This post originally appeared in the Canadian Bar Association's National Magazine.
Recent headlines might have you thinking that the legal sector is under siege. Disruptive technology, globalized markets, increased client expectations and downward price pressure might have some fresh graduates re-thinking their decision to go to law school. Clearly, the times are changing.
While the bulk of attention has been focused on the effects of disruptive technologies like AI and automation, a new threat to the status quo has been quietly evolving – the multidisciplinary professional service organization (MDP).
You are likely familiar with the better known MDPs - the so-called ‘Big Four’. It’s been a while since the Big Four have been in the accounting business. After rebranding and repositioning as MDPs in the early 1990s, they and other firms have steadily increased the range of their offerings.
Consulting firms’ move into the legal sector has been gradual. Firms have toyed with tax, immigration, and trade law, but it was EY Canada’s recent foray into business law that has to many, signaled a new threat.
The world has changed. Disruptive technologies have created an unquenchable thirst for convenience. Organizations are only as good as the experiences they create. The more holistic the experience, the more competitive the service. Corporate clients in particular face increasingly complex operating environments that demand holistic solutions. Big consulting firms are particularly well positioned to develop solutions that cross traditional boundaries.
Some industries have awoken to this trend. Traditional accounting firms have responded by adding periphery services like forensics and cybersecurity to their repertoire. Law firms who brand themselves as full service may need to adjust their sails.
A 2014 report by the CBA cites that mid-size firms will be squeezed the most, as larger firms gain efficiencies through heavy investment in technology, and smaller firms compete on price and service. But in some practice areas, namely business, IP, and trade law, MDPs have serious competitive advantages that are perfectly aligned with global trends.
Full service firms will need to ask themselves whether they can in fact offer the same scope of services that similarly-sized MDPs offer, and if not, will need to determine where their true competitive strengths lie.
Fundamentally, all of these changes – technology, globalization, increased expectations and price pressure – come down to one thing; adequately recognizing and efficiently meeting real-world needs. To do so, modern law firms will need to have the structures, tools, and mechanisms in place to help them shift to a client point of view. Systematic failure to meet these evolving needs creates a vacuum – and vacuums are where disruption thrives.
As a generalization, lawyers are a conservative group. They are trained primarily in law - not innovation, anthropology, or statistics. As such, there is a serious dearth of talent in the legal sector with skills in innovation.
Cultural challenges are a further barrier. Skepticism, considered a valuable if not necessary trait among legal professionals, creates an environment hostile to creativity and experimentation. For firms to even begin to compete, some basic changes to firm processes and approaches are necessary:
Feedback mechanisms that allow firms to recognize what is working and what isn’t.The Critical Incident Technique (CIT), for example, is a method for collecting and analyzing events of critical importance to service experiences. Other techniques borrowed from the social sciences, like unstructured interviews and participant observation can also offer valuable insight.
- Participation of clients and service delivery personnel in innovation discussions. Too often innovation discussions happen in boardrooms without the input of those who are responsible for implementing or using a new or modified service. Costly failures are more likely to arise out of failure to obtain feedback before launch.
- A cultural openness to experimentation, and diversity of perspectives. The importance of diversity in law has been emphasized by several organizations, including the CBA. Encouraging dialogue between people of diverse experiences can help you to identify patterns and develop ideas without capitulating to ‘groupthink’.
- New skills and tools. Training in methodologies like design thinking, systems thinking, lean, and agile, will give firms the skills they need to develop their own innovation programs, where value-creating ideas can be regularly developed and tested.
- Tolerance for uncertainty. Innovation, particularly processes like the ones mentioned above, require a degree of tolerance for uncertainty. It is in the space between certainty and doubt that new ideas are most likely to arise.
- A willingness to fail. Acknowledgement that not all innovations will be successes, and that not all prototypes are intended to be successful, will give your team the psychological latitude necessary to develop successful projects.
The firms who work to embed these practices will find themselves much better positioned to weather the changes brought about by an increasingly competitive and dynamic legal landscape.
Conduit Law, a Toronto-based “general counsel on demand” firm, managed to overcome these hurdles and developed innovative solutions based on observed market needs. They parachute their associates into corporate clients’ offices, allowing them to better understand their needs, and deliver more personalized service.
Conduit was recently acquired by Deloitte. Need we say more?