Innovation, learning to be innovative and knowing how to create an innovative culture, have become THE focus of keynote addresses and training courses for law firms in the “new normal”. These are important. Based on any form of business life cycle analysis, the legal industry is a mature industry in decline. The important thing to note here is that decline need not mean extinction provided the industry changes. And changing it is. Fueled by globalization, technology and client demands for cost certainty, legal services are no longer being delivered in the same way, by the same people or at the same price (Susskind, 2013). In just a handful of years, legal services have become more accessible, cheaper and, in some areas, offered by non-lawyers. So, just how important is innovation to lawyers and law firms? Does it really matter?
Innovation and Governance
The answer to these questions should be at the top of every law firm managing partner’s agenda right now. Leading a law firm has never been easy and, leading one during a time of unprecedented change requires more than any one person’s vision; it needs a critical mass of influential partners and others who dare to be different. In the best-case scenario, these champions of innovation can be found within current leadership ranks but, if your firm is like many others, that is unlikely. The absence of “new normal” leadership knowledge, skills and competencies, those rooted in emotional intelligence (Goleman, 2004), is not a criticism of current leaders, it is simply an acknowledgement that every leader has his or her time, and times are changing! Today, part-time, in between practice law firm leadership, is giving way to full-time, fully engaged leadership and management with a difference.
In the US, a new, renewed or enhanced focus on “the business of law” in addition to “the practice of law” in law firms has come about mostly due to the global financial crisis and the changing expectations and demands of corporate counsel. The US Association of Corporate Counsel articulated its views on the critical skills for outside counsel in its 2008 Value Challenge initiative. These skills included capabilities in: “aligning relationships, value-based fee structures – i.e. not based on the ‘billable hour’, staffing and training practices, budgeting, project management, process Improvement, use of technology, data management, knowledge management, and change management”. Overseas, the emphasis on these skills or what is sometimes referred to as the “corporatization” of law firms, has led to significant change. In 2007, Slater and Gordon became the first law firm to float on the Australian stock exchange. In the UK and as a result of newly permitted alternative business structures (ABS) from 2012, non-lawyer investment and ownership in law firms became possible. These changes have led to different business and staffing models for the delivery of legal services.
While U.S. lawyers, law firms and the ABA are still debating the extent to which they will embrace these changes, they have nevertheless been impacted by them. Given the role and position of U.S. firms in the global legal services market place, this was to be expected. To take one example, while US law firms generally cannot share profits with non-lawyers (except in limited circumstances in Washington, DC), most US law firms do share at least some aspects of leadership and management between their partners and a combination of C-(Chief) and D (Director)-suite professionals. This group of multi-disciplinary, non-lawyer specialists in areas like IT, HR, professional development/talent management, marketing & business development, finance, risk and compliance, bring to their firms a rich source of tried and tested best practices in how to manage and operate successful businesses across many different industries. These professionals understand what corporate clients want and, may even have been corporate clients themselves. As a group and individually, they are a source of current market intelligence and data every bit as important as that obtained by practising attorneys in the firm and those undertaking client secondments outside it. So, whether or not ABSs prove to be the best way forward for U.S. firms, their future success would seem to hinge on finding more ways to bring their attorneys and specialists together and engage them in developing new ideas and different solutions to old problems. Training in how to facilitate communication, collaborate effectively, problem-solve and build relationships as well as lead, build and contribute to highly effective multi-disciplinary teams, needs to be a priority for every law firm leader and manager right now.
Innovation, Environment and Culture
Creating and leveraging opportunities for innovation is essential for the growth of every business and profession. Law firms are no different but, they do have some unique challenges. Change never comes easily and that is especially true where the industry, like the legal industry, is founded on precedent, conservatism, law, rules and regulations. Innovation and change are much less about “who did it before us” and more about “let’s be the first to do it”. Law firms do not have research and development departments. They do not invest in ventures that might fail. Yet, every other industry that pushes the boundaries, pushes forward, and innovates, invests with priority in these initiatives. While it is true that law firms do not make widgets and that it is more difficult to innovate in a mature industry, it is equally true that this creates the “perfect storm” for innovation. Just think diversity and inclusion and innovation will follow!
