As changes in the marketplace come faster and more frequently, law firm innovation has never been more important.
In this post, we explore three forces bearing down on firms’ incentives and ability to innovate. We’ll discuss the possibilities for innovation in its broadest sense. (Hint: It’s not just about technology). And we’ll wrap up with some suggestions on where to go next.
In a market that’s changing, innovation takes on a Darwinian undertone. And firms that innovate and adapt to the changes around them will be those that thrive.
Two years ago, at the height of the pandemic, Martin Denyes, managing partner, Ontario, at Fasken, called innovation “an imperative”. (1) From his firm’s perspective, it’s not just about remaining competitive with other firms, but also about competing with start-ups, alternative service providers, and big tech. This requires considering innovation from both the firm’s and the client’s perspectives, as we’ll see in the discussion that follows.
Past: The Pandemic Wakeup Call
For firms that had been reluctant to innovate, the pandemic left little choice. The disruption that the pandemic caused affected virtually everyone the firm touched, from courts to clients to couriers.
While it’s unclear whether the pandemic is subsiding or we’re settling into a “new normal”, the changes it prompted are now table stakes. You would be hard-pressed to find a firm that can’t support work-from-home or a virtual court proceeding. So, where are the opportunities for innovation now? For the answer to this question, we look to the present and potential future challenges faced by all law firms.
Present: Retention is About More Than Compensation
A recent study found that for every 20 lawyers hired by a firm, 15 would leave within six years. (2) As we noted in “The Great Resignation: A Wakeup Call for Canadian Law Firms”, this attrition can cost firms as much as $800,000 per lawyer.
Most firms have reacted to the recent talent war by increasing compensation. This drove a 10% rise in associate earnings last year. Yet, lawyer surveys show that higher wages aren’t among the top five changes that would keep employees from leaving. (3)
Instead, associates are looking for innovations that will provide them with more autonomy, opportunities for advancement, less stress, and better quality of life. These desires can be met by both human resource programs and technologies that make an associate’s job easier.
As a recent ABA Journal article puts it, “if innovation is a rising priority for law firms, it’s those that engage soonest with tools designed to make associates’ lives easier that’ll capitalize off the Great Resignation.” (4)
Future: Innovating When Recession Looms
It’s impossible to predict whether the economy is heading toward a recession, but some firms are bracing for the worst, becoming more selective in their technology investments.
Innovation has often been associated with leading-edge technologies – the latest “shiny new objects”. In this time of uncertainty, firms are shifting their attention from the unproven to the proven – to solutions that deliver tangible business benefits. And they’re looking to get the most out of the technology investments they’re already made.
How should firms distinguish between the “must haves” and the “nice to haves”? Consider whether the technology reduces cost, improves productivity, or raises the quality of service. Which of these do the firm’s clients value most? Which of these will benefit the firm most?
And how can firms get more out of the technologies they already have? Consider other uses that haven’t been tried. For example, if you’ve been using document automation for court forms, try using it for correspondence. Or look for staff members that aren’t yet using products that could benefit them and the firm, and put programs in place to encourage adoption. (For more on this topic, see “Software Adoption: A Missed Opportunity?”)
Wherever you sit on the innovation spectrum, consider these simple principles:
- Focus on initiatives that add value for your clients and your staff
- Turn to proven technologies with a demonstrated return on investment
- Use challenging times to your advantage by investing in approaches and technologies that will distinguish you from your competitors
Any or all of these will guide you toward innovation that makes you and your firm more adaptable to whatever comes next, and more attractive to both new hires and clients.
About Michael Sauber
Michael Sauber leads the marketing program for Korbitec, producer of Automated Civil Litigation Software (ACL) and xchangedocs. He has worked with document production technologies and professional services for over 30 years and is a frequent blogger on these topics.