‘Legal Innovation’ Is Not An Oxymoron

The legal industry is known for adherence to precedent, not innovation. While precedent remains a guiding principle in the practice of law, innovation is transforming the models, methods, and players involved in the buy/sell process of legal services. Technology, process, access to institutional capital, re-reregulation, client demand for enhanced value, and changes in other professional service industry delivery models—notably medicine and accounting– are legal innovation’s principal drivers.

Legal innovation has lagged compared with other industries. Law’s Uber has yet to pull up to the curb. But that does not mean that the breadth, scope, and pace of legal delivery innovation has not picked up in recent years. Consider, for example, that in-house corporate departments and legal service providers (read: legal providers that do not ‘engage in the practice of law’ but deliver ‘legal services’) now account for nearly half of total legal spend. The rapid growth of these new supply sources—and their tech and process savvy delivery capability and corporate structures that are better aligned with client standard operating procedure—is a paradigmatic shift away from the long-dominant law firm partnership model. So while no dominant provider has emerged to replace traditional law firms, it’s clear that the search for new delivery models is well underway and yielding an ever-expanding array of client options.

BigLaw partners still rake in princely sums, and entry-level lawyers at their firms earn a lavish lunch less than $200K, but that hardly supports the case that the traditional law firm model is alive and well. Consider the shift in buying practices among corporate clients and the delta between overall legal demand and flat demand for law firm services during the past five years. Then note the shrinking number of equity partners, the smaller classes of incoming associates and the overall declining percentage that large firm lawyers represent in the overall legal population. This is the fallout from changing customer expectations and their internal steps—as well as the growth of well-funded providers—to fill the void being created by buyer migration from the traditional law firm partnership model.

Let’s consider for a moment ‘disruptive innovation,’ the oft-misapplied term coined by Clayton Christensen to describe a paradigmatic industry shift. Professor Christensen’s theory posits that change takes hold in the lower end of a market, introducing new customers into the marketplace by creating ease of access, lower cost, and greater efficiency. That’s precisely what is happening in the retail segment of the legal industry.

LegalZoom, a legal technology company that now has over 3 million customers—and sky-high approval ratings– is successfully using technology to improve access, promote efficiency, and reduce the cost of legal services. They are also bringing new customers into the market. The company is also creating a template for how, when, and for what service level lawyers are required for different tasks and functions. LegalZoom is pioneering levels of lawyer touch-point determined by the value assigned by the customer, not the provider. This ranges from self-serve (standardized documents); to limited access (short online chats with lawyers or calls on a fixed fee basis); to full-blown engagements (with approved panel counsel). This approach is a paradigm shift worthy of the ‘disruptive innovation’ moniker. More importantly, it is one that will migrate to more complex matters in the corporate segment of the legal market. The question will be: who and what is the appropriate resource to deploy for a specific task—or matter– based upon its value to the client?

Corporate clients are already engaged in this process—a paradigm shift—in a number of ways: (1) an increasing willingness to procure services from providers with delivery models different than the traditional law firm partnership model; (2) taking more work in-house; (3) sourcing work—either internally or externally—to providers that are better aligned than law firms with the company’s risk tolerance and enterprise objectives; (4) utilizing technology, process, and ‘the right person for the right task’ to promote efficiency, mitigate risk, and reduce cost; and (5) rejecting the longstanding myth that only law firms—and lawyers—must perform all ‘legal’ tasks. Legal problems are increasingly viewed as business challenges raising legal issues.

Why have law firms not taken more aggressive steps to protect their once-dominant market dominance? There are several reasons: (1) there was little need to innovate until the global financial crisis of 2008 changed the way business is conducted—even law; (2) law firm senior partners lack the financial incentive to invest in the firm’s future because their ‘equity’ is not residual; (3) law firms were able to prop up profits by internal cost-cutting measures rather than client-centric innovation—no more; (4) law firms were able to prop up profits by internal cost-cutting measures rather than client-centric innovation—no more; (5) firms lack the investment capital to make long-term investments in innovation and there is a generational/economic divide between older and younger partners; (6) rather than innovate, firms have tried to ‘reinvent’ their brands by merger. This is neither innovation nor is it a generally a winning formula based upon a recent study conducted by ALM Intelligence

