Is Legal Innovation just a Smoke Screen?

Last week a head of transformation in legal apologised to me:

Sorry I’m not innovative – it’s not my skillset.

I was surprised she would say something like this. She had implemented a new program that seemed to me to perfectly embody innovation: it was having significant impact on cost and efficiency with the result that legal services were contributing significantly more value to the business. When I pointed this out she replied

oh yes but that isn’t innovation – I haven’t used much tech.”

This is where the innovation debate is losing its way in law. How innovation looks has become more important than what it does. Perception trumps results. Use the words legal tech or disruption and instant credibility is bestowed upon you – while demonstrating practical results can be deferred to another day. “Revolutionary” “ground breaking” and “game changing” are all used to describe even the most marginal changes. Meanwhile potential that would deliver much greater impact with much less risk is overlooked because it doesn’t conform to what is considered “innovative.” In the rush to be seen as innovative we are skipping the important step where we check whether the “solution” really will fix the problem.

Why does this matter?

For all the years of innovation awards, articles and linkedin feed announcements – clients are experiencing law the same. Of course there have been improvements– but are they to the tune of 50% lower bills? 50% greater value (stuff you can touch not just imagine) from the services? Is it something we can bank? Or leave the office at 3pm instead of 10pm? Without these kinds of tangible results do ultimate clients feel patronized by the legal innovation debate? Especially when “disruption” in their markets is far more terrifying than anything experienced in legal.

Innovation that is nothing more than a smoke screen harms legal progression by feeding inertia. (1) Its failures convince us that the old way is still the best way. (2) It consumes budget without sufficient ROI (3) It offers inoculation from further change – “we have already innovated” is a reason not to do anything further. The NASA equivalent of not having to actually go to the moon once they had the plans for the design of a rocket that could take them there.

So is innovation in law nothing more than a smoke screen – a PR exercise hiding the old system’s business as usual? We explore some ways in which innovation is failing legal and then suggest some actions that can refocus the debate toward tangible, meaningful outcomes.

1.    The debate is aspirational

Much of the language of innovation in law is “what will happen” as opposed to achievement. “Firm X is partnering with A tech company.” “Firm Y is opening a new …” Then silence – no follow up with evidence of impact. Too many Law Firm partners treat innovation solely as a PR benefit – oblivious to the real value it can bring to their business model. Once they’ve got the innovation award or the press release or the content for their panel submission – their attention span is spent and the “innovation” hobbles on hoping no one notices that the final outcome is a long way short of the lofty language used in the prediction.

2.    The idea gets more attention than its adoption

Automated documents, LPO, Delivery centres – all of these had their moments in the sun as disruptive forces in legal the same way robot lawyers and legal tech are being talked about today. Yet most failed to live up to the lofty promises made at their inception. Why?

The fault wasn’t the products – as tools they were effective, theoretically sound and impressive. The value ceiling was how the product was used in the legal environment. How can outsourcing work effectively if there is no data on which parts of transactions are repetitive and which are not? How can automated documents make a difference if you aren’t sure how many times a specific type of document is used in your department? In 10 years of legal transformations I very rarely witnessed a program where the solution was decided AFTER analysing the environment where it needed to work. The solution was picked first “we want to outsource” and then it became about changing the environment to match the preordained solution. This produces hit and miss results – often the wrong solution is implemented, or the right solution but in the wrong way – with the same result – an impact often celebrated, but leaves shareholders unable to disntinguish between pre-innovtion and post-innovation.

The products in today’s debate are new – and more advanced – but the reasons for innovation frustration in the legal industry still exist. Most lawyers can tell you what AI is – but few can articulate in detail the factors that will make it successful in their business; identify the exact processes where it will bring the most impact; produce the metrics needed for the AI to work comprehensively; and work out where the suddenly liberated lawyers can add the most value. AI as a product is “game changing” but as a solution it is only as good as the way we use it. To put it crudely – if detailed analysis hasn’t occurred to measure (1) the biggest challenges (2) whether this will solve them and (3) how to implement/ensure adoption – it would better to gamble the entire investment – at least then the odds of success are a fair 50/50.

3.    The debate is happening at the wrong end of the spectrum

Most of the legal innovation debate focuses on the supply of legal services and not their demand. The vast majority of legal tech is concerned with helping lawyers in law firms do their current work better. Very few innovations relate to how in-house counsel source and execute work. Fewer still focus on how legal issues arise in business in the first place. This creates a strait jacket for legal innovation – reinforcing the basic structure of the legal industry and frustrating more fundamental change. As the legal industry is fond of using the Horses to Cars disruption as an analogy – this is the equivalent of providing the blacksmith with better tools or designing innovative saddles and trying to fit them as car seats.

There isn’t a need to innovate a process that isn’t necessary in the first place. Refocusing the debate on how legal issues arise, rather than how we currently perform legal services would bring much greater innovation to the industry than automating an obscure process. This may make for horrifying reading for lawyers – but it shouldn’t be taken as such – even the most idealistic AI scenarios will always require lawyer input – but as highly technical legal advisors and not making hay out of overworked legal departments by dressing up admin as legal work.

Innovation in other industries (Music/TV/Aviation) didn’t involve making current suppliers more efficient – it was about reshaping the service itself to better fit what the customer needed.

Our suggestions on how legal innovation can take off beyond PR 

1.    Distinguish between smokescreens and real innovation

2.    Analyse don’t assume

Diagnose your legal environment before you do anything. Most of the time the results will surprise you. We often find some of the biggest impact is in an area unknown or out of sight from management. Knowing this before deciding how to innovate makes it more likely your innovation will be as good in practice as it is on paper.

3.    Start at the end

Develop a view for what success looks like before deciding which path to take. What kind of things should you measure to see whether it has been successful? These criteria should shape your innovation.

4.    Scenario test outcomes

Use metrics from the diagnostic to model out solutions in real terms. This helps to quantify the impact before any investment takes place. It also helps to identify any barriers and pitfalls earlier so they can be resolved.

5.    Seek lawyer input

Having current lawyers input early into any innovation can reap significant rewards at the adoption phase. As noted earlier – innovation does not mean the end of lawyers – in most cases it will enhance what they do. Getting advanced input early on can help frame the innovation into a format where its adoption is maximised.

6.    Small steps

Always focus on implementation – start small, make mistakes, go back and fix. Resist the temptation we all have as lawyers – to build it all upfront and argue away any challenges to its outcome. A piece meal approach goes against our gut, but it will lead to an innovation that delivers results, and not a program that has many sponsors at the start, who then vanish when the cold reality hits.

7.    Don’t buy anything until you have gone through a deliberate and detailed analysis

Whatever you buy – whether consulting service or product – will colour your outcome. Once you have something you will feel obliged to use it – even if it doesn’t meet your objectives exactly. Perfect execution of this will not guarantee a good outcome in your environment.

Concluding thought

We need to move beyond the aspirational to delivery in the legal innovation debate. We can do this by increasing our focus on the results of anything claiming to be innovative.

Cost pressure is affecting everyone in the legal supply chain – clients, in-house departments and law firms. Fake innovation increases the pressure and limits the potential solutions – predominantly to things like redundancies or law firm rate squeezes which help no one.

Results based innovation brings genuine relief to all – client, in-house and law firm – in a way that makes legal services more efficient, but also more valuable. The key is making sure each legal participant is aware of the things that affect their cost and their work volume, and select their “innovation” on this basis, and not on what they think will make them look good in the market.

The future is bright in legal – we have the capability – now we just need to use it!

This article was also published on LinkedIn by Dermot Knight and is re-published here with the permission of the author.