"Innovation in Legal Services" Sponsored by Allen & Overy

I was invited to attend a presentation on "Innovation in Legal Service Delivery" last Wednesday at Allen & Overy's New York offices, where the conversation was kicked off by four speakers:

• Ward Bower of Altman-Weil discussing their Legal Transformation Study;
• Rosemary Martin, newly minted General Counsel of the Practical Law Company and as of two weeks ago General Counsel of Reuters;
• Paul Lippe, CEO of Legal OnRamp; and
• Michael Will, partner, Derivative Services LLP.

Unfortunately, the only public coverage the event has gotten to date focused on the common wisdom that law firms are allergic to innovation ("Innovate or Die Still the Message to Law Firms" is the headline of the piece), that they're "conservative to a fault," and "slow to embrace change."

What's wrong with that?  Simply that it misconstrued not only the creative and diverse approaches of the four panelists on the program, but most importantly did not comment upon or reveal the tonality and purpose of the event, which were exploratory, open-minded, inquiring, and refreshingly prepared to admit the speakers (and the questioners) didn't have all the answers.

Where to start? 

I suppose as good a place as any is to go right back to the mainstream media, where, it bears reminding, Allen & Overy won the Financial Times annual award last year as "The law's best and boldest innovator."  (I understand this FT competition will be broadening its reach to include a separate US category this year; that should be interesting....)

Another starting place might be to reflect on the conversation about the billable hour, regular scourge of those evangelizing for innovation.  What struck me about this part of the conversation was that the law firms seemed weirdly less wed to it than the clients.  After all, how is a GC necessarily to defend a bill to the CFO for $850,000 "for services rendered."  One imagines the conversation if it went well:  "Why not $750,000?!"  And if it went badly:  "You were trying to save money?!  This was a million-dollar-plus case!"  But on the billable hour model, with activities itemized down to the 1/10th of an hour for the paralegals at the document warehouse, the GC is bulletproof.  "Well, yes, you see, but the work was actually done, to the tune of $902,347.25"

Yet another might be to look at the actual framework of the Altman-Weil sponsored Legal Transformation Study, which looks out to the year 2020 and projects four potential scenarios, based on your view of whether legal service delivery will become more aggregated or more disaggregated, and on whether regulation will become heavier and more intense or looser and more laissez-faire.  This produces the following 2 x 2 matrix:

The dimensions are "aggregated/disaggregated" across the horizontal axis from left to right, and "highly regulated/laissez faire" down the vertical axis from top to bottom. 

None of these four scenarios is meant to represent an exclusive view of the truth, as combinations and permutations may be (according to your view) the most realistic.  Similarly, none is meant as a "prediction."  Rather, scenarios are tools for critical thinking about how your firm (your practice group, your office, your own book of business) may fare in the future depending on what you think is plausible as the industry evolves.  Here are the four quadrants in summary form:

• Mega Mania
  • Consolidation
  • A conflicts-prone world
  • A traditional model dominated by giants
  • Client loyalty is low, frustration high
• Expertopia
  • Rise in litigation
  • Expertise at a premium
  • Numerous niche players driven by regulatory breakup of large providers
• E-Marketplace
  • Major economic downturn leads to deregulation and harmonization to spur growth
  • Flurry of new providers
  • Commoditzation
• Techno-Law
  • Peaceful world dominated by desire to enhance trade relations
  • Harmonious regulatory systems offering "lawyers in a box"
  • Clients demanding interoperable technology to pare costs
  • Global sourcing

Again, none of these, nor all of them together, is meant to be a blueprint for the future; they are meant to spur reflection, analysis, and strategic agility and nimbleness.  Take issue with them as you will, but do not take issue with the reality that the status quo is not an option.

Meanwhile, Rosemary of the Practical Law Company talked about her background of a dozen years at Rowe & Mawe followed by nearly a dozen more at Reuters, and her conviction that outfits such as the Practical Law Company are preparing the way for how law will be practiced in the 21st Century.  Hers was not a message of "innovate or die," it was more a message of, "look around and see how the other departments of corporations have been transformed.  And dare to think you might take a page from their books."

Rarely recently have I sat in a room with as many senior, high-caliber inhouse and law firm practitioners discussing openly their thoughts, their suggestions, their speculations, their doubts, their hopes and their fears for how our industry may evolve.  That leads me to my own devout hope, which is how to continue to advance this conversation.

One of more insightful remarks came from Paul Lippe of Legal OnRamp, who said that he believed there were "immensely strong pockets of innovation" in law firms, driven by individuals with vision and a commitment to their idea of a different future, but that "law firms have no way of institutionalizing those visions," and thus they tend to wither away after the spearheading individual departs.  Corporate America, you may have observed—at least the best of it, places like Google and Intel and the new HP—have ways of nurturing and spreading these individual pockets of innovative excellence.  But I fear our colleague's remark was true, that we have no such practices.

About this time you may be saying to yourself, "Sure, and I've heard all this innovation stuff discussed for the last 10 and 20 years and I'll hear it for the next 10 or 20."  That, permit me to suggest, is the problem.  That's the problem our faithful American Lawyer reporter succumbed to in trying to cover the event, and I admit it can be all too appealing to fall prey to a type of intellectual exhaustion, a feeling that all the energy has been drained out of the issue of "innovation" in legal services.

But I have news for you:  No one in this room on this evening believed that.  To those of us there, innovation is a vital, demanding, pressing challenge.  On the demand side, clients are increasingly seeking alternatives to the billable hour and annual 6—8% increases in fees, while on the supply side, associates are increasingly unwilling to stomach annual increases in billable hour expectations for episodic starting salary bumps. 

Actually, I believe the attitude of "I've heard this already" is just fine.  For 90% of firms. 

But 10% will change, and that 10% will explore alternatives, some successful and some failures.  The failures we can chalk up to Darwinism (and failures need not be fatal), and the successes we can chalk up to Darwinism.   If there are tremendous successes, however, the logic of the competitive marketplace tells us something else: Best be a fast follower.

So I ask you, dear reader:  How shall we continue these discussions? Are they best conducted in law firm-sponsored colloquies such as this?   Under the auspices of a legal publication such as The American Lawyer?  At dispassionate fora and conferences put together by and hosted at a law school?  What are your thoughts?  Let me know.

Or else, adopt the tone of the press coverage and decide it's ten years on and "still the [same old same old] message."