Much has been written about the several- generation law firm and the many and varied differences between Baby Boomers, Gen X and Gen Y (Ursula Furi-Perry, 2012). Similarly much has been written about the absence of diversity and inclusion in law firm leadership (NALP Bulletin, April 2014). Innovation evolves from diversity – diversity of view, diversity of background, diversity of approach and diversity of opinion. Innovation cannot happen if the same voices are heard on the same topics wherever leadership is performed or decisions are made in a firm. Different people, with different ideas and approaches are a critical part of this equation. People innovate, organizations do not!
Innovation will happen in any place where there is an opportunity for different opinions to be heard. Listening is critical here. Listening is not telling, fixing or critiquing. Training people how to listen well and be open to constructive feedback is the key. Innovation will thrive in any place where it is encouraged and acted on. There are many different ways to encourage thoughtful input starting with something as easy as a virtual (social media supported) suggestion box and it moves on from there. Others include holding monthly key client or practice area matter debriefings; converting monthly firm-wide meetings to town halls or open fora that encourage new ideas from everyone; roundtables between firm leadership and senior professional staff to collaborate on solving the big challenges for the firm; roundtables with clients so you really understand their problems and their market/where your next job will come from; asking Gen Ys to sit on a board or committee; creating time and space for brainstorming at meetings; or making a firm-wide decision to break the glass ceiling for women and minorities rather than watching them chip away at it year after year. It is these things, simple but significant, and through these actions, that innovation happens, work environments change, and a culture of creative excellence is borne.
Innovation and Recruitment
Innovation comes from talent within and outside. It probably won’t be found in an academic transcript but it might be uncovered in almost everything else an applicant has done. Recruit for adaptability, flexibility, resilience, sociability, collaboration, calculated risk taking, independent thinking, creative problem solving, instigators of process or system improvements (Boyd and Goldenberg, 2011) and yes, for your attorneys, legal writing, legal knowledge and research skills too. Use behavioural interviewing and, if you need to, undertake training so you can be sure you do it well. Psychometric testing – emerging as a tool in partnership selection schools – is worth investigating so you can identify key personality characteristics, behavioral styles, abilities or aptitudes most likely to support the qualities noted earlier.
Look at, analyze and understand all that data you have collected about who, what, how and why attorneys and professional staff succeed at your firm. Use the data to inform recruitment processes and guide you in how to make better matches between your firm and the people who will bring your business priorities, mission, vision and values to fruition (Deloitte Consulting LLP and Bersin By Deloitte, Global Human Capital Trends 2014 Engaging the 21st century workforce, March 2014). Do not recruit the same way, from the same law schools/universities, based on the same qualities and expect your new recruits, clones of all others who have gone before them, to be innovative where their predecessors were not. Do recruit the same way where that has produced your entrepreneurs, visionaries, thought leaders and champions of change. Finally, if you employ someone, make sure you have an environment where those “entrepreneurship” and “innovation” core competencies you have developed, can actually flourish (Manch, 2010). Also be sure that your learning programs, career development activities, performance evaluations, compensation and promotion initiatives consistently enhance, reinforce, entrench and reward these competencies.
Where to from here?
For as much as it can be said that the lawyer personality is hard-wired for conservatism and left-brain solutions, just as much can be said to the contrary. Lawyers already have the right stuff to innovate and, in the last few years, some outstanding innovations have emerged to prove it: from the ABSs in the UK mentioned earlier, to very different technology based operational platforms in the U.S. (Clearspire and Axiom Law), and a host of new business ventures (Riverview Law and Legal Force Bookflip), law firm offshoots and thought provoking public fora (ReInvent Law Laboratory and Re-Think Law) in between. Lawyers involved in these initiatives have all been visionary leaders, deep thinkers, critical thinkers, idea generators, creative problem-solvers, great researchers, trend-spotters, trend-setters, creators of deep analytics and intelligent risk takers (Boyd and Goldenberg, 2011). This is their time, their place and their “new normal” to lead – is this your time too?
This article was first published in Law Journal Newsletters, Law Firm Partnership & Benefits Report, ALM, Volume 20, Number 5, July 2014, pp. 5- 6 and is republished with consent.