Law’s Uber moment has yet to occur, but there is a wealth of evidence that innovation is driving change—in the buy/sell dynamic; in client expectations; in the more widespread and effective deployment of technology and process in legal delivery; in the tasks that lawyers perform and for whom they are employed/managed; in the price sensitivity for all but the highest-value tasks and matters; and for the melding of legal, technological, process, and collaborative skills required to deliver legal services. And while a handful of law firms—Seyfarth and Allen&Overy are two prominent examples—are traditional model outliers that have engaged in real innovation in service delivery, the bulk of the innovation has come from corporate legal departments and elite legal service providers. Is it any wonder, then, that these two groups now account for almost half of total legal spend?

Big money is eying—and investing in– the legal vertical because of its immense size and disruption potential. Legal technology companies are proliferating; artificial intelligence is already part of the legal landscape—just last week a UK insurance company teamed with an ABS legal service provider to role out an AI-powered app to answer coverage questions for policyholders; and global legal service providers like Axiom and UnitedLex, among others, have global footprints and nine-figure revenues. Most importantly, consumers are embracing delivery options different than the traditional partnership model. This will stoke the innovation fire already ablaze in the legal industry.


The pace of innovation in legal delivery will continue to accelerate during the next few years. And while many envision disruption in binary terms–law firm vs. service provider; AI vs. lawyer; insource vs. outsource—it’s more nuanced than that. Disruption in legal delivery will not be a ‘one-size-fits-all’ approach. Clients assign different values to different tasks, functions, matters, and portfolios. Value is derived from context. For example, a product liability case is nuisance value if it’s a one-off but high value if it could give rise to a multiplicity of similar actions.

The value of a matter drives the election of resources most appropriate to meeting the client’s objective. The disruptive legal delivery model will be one that provides a scalable array of solution tools—human and technological; legal and business; embedded and agile– that produce efficient, cost-effective, and risk-appropriate resolutions to client challenges. That’s precisely what top lawyers have always delivered and it will be the winning formula going forward.

This Article originally appeared on and is featured here with Author permission.


Mark A. Cohen
Mark A. Cohen
MARK has had a long and distinguished career as a lawyer and innovator in the legal vertical. His unique perspective on the legal industry is derived from roles he has had as an internationally recognized civil trial lawyer, legal entrepreneur, early large-scale adopter of technology for the delivery of legal services, partner at one of the largest law firms, founder and managing partner of a national litigation boutique firm, outside General Counsel, federally appointed Receiver of a large, international aviation parts business with operations on four continents, (Adjunct) Distinguished Lecturer of Law at Georgetown University Law Center, writer, speaker, and acknowledged global thought leader at the intersection of law, business, and technology. Mark currently serves as CEO of Legalmosaic, a company that provides strategic consulting to service providers, consumers, investors, educators, and new entrants into the legal vertical. Prior to founding Legalmosaic, Mark was Co-Founder of Clearspire, a groundbreaking legal service provider whose disruptive, proprietary IT platform and reengineered legal model garnered international acclaim. This followed his founding of Qualitas,an early entrant into the LPO space. Earlier in his career, Mark was an internationally recognized civil trial lawyer. He was an award-winning Assistant U.S. Attorney and the youngest partner of Finley Kumble prior to founding his own multi-city litigation boutique firm. Mark is widely known for his blogging and speaking on a range of legal topics focused on changes, challenges, and opportunities in the current legal landscape. Mark maintains an active speaking scheduled, both domestic and international. He has been a keynote speaker at Harvard Law School’s Speaker Series, Reinvent Law, 3M’s Global Legal Alignment Summit, LegalZoom, University College London, and, in May 2017, The German Bar Association’s Annual Conference. He writes a weekly column for Forbes and has been published in major legal and business media sources around the globe. Mark has been active in sports and the arts throughout his life, and this is reflected in his writing and speaking on legal issues where he frequently makes references to those topics. He enjoys mentoring students and young lawyers and is known for his colorful sense of humor and candor.

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