Law is staging its own version of “every kid gets a trophy.” Its award season is longer than baseball’s, and the list of award categories rivals the Oscars. Every week, all over the globe, the legal industry throws gala dinners to celebrate its “innovators,” “visionaries,” and “pioneers.” These gatherings afford attendees a chance to dress up, schmooze with peers, feel important, and convince themselves that their industry is performing splendidly. Legal providers are hearing “Celebration” while for buyers it’s “I can’t get no satisfaction.”
Legal consumers are not handing out many plaudits to law firms. A 2017 study of the British legal market commissioned by LexisNexis and Judge Business School at Cambridge University contains a stark finding: ‘There is unambiguous evidence of a significant and persistent disconnect between law firms and their clients.” The disconnect has resulted in a steady migration of work from firms to corporate legal departments as well as a growing client receptivity to service providers and other “alternative” (now mainstream) sources for legal services. That’s not only the pattern in the UK but also in the US and globally.
The LexisNexis survey cites four persistent causes of the client/firm disconnect: (1) clients want solutions and law firms offer advice; (2) law firms strive for perfection while clients generally want a “good enough” solution; (3) law firms fail to provide cost and time predictability–they have not invested in business staples such as project and process management capability and (4) a knowledge gap.
A stunning 40% of respondents in the LexisNexis survey noted that senior partners of panel firms lacked more than a basic knowledge of their businesses. That underscores a more fundamental challenge confronting lawyers: they must offer more than legal expertise. Legal buyers want answers to business challenges—at the speed of business. That means legal and business expertise—supported by technology and process—is required. That’s not the model that traditional law firm partnerships are built on.
The 2017 Georgetown Report cites the “erosion of the traditional law firm franchise,’ a euphemism for “clients don’t need large law firms to handle many legal tasks.” The 2018 Report concludes that the internal steps law firms have taken to preserve profit-per-partner (PPP) have failed to address chronic, systemic deficiencies. The Report concludes that “Too many law firms are still fighting the last war “applying old fixes to new market conditions.” Law firms are spending more on marketing but remain largely unresponsive to client demands for “faster, better, cheaper” solutions that: (1) solve business problems; (2) with better customer service; (3) deploying the right resource to the task; (4) commensurate with its value and risk; and (5) capturing intellectual capital and data that can be leveraged. Why? Increasing marketing budgets, handing out more awards, and chanting “innovation” creates a (false) impression of client-centricity. These moves are buying time for senior partners who are well into the back nine of their careers and generally disinclined to invest in the firm’s future that offers them no financial return. But they are not scoring points–or solving deficiencies–with clients. The recent wave of associate increases by Milbank and scores of other firms that followed is evidence of law firm tone-deafness to clients.
Problem Solving and Consumer Perspective Are What Counts
Law’s obsession with awards and innovation has eclipsed focus on solving its major challenges: (1) expanding access to legal services to the tens of millions of individuals and businesses presently unserved; (2) improving the delivery of service to existing legal consumers and garnering their satisfaction and loyalty; (3) preserving the rule of law by safeguarding democratic institutions; and (4) delivering pro bono services to those in need. Solving these challenges requires a long-term approach that is inimical to the short-term mindset of most law firms. It requires a new organizational, economic, talent management, and reward model. Most of all, it inverts the provider focus from “what works for us?” to “what works for the consumer? Awards and claims of “innovation” provide instