In this blog, I wanted to share some observations and musings about law firm innovation. It's a subject we've covered before, but in this edition, let's get to some root cause analysis of why law firms continue to falter around innovating their business models and business operations.
Frankly, as we visit with law firms globally, we find all too often there is a "mostly talk and very little action" approach to innovating the business model and business operations. It's not because of lack of desire to innovate! It goes deeper than that.
The good news is - Law firm leaders are fully aware of the following facts:
- Clients expect law firms to make strategic and long-term investments in Operational Excellence.
- Clients expect law firms to understand their own business operations inside and out, and again, be continously improving upon them.
- Clients expect law firms to provide high-value services and INSIGHTS based on specific experience in their industry, geography or problem space.
So why is it taking so long, with so many false starts to make the changes that were needed, frankly, years ago??
We, at Elegrity, are aware of these client demands for law firms too. Beyond that, with 20 years of deep and broad law firm industry experience under our belts, we know the state of affairs inside law firms themselves. As result, we are known for developing solutions to root cause issues by our law firm clients - that by their very nature drive business model and operational innovations.
This also puts us into an interesting 'seat' to observe the psychology happening inside of law firms when faced with the need (and opportunity) to innovate.
Based on these observations, I wanted to share the top 5 blockers we discover that gets in the way of law firm innovation most often:
Law Firm Innovation Blocker #1: Inertia
Ever had the experience of letting an exercise regime slip away from you, and the amount of both mental and physical exertion required to get yourself off that couch and back to it?
Well, law firms have been sitting fairly fat and happy for a very long time. So it's no surprise that the lawyers and leaders who lived through the pre-recession days may have trouble getting into a new pace of motion.
Here's a quote from a law firm leader inside a large law firm that says it all: "I don't believe you can incrementally change a law firm. I think the only way to get to the needed changes is to shut it down and start from scratch - hire by hire."
Luckily for law firms, we know that you CAN incrementally evolve a law firm, and we have proof of that - but getting folks to believe it can be tough (keep reading...).
Law Firm Innovation Blocker #2: Need to 'Know-it-all' Before Taking Action
This is perhaps my favorite one, because it's the most ironic, although when you think about it, it sort of does make sense.
I see the same pattern happen over and over again. We meet with law firm leaders and they can literally 'see' how our experience and solutions solves problems they haven't been able to solve for years. They get excited, and then they falter - they try to learn everything we have learned over the last 20 years, and they 'freeze'. Why? Because they think they have to take a 20-year course themselves, understand all of the ins and outs, the how, the why, etc. They think they have to be everything and do everything themselves. I've even met some firms that state "we never work with consultants" - and they don't see the irony of that statement!
The irony here, of course, is that law firms sell their experience to their clients. The expectation is that their clients need their help because, presumably in many cases, they don't have the internal experience needed to accomplish specific types of work. And, of course, law firm clients have to take a bit of a leap of faith that the lawyers who are going to do the work, provide the solution, actually do know what they are doing - to the point that they don't have to do the same work on their own before they can proceed!
The reason I think this irony actually adds up is that lawyers are super smart. They are used to 'knowing' and being the experts. That expectation that you need to 'know-it-all' before taking action ends up filtering down in the organization. The problem is, no one can know-it-all, nor can law firms afford to wait until someone spends thousands of hours on something to 'know it', nor can they afford to hire FTE's to put on every business challenge. Everyone has areas where they are going to need help. This is ESPECIALLY true when looking to innovate. Doing things fundamentally differently will necessarily drive law firms and their employees outside of their base of knowledge - and you will need help.
Sadly, this blocker costs law firms YEARS of wasted time. Not kidding here...we often see firms come back to us 2, 3 or even more years later with the SAME ISSUE we knew how to solve at the beginning.
Some of the best decisions we've ever made at Elegrity for our own business have been based on seeing solutions and ideas presented by external experts that just 'made logical sense', hiring those experts and taking the chance without trying to learn their expertise ourselves. Most often, it worked better than we thought. When it didn't work, we took those failures as lessons that only served to strengthen our business further. I often wonder if the failures weren't the more valuable...
See this great article about the key role of failure for businesses: The Role of Failure in Business
Law Firm Innovation Blocker #3: Short-term thinking
When a firm does identify and move forward on the business model and operational excellence front, they most often come at it with a short-term view.
The most obvious example for this blocker is law firm new business intake projects. It's hard for me to fathom, having been involved in this since the early 2000's when the first firms moved to optimize this process, that law firms today continue to make the exact same mistakes they made then. In fact, I think some firms are going backwards, choosing even more myopic and stagnating approaches - thinking that the initial failures won't be repeated by just going with something just for 'intake'.
The real root cause of law firm stumbles around New Business Intake and many other initiatives is short-term thinking (combined often with the "Need to Know-It-All Before Taking Action"). There is a fundamental misundertanding in most firms about what 'Operational Excellence' means. It most certainly doesn't mean you 'buy an app for that' and the issue is resolved. What it does mean is embedding the capability for EVOLUTIONARY improvements into the fabric of the firm's operational infrastructure AND culture.
For these capabilities to exist, you need more sophisticated approaches and technologies, not 'simpler' ones.
Go for the long ball, or you will lose the game.
Law Firm Innovation Blocker #4: Perfectionism
Lawyers live inside the details of things. One word wrong, and the meaning of an agreement can be completely different. They need to be as perfect as they can. It's internalized into their very beings.
But in business today, when the world around us is changing faster than we can even imagine, with only the threat of going even faster, PERFECTIONISM IS THE ENEMY OF SURVIVAL.
Biologists have a word for the way in which solutions emerge. That word is "evolution." Read my blog, my whitepapers, listen to me speak - you will see the words 'evolve', 'evolution', 'evolutionary' a much as any other key word. It's because innovation requires a combination of strategic direction that has been strongly vetted and a slew of 'trial and error', with continuous adjustments, re-works, incremental additions and wholesale add-ons.
This blocker, along with the 'know-it-all' blocker above causes a lot of 'freezing' for law firms. Innovation is RISK. Evolution is the mitigator of RISK.
Let go of perfect - you simply can't afford it or obtain it when talking about operational excellence. The definition, in my book, of operational excellence is ADAPTABILITY, AGILITY and the willingness to TRY and live with something less than perfect.
Oh, and just to be clear, I'm a perfectionist myself - so I get it!!
Law Firm Innovation Blocker #5: FEAR
Last, but certainly not least, the most powerful blocker on the planet - FEAR. Fear of change, fear of failure, fear of not knowing, fear of making the partnership upset. It's rampant, and it's real. I'm not trivalizing it.
Law firms should be afraid - of not moving fast enough to make the changes needed to survive. That fear, above all of the other ones, should take precedence. And if you can USE that fear to drive motion and innovation, then you've just changed it from a blocker to a motivator.
Let's Get Moving!
Above all else - you have to have trust in yourselves. Trust that you can change, and still be successful (and actually, be more successful). Don't just look to other law firms, who are having the same struggles as you, to figure out what your firm should do. They aren't your firm - and maybe they have it wrong! If something or someone comes along that just makes good, logical sense and seems to support the key strategy shifts you need to make - then JUST DO IT.
Whatever you do, stop trying to be 'safe' all the time. Try out some things that just make good, logical sense. Some will work, some may not, but movement with continous evolution is the key.