Law firms have a lot to learn from businesses in other industries. Add “how to innovate” to that list.
That is at least the idea put forward by Robert Saccone, a former CEO of Seyfarth Shaw subsidiary SeyfarthLean Consulting who now consults law firms on innovation—and who thinks most traditional law firms are going about innovation all wrong.
“Most incumbent law firms do not innovate for measurable results like their corporate clients; they innovate for show,” Saccone wrote in a blog post Sunday. “They innovate to differentiate but not to be different—ironically as their competitors increasingly do the same. The targeted and measured innovation we are seeing in other sectors just isn’t happening. We can (must) do better.”
Saccone’s post was in response to a conference that featured presentations from innovation and strategy leaders from all types of big businesses: Comcast, Sony, Avis, MetLife and others. Saccone wrote that innovators at those big businesses use a much more rigorous approach to vetting and pursuing new business ideas. They measure innovation investments against goals including increased profits, revenue and stakeholder value, Saccone wrote.
Law firms should take a similar approach, he wrote, and that requires analyzing a law firm’s market and business to understand where innovation would be worthwhile.
“The firms that can perform an honest and thorough business diagnostic, that can analyze and extract useful insights from the data available to them and make informed decisions, will pull ahead of the pack,” Saccone wrote. “They will better understand the economics of their firm and markets, supply and demand for their products and services and will intently focus on profitable and sustainable growth. Those that do not, or can not, may find themselves in a fractal mess.”
Plenty of law firms in recent years have hired “chief innovation officers” or developed groups that are focused on providing new types of service delivery for clients, with one industry source placing the number of Am Law 200-level “CINOs” at 32 earlier this year.
But law firm innovation groups can struggle internally to express their return on investment to the broader law firm. In a setting that uses billable hours to set compensation, it is naturally challenging to value projects that cut billable hours.
“We haven’t figured out ROI yet,” said one recently hired Am Law 100 chief innovation officer who declined to be named discussing the challenges of compensation. “I’m trying to use touches. How many clients and people internally I’ve touched. We also have a couple big projects going on. That will help. But nothing formal. That’s the challenge for us: If there’s ever a business downturn, are we [safe] in that ecosystem?
Still, other firms that have had success making “products” out of legal advice have said that the compensation partners derive from those products’ ongoing advice will encourage others to follow that innovative model.
Buck Owen, chief practice officer at Dentons, said at an industry conference last month that a partner at the firm had created an automated tool that provided updates on regulatory changes across the globe. The product was a combination of decision-tree software from Neota Logic, automated regulatory research provided by Libryo Ltd. and collaboration software HighQ Solutions Ltd., Owen said. That type of model could be replicated in other areas, Owen said, even if it is true that making a broad impact can be difficult.
“It’s easy to get a couple quick wins, but tougher to blow that out on a macro level. That’s true. We’ve experienced that,” Owen said. “I still think much of what we do is very partner-driven, and the partner [in the regulatory product example] will continue to reap fees in her column for a long time. That will affect her compensation, and others will hopefully realize that. That is how I hope this spreads. At the end of the day, a lot can be accomplished by compensation within a law firm. And if you see someone succeeding and being recognized for it, pretty soon there are five others wanting to do it.”