
on their websites like ‘re-engineering the
practice of law’, ‘law redefined’, and ‘taking
a different view on legal services’. And it’s
not just new legal businesses that are getting
in on the innovation act.
Since the Financial Times (FT) launched
its ‘Innovative Lawyers’ awards in 2006,
there have been a whole host of established
firms clamouring for recognition. That magic
circle firm Allen & Overy won the FT’s top
spot in the rankings for 2011 may be in no
small part down to the fact that it funds a
permanent innovation panel to support its
more creative business initiatives.
But where has this come from? Well,
there’s no doubt that industry commentators
have long been calling for a shake-up of the
legal profession. In May 2010, for example,
Professor Stephen Mayson, director of the
Legal Service Institute, wrote:
“Why are lawyers so slow to change, so
slow to take up best business practice, and
so slow to adopt innovation; and what is it
we can do to forestall them from using the
professional principles they hold dear (quite
rightly) as a justification for resistance?1”
In response, an increasing number
of law firms seem keen to prove they are
anything but slow.
Indeed, Riverview Law, one of the latest
new entrants to the UK legal market, uses
Mayson’s questioning as the basis for its
more innovative proposition – which is to
provide an entirely new kind of legal service
delivery business model. The firm combines
solicitors and barristers who together provide
legal services at a fixed fee.
With the financial backing of global
law firm DLA Piper, it has also made
considerable waves in the press as a
potential big player of the future.
All change
This report examines the case for innovation
in law. Using practical examples of latest law
VII
Executive summary
firm management strategies and client service
delivery models, the report aims to characterise
what is exactly meant by ‘innovation’ in the
context of the legal profession.
Innovation in Law Firms first goes behind
the scenes to examine the internal and
external pressures pushing law firms to
change. Some argue that firms face nothing
less than a perfect storm – as the impact of
the economy, globalisation, changing client
requirements and the lawyers themselves all
demand a radical shake up of the way legal
services are delivered.
Beyond the theory, the report then looks
at the practice. It examines the firms that
have launched in recent years, as well as
the alternative business structures (ABSs)
that are now coming into play off the back
of the Legal Services Act. These new kinds
of legal business model provide clients with
an all-important choice – and one that will
undoubtedly impact even the largest of firms
as they are forced to increasingly justify the
expense of their elite offering.
From internal restructuring – including
outsourcing – to new client service packages
and innovation in international expansion,
Innovation in Law Firms will assess how the
traditional legal business is using innovative
strategies to win new clients, markets and talent.
The report also looks at the obstacles
that are currently preventing innovation, and
examines how these might be overcome. In
the larger business, this can be particularly
challenging. The partnership structure does
not necessarily lend to creative thinking and,
even where it does, a truly innovative idea
can quickly get lost in the sheer size and
bureaucracy of a global business.
Innovation in Law Firms uses best
practice examples to suggest ways in
which law firms are becoming more
innovative – and asks how they are doing
so while retaining and growing profitability.
VIII
The report asks pertinent questions
such as:
1. Do clients really want innovation, or do
they just want cheaper legal services?
2. True innovation means taking risks. Can a
business as risk-adverse as a law firm ever
really be innovative? And how do law
firms handle the inevitable uncertainties
that innovation creates, especially where
partners may resist change?
3. In recent years, certain firms have been
labelled as ‘innovative’. But what does
that actually mean in terms of their
service offerings?
4. How can lawyers and partners
themselves play a part in supporting their
firm’s innovation? And why would they
want to?
5. In the long term, how far will the
innovation we are seeing today change
the legal profession for good?
For years, the need for innovation in the
legal profession has been discussed. But that
was theory. Now we face the reality of what
innovation in law really means. With case
studies from across the globe, Innovation in
Law Firms presents the new paradigm of 21st
century law.
Reference
1. Mayson, S., ‘If ABSs are the Answer, What is the
Question?’ at http://www.legalservicesinstitute.
org.uk/LSI/LSI_Papers/Speeches/If_ABSs_are_
the_Answer,_What%E2%80%99s_the_Question_/