Is Your Firm an IT Pioneer, or a "Fast Follower?"

Rarely do the stars align to find David Maister, Richard Susskind, and Kieran Flatt (Legal IT) all writing about the same thing at the same time, but when it so happens the opportunity to try to synthesize their thinking is too rich to pass up.

The common topic du jour is essentially the payoff of IT investments in law firms:  Do, in a nutshell, investments in IT pan out positively in revenue and profitability growth?

Kieran is squarely in the skeptical camp:

"I for one have yet to see any sort of technology that really does deliver a substantial competitive advantage to medium-sized City practices. Turn the clock back a few years: some of the leading firms had bugs, glitches, performance problems or stability issues with their document management systems (DMSs). Most, if not all, of these gremlins have now been sorted out, but for a long while the affected firms had to carry on running older, less sophisticated software — and they continued to make money at pretty much exactly their usual rate.

"Rather than proving anything about the respective merits of the various DMS platforms on the market, I would argue that this case proves DMS is nowhere near as critical a resource as it is usually made out to be."

He is not only a skeptic, he's an IT Minimalist:  "Only three aspects of a firm’s IT function really are mission-critical. You guessed it — the telephone and e-mail services and the billing system."

To be sure, he readily admits that the Clifford Chance's of the world could not exist in their current form without sophisticated globe-spanning IT infrastructures, but how many firms are in Clifford Chance's league?   Here's the dilemma he sees; firms have essentially two choices.  You could call the first the Clifford Chance  Model and the second the Wachtell model:

"Either get big and global, rely on good management and innovative systems, commoditise much of your business and slash your margins to compete — which gives the leaders of the IT department a vital role in driving profitability and running the business — or just focus on providing good support IT, keep costs to a minimum and expectations low, and let the fee-earners and partners get on with making the money."

In the course of his piece, Kieran refers to David Maister as "the high priest of profitability," and tags David as a disciple of the second alternative—empower the fee earners to make money and get out of their way—and characterizes David's view as one that "focus[es] almost exclusively on excellence .... with much less emphasis on strategy, processes, technology and management structure than is the norm."  Strategy and IT be damned, in other words.

David's gentle rejoinder and "clarification" put the stress on actually changing the behavior of professionals rather than on grand strategic visions.  And he exposes (some firms') use of technology as a smokescreen for avoiding the hard work of actually improving the quality of human interactions, which are the only source of sustainable and distinctive success in a professional services firm.

"Too many places put in new tools so that the front-line senior people won't have to change what THEY do, - ie, they pass the task of achieving competitive advantage on to the techies. Firms have taken this approach for a long time - they would rather spend money on low ROI activities than change personally. They did this in marketing, always looking for something (branding, PR, brochures, websites) that could be done by somebody else, so they (the front-line senior professionals) wouldn't have to change the way they dealt with clients and customers."

Technology may be great in the hands of enthusiastic and energetic people, but if the availability of sophisticated IT tools leads people to the view that IT is primarily, or even substantially, responsible for the firm's success, you have taken your eye off the ball of your professional offerings and your clients.

 Richard Susskind squares the circle by asking, "SHOULD lawyers be technology pioneers?", and proposes three possible reactions of law firms when confronted with (say) an encomium to the fabulous promise of wikis and blogs:  They can of course resist; they can prepare to take action; or they can be pioneers and lead the way. 

Richard notes the rigors of true pioneering:  "Successful pioneering in IT is not temporary pacemaking. It is about striving to keep ahead of the pack and reaping substantial rewards as a result."  It's not a one-off sprint, in other words, but an ongoing and sustained distance race.

The question remains:  Is it a race worth running?

You can also count Richard in the Scottish verdict ("not proven") camp:

"It is not yet clear whether it pays for lawyers to innovate in IT. Did great benefits accrue to firms that led the way, for instance, in advanced financial systems, document management systems or in human resource systems? Was the investment in the early bespoke systems worth it or might it have been better to wait for off-the-shelf solutions?"

His true belief is that any system, no matter how well-crafted and effective, that faces inward to benefit the way the firm works, will never provide a competitive advantage.  Only systems that face outward to engage clients—and to make those clients' "switching costs" (to another firm) extremely high, will provide sustainable competitive advantage.

I know of one firm that's actually doing this today. 

So we have three luminaries converging on one tentative hypothesis:  If IT in law firms doesn't:

• face towards clients;
• give practitioners tools they can use enthusiastically; and
• enable migration towards higher-quality, more effective personal one-on-one interactions,

then it is not worth the candle.