Legal Industry Innovation turns the corner: Are you ready for what’s next?

– by David Kinnear

As kids we used to play musical chairs at birthday parties and church socials. While you’re laughing about that, think about the potency of the analogy for the legal industry. Within the next 3-5 years, with ’20 being a watershed moment, there simply won’t be seats left for everyone – and the competition for those that are left will be fierce. Legal innovation is the hot topic du jour. Even if some of the so-called innovation in question is as temporary and insubstantial as froth on a beer, there’s enough that is serious. It has permanent implications for the legal sector and those working in it.

Legal innovation may not have mattered so much 5 or 6 years ago – it was easily brushed off – but now it does. There is no ignoring it.

A while back I had spoken with a senior partner of a major law firm about their strategy on legal technology adoption – the response was interesting and very telling at that time (and since): “We don’t want to the first but, I can tell you, we won’t be third.” Similarly, the appetite for innovation has grown markedly amongst general counsel.

If legal technology is the face of innovation then the substantial uptick in investment cannot be ignored. 

The legal industry “quickening” is occurring in a remarkably similar manner to how each of the HRO and BPO markets unfolded – attaching to the fundamental premise that we can deliver services “better, faster and cheaper” with technology and labor arbitrage applied. That phrase has been ridiculed by some, rejected by many and consciously ignored by others. But it doesn’t go away. In a global economy now driven by technology and data, it’s hard to be a standout for manual processes and related time valuation techniques that worked 10, 20, 30 years ago. Buyers want to know what you can do today – using today’s resources and techniques.

There is a fundamental premise that we can deliver services “better, faster and cheaper” with technology and labor arbitrage applied – it is yet to be proven wrong. And the legal industry is no exception.

For those who were involved in these momentous “lift and shift” periods of change, no-one forgets the day that one of the Big Four announced its entry into the HRO / HR services market.

Like a sonic boom, the entry of the Big Four was heard around the industry and it was, in reality, the starting pistol for an arms race built around scale and technology – then played out in Boardrooms and on golf courses all over the marketplace. This time it’s the legal sector.

In recent months, big “consulting” players have given a glimpse of their plans for the legal space – and one can only expect that others will add their voices also. In just the last few days, the largest law firm in the world kicked off a roll-up expansion strategy in the US – tapping into major “local” markets. Add to that the early whisperings of legal market entry from the largest e-retailer on the planet whose recent IP service offering looks remarkably like its earlier move into the grocery sector (via the acquisition of WholeFoods).

Between these organizations there is immense market-moving power – unlike anything that the legal industry has seen before.  

Innovation takes many forms and too often it’s confused with simply being yet another shiny “app”. Sometimes it’s having the scale and technical leverage to deploy solutions for industries that others cannot by reason of being simply too small. Financial services is full of such examples – the outsourcing or alternative sourcing of support services that fall outside the “defensible core”. Sometimes – and there are some great examples emerging – it’s the sourcing agility that new technology can provide, helping new efficient organizations to emerge and act without the legacy incumbrences and costs of traditional delivery models. There can be no mistaking the upheaval starting to occur in the delivery of legal services by law firms – several of whom have turned a lot of focus on flexi-delivery models for their human capital assets. It speaks to the dis-assembly of traditional legal models that is happening – beckoning a future built around greater professional identity for the individual and an unprecedented level of agility.

Sometimes – and there are some great examples emerging – it’s the human capital sourcing agility that new technology can deliver. It’s helping new agile, efficient organizations to emerge and act without the legacy incumbrences and costs of traditional delivery models. It’s customer-centric law without a lot of the usual baggage.

On any view, now is a good time for organizations in the legal sector to think long and hard about where and how they fit into the new world that is emerging. There is an irreversible wave of change happening – it gathers momentum every day. Now it’s not a question of being first, second or third – you just don’t want to be last.

When the music stops, just be sure there’s a chair – and you’re sitting in it.

David T. Kinnear 

Barrister | GC | Mediator | Publisher
London & New York