Gradual innovation in the legal just doesn’t sell

When we speak about legal innovation (and the future of law), we often imagine dramatic changes.

Case in point - all the click-inducing article/book titles. You have probably seen them - “The end of lawyers”, “Robot lawyers” - and the like.

But in reality, innovation is much more incremental. Very rarely, we see disruptive moves. Evolutionary changes are much more prevalent.

Power of the increment in the legal services market

Ron Friedmann recently laid his list of predictions for the 2020 legal services market. In doing so, he remarked:

Right to the spot. 

There are many reasons why innovators would undergo small changes, rather than Earth-shattering tectonic moves. Authors sometimes scold lawyers for moving too slowly. However, legal innovation is no different from innovating in other sectors.

The business case for legal innovation

Innovation is pretty essential for any business to keep competing in the local or global arena. And the Business of Law is no different here.

Before starting to introduce changes, it is crucial to have the prevalent WHY. There has to be a business case, and it needs to make sense for all stakeholders.  

The same goes for any innovation - whether it involves legal tech or not. 

(yes, it IS possible to innovate without legal tech)

Every innovation needs to demonstrate its viability in numbers to continue to be supported. Legal innovation shouldn't merely run in the wild.

The risk of innovating legal services

Obviously, there is a risk with any change, and the same goes for adapting how you deliver your legal services.

Making huge leaps (and potentially destroying what currently works) may not grant you longevity in any Board room.

There is a good reason why you'd want to be careful and innovate the “safe” way.

Think of a laboratory, for example. Every lab experiment is being done in a strictly controlled environment. When a particular test turns south, the failure happens on a small scale. Hence, consequences are easily absorbed and contained.

Laboratories have been trying their hand at innovation for centuries. No reason to reinvent the wheel there - just follow their example on how to innovate.

(this is likely the reason why some BigLaw firms started their legal innovation incubators (the NextLaw Lab, e.g.), to be able to harness innovation the safe way)

Entrepreneurs’ approach to legal innovation

Entrepreneurs are painfully aware of their limited resources - in whatever shape or form (e.g. time, finances, skills, etc.).

Therefore, one defining trait of outstanding entrepreneurs (apart from not being afraid to experiment) is that they are jealously protective of their capital.

However, that doesn’t mean entrepreneurs are stingy when it comes to spending. More likely, it means they will look for ROI at every step they take.

So how does innovation fit here? 

Simply:-

Entrepreneurs will seek to learn something new (about their target market, industry, segment, messaging, etc.) at all times. 

So what does this mean for you? 

To learn the most from your experiments, you need to be able to measure the impact of any and all changes you are making.

And to be able to measure the impact of your innovation efforts, you simply need to go small. Take incremental steps. Change ONLY ONE variable at the time. 

Otherwise, if you make a dramatic change, it will be challenging to understand which variable had the most impact on the outcome of your experiment.

Are you a law firm partner? An executive in the legal services space? Corporate Counsel? 

If you are in any of the above positions - you are, first and foremost, an entrepreneur. So think like one, and act like one.

Impact of the incremental legal innovation

You have probably heard about the “one percent a day” rule. 

Yes, if you compound 1% every single day a year, you end up with the 37x multiplier, at whatever you were doing. 

So don’t try to outrun anyone blindly. Clinically analyze what you are already doing, and see how you can be better at it, one percent at the time.

Predictions for 2020 legal market

Finally (and this is how it all started) here are Ron’s views on the legal services industry in 2020:-

This is absolutely spot on.

Also, one of the indicators the hype will not materialize any time soon - if 2019 was the year of explosive funding, we are now in the period of watching for the ROI, followed by the (draught) period of consolidation, per the Gartner Hype Cycle chart)

(Gartner Hype Cycle chart in the nutshell)

Gartner Hype Cycle illustrated (image credits: Jeremy Kemp)

My vantage point?

I believe 2020 will be the year we see first semi-public experiments at some scale with no-code platforms. Productization of legal services is a vast topic, and it is starting to lift off. Law firm partners begin to dream about all the ways they can scale their legal service offerings (scale, not grow, please mind the difference).

However, I don’t believe we will see a mainstream application of the above concepts, not at least before 2021. I feel no-code platforms will initially focus on creating in-house apps for optimizing internal processes.

The truly EXCITING business cases have yet to be discovered by partners. And legal service productization has immense potential.

Recession? If the proverbial excrement hits the fan...

(a phrase frequently used by my Corporate Finance professor post-2008)

...I believe all the talk about alternative legal fees will start blowing up again. The technical analysis alone on this chart here would suggest so:

Permanent legal market trends 2009-2019 - Altman Weil Law Firms in Transition 2019

Nobody has a crystal ball, and if they do, it probably ain’t working. What we do have is the power of incremental change.

(thank you, Ron, for leading this discussion)