While shiny new objects can be fun, the real value in innovation is in the output
I was recently at a dinner with some colleagues and the discussion turned to outside interests and passions. Some were into outdoor activities; others loved watches and fashion. When asked what makes my heart sing, I said legal innovation. Notwithstanding the collective eye roll of my fellow diners, it came from an authentic place. I love innovation and the incredible pace of change happening across all aspects of the economy, and obviously I have a particular interest in the legal services industry.
When it comes to legal innovation in the form of business models, process, technology, products or services, my filter is to ask the following questions:
• Is this something that I (or someone I know) would use?
• Is this something I would invest in as a business?
• Is this something for which I would be willing to provide my own labour — mental, emotional and otherwise — to make a success?
• Would I enjoy being a participant in the building of this thing (venture, product, solution, conference, etc.)?
• It’s important to know your motivations and you should always start with a capital “W” — Why?
Most of the time, I like this stuff because it captures my imagination about the art of the possible. That’s what I find exciting — the manifestation of something new where it did not previously exist. My guilty pleasure is novelty and shiny objects because I value things that are unique. At the same time, however, I know that innovation needs to do more than just be new. It needs to be better and in the interests of the player that matters the most, which usually, alas, is not me. In business, it is always the client that drives the Why.
In process optimization and daily working life, there are only three fundamental classifications of value. You should be asking yourself which of these three types of value you are engaged in before starting any project, task or breath. This should strike the consciousness of each individual as they go about their day and the organization as a whole as they plan out their strategic investment of time, money and human capital. The three types of value are:
Client Value Add: This is the root of the offering to clients and the ultimate Why of a commercial enterprise. Typically, when engaging law firms, clients are seeking advice and domain expertise that is not readily available by other means. This could include support in processing transactions, navigating legal systems or interpreting obligations and rights. Clients pay for these items (directly).
Business Value Add: The accounting and IT departments don’t go to the core offering of a business, but they are necessary to maintain operations. These inputs factor into the cost of the ultimate deliverables and eat into margin. Clients pay for these items (indirectly).
Non-Value Add: This is everything else and the overwhelming majority of activity that goes on in most organizations and processes. Clients pay for these items, involuntarily, of course, and in many instances, the provider may not be aware of the insidious elements of their operation that do not contribute to the client or the business.
As much as law firms are begrudgingly adopting project-management, onshore and offshore delivery centres, lean process improvement and other measures that are revolutionary for the legal industry, one shouldn’t be surprised if the reaction from clients is a yawn. Yes, the mantra is that all of the changes that are happening are the result of client pressures; however, the inputs in the value chain are not relevant to the end user.
While much of what we are seeing is indeed innovation and in the eyes of some, myself included, pretty cool, it’s not necessarily material for clients. Did the cost of doing business with the provider go down or up? Did some “new” offering get provided? A practice innovation allowing for greater efficiency is indeed important and needed — but does it improve the client experience? If it is just a better input, that’s great, but I don’t get excited as a consumer when Pepsi comes up with a better bottling system, even when it is faster, cheaper, better for the environment and light years ahead of Coke’s operations. It still tastes like Pepsi and the price had better not be increased because of the company’s need to catch up to its investment toward inputs.
I love the emerging players such as Kira, Ross Intelligence, BlueJ, Closing Folders and a host of other legal technology providers — all companies I do everything I can to support — mainly because I’m a geek and understand the pain points they solve from the perspective of the professional services provider. Plus, they look cool!
But what of the perspective of someone who buys services from firms such as the role I played at Xerox as in-house counsel? You have great tools that make you more efficient? That’s terrific. I look forward to the reduction in my legal spend as a result of your needing to pay less for labour.
It’s the client-centred outputs that matter. The measures being adopted by firms are very often in the hopes of preserving margin or maintaining business, not increasing or creating new value to the end user.
In many Requests for Proposals, there is a section where the prospective provider is asked to demonstrate their commitment to innovation. What is not being said is that the reason for the section is not to show what tools you use or processes you have leaned out. It’s really asking you to show you can do the same work for less money or in less time. Alternatively, can you provide some new benefit where one did not previously exist?
When I used to attend court on a regular basis, I found it baffling to arrive at court and not know if I was there for the day or for 20 minutes. My gauge in respect of a “good judge” wasn’t their base of jurisprudential wisdom or even their demeanour. The “best” judges would simply ask at the beginning who was in attendance for an uncontested or settled matter and deal with those first. The shorter time to process, the higher up the queue the matter would ascend. This method would result in as much as 70 per cent of the room being cleared within the first two hours. Surprisingly, this was not a universal practice and it was possible to spend hours waiting behind lengthy contested matters.
All of this came to mind at a recent event outlining “practical” innovations, which were presented in five minutes or less. The most practical of the presentations used no technology at all unless you count markers, sticky notes and flip charts. The demonstration of a Kanban board and how to cycle through issues, tasks and documents on a specific matter clearly showed the benefits of a visualization and the method of processing the buckets of “to do”, “doing” and “done,” to identify bottlenecks. What happens in most law firms is a never-ending exchange of emails, documents with version numbers and delayed discussions on matters that are best resolved by quick, in-person dialogue.
This simple “innovation,” perhaps buttressed with a digital rather than physical version, undoubtedly leads to faster cycle times, fewer back-and-forth exchanges between the stakeholders and greater clarity in terms of who does what to whom. The cost to do the same work will be lower based on the improved time to completion and diminution of waste. Imagine being able to demonstrate a result like Hunoval Law has for its mortgage enforcement clients where the Notice of Hearing cycle has been reduced down to eight days from 70 days with a corresponding $4 million in savings.
Innovation for innovation’s sake is a dangerous, internecine game. While the best legal technology minds of our generation build the shiny and new, we can’t lose focus of the goals of innovation and how business models, process and products have to serve tangible ends. Innovations need to be sharply focused upon making the world better for the client and creating incentives for new cycles of innovation as we grind down old ways of conducting the business of law.
Jason Moyse is industry lead of LegalX and manager, legal business services, at Elevate Services, serving global law firms and corporate legal departments.