On Nov. 9, a customer in a Blockbuster store in Hawaii rented a movie, titled “This Is the End,” around 11 p.m., local time. Coincidentally, this was also the very last DVD rented from a brick-and-mortar Blockbuster store. It marks the end of an era of a business model that lasted for decades and seemed untouchable. However, new competitive models arose and due to Blockbuster’s lethargy to adapt, its market share in the business dwindled and the company was ultimately forced to change its existing model and joined the competition late. First, companies such as Netflix started to mail DVDs to people’s homes and provided an easy-to-use online catalogue. This model was the first major innovation in that business and a serious competitor to Blockbuster. Netflix has continued to evolve and innovate and online streaming of content is becoming the standard for the delivery of home entertainment.
Technology innovation can be completely disruptive, creating a new market and displacing the old business model. The Blockbuster example stresses that if a company does not adapt quickly, more nimble outside entrants could gain a large amount of market share. Mail delivery and online streaming have proved to be completely disruptive, but other types of innovation are more continuous. In these instances, innovation is not completely disruptive, but rather provides more efficient ways of service or product delivery and ultimately provides more value to the customer.
We are currently at a crossroads in the legal industry and to maintain market share, traditional firms should not let innovation pass them by, like Blockbuster did. New, fresh ideas are being pushed to the forefront, while older models of legal services delivery are becoming less desired. Like no other time previously, clients are pushing for value and efficiency. Somehow, the legal industry has to adapt to these demands. Can you show us your processes of how you do legal work? Can you work more efficiently? How are you using technology in your practice? How are you managing legal projects? Can you give us a better price or an alternative fee arrangement? These types of client questions are now common and expected.
New client demands are powerful in driving the industry and there are exciting opportunities for firms to innovate their models to meet these expectations. The innovation itself could be a technology solution, but it could also be some application of a management technique, such as six sigma or even legal process outsourcing. If traditional law firms do not attempt to innovate in some way, it seems likely that more nimble models for legal services delivery could prevail in the long run. For example, companies like LegalZoom and Rocket Lawyer are chipping away at the solo practitioner and small-firm markets, one automated document at a time. The primary business for these companies is to use an online questionnaire to gather facts, which are then used to generate a legal document. The questionnaires can accommodate for complicated fact patterns because on the backend the software uses decision trees to eventually create the desired legal document. Although this “virtual lawyer” solution works for many products in their legal suites, both LegalZoom and Rocket Lawyer also provide access to actual attorneys. Both companies understand that there is still a need for legal advice from an attorney. However, they offer innovative pricing arrangements, including tiered flat fees, promoting transparency and predictability. These companies are examples of outside entrants that have found a niche and are sure to disrupt some segment of the legal market. As a traditional law firm or practitioner vying for the same work, a decision needs to be made. Be competitive or otherwise join the disruptors.
There are many exciting opportunities for firms to make their practices more efficient and the worlds of business, technology and law need to converge to meet new client needs. To achieve this, there needs to be a framework to identify relevant business problems, field creative solutions to these problems and then shepherd the idea to execution and implementation:
• Get top-down support. The message to innovate the firm needs to come from the top. Such an initiative is likely to be a diversion from the existing culture in many firms, and the dedication to change needs to be firmly established. Continuous support from the highest level of management is critical to the success of any innovation initiative.
• Form interdisciplinary teams. Every firm has people who are knowledgeable within different segments of the business, such as legal, marketing, technology and finance. Creating small teams that represent these backgrounds adds tremendous value because of the variety of insights that these experts contribute. Many problems within the business can be identified if the right questions are asked.
• Conduct research. The teams should conduct research within and outside the firm, and having the right balance of expertise on a team will provide the ample opportunities to improve. What is working? What is not working? Why are current processes in place? What are firm employees’ experiences? Being open and available to share and research how things are done in the workplace is critical for this step. The teams need to be able to have access to employees to gather all of the research. At the same time, the teams should keep up to date with trends in their respective fields. There are traditional methods to do this through industry groups, but nowadays, social media platforms such as Twitter and LinkedIn provide more timely and frequent views of what others might be doing in the field. Although there might be a danger for information overload, there are typically a handful of industry thought leaders that should be followed.
• Analyze research/pick one problem. After the teams have done all their research, both internal and external, the next step is to analyze it all. This typically involves several meetings to discuss what was found and identifying recurring issues in people’s responses. From this analysis, it should become clear where the major opportunities for improvement exist. Given everyone’s expertise, paired with any firm wide directives, the team should identify all the business problems, but should pick one to focus on.
• Ideation. After the business problem is identified, ideation entails coming up with as many ideas as possible. Out-of-the-box and far-fetched ideas are encouraged because this might lead people down a path that would be completely ignored if one’s thinking remains in constraints. Creative ideas could spawn smaller, related, more viable ideas to the problem. Depending on a firm’s available resources, this process might vary from firm to firm, but in the end, the best, viable idea is chosen to meet the identified business needs. The ideas do not necessarily have to involve a technology solution. For example, an existing process could be improved upon by having more frequent meetings. However, often technology can facilitate many business processes in some way.
• Quick prototyping. After a solution is found, the best way to prove that it is a true differentiator is to implement the solution as quickly as possible and test it on the users. Results, usage and effectiveness should somehow be measured to show the true value of the solution. But in the end, the solution must directly touch the practice in a way and the benefit must be felt immediately. If at minimum, the prototype provides such value, the solution can always be improved upon with next iterations.
Iterate and improve. Assuming that the first prototype of a solution is successful, improvements can be made in regular intervals. The core functionality of the solution to meet the business problem identified in the first place is maintained throughout the iterations and the solution just gets better with small improvements. Continuous feedback from users will drive these improvements.
There is a sea change happening right now in the legal industry and disruptive innovators such as LegalZoom are already making their mark. However, the opportunity for continuous innovation, providing efficiency and value exists for firms to maintain market share. While it is not easy to evoke change in any enterprise, having a framework in place and simply giving employees across the firm the time to participate are the first steps to join the phenomenon, rather than be a victim of it. In this column, I will explore business problems within the administration and practice of law and will focus on how infusing innovative and creative technology solutions might help to meet the demands of today’s clients.
Johan T. Widjaja is a practice innovation analyst at Reed Smith. He assists litigation practice groups in finding and implementing technological solutions. He can be reached at email@example.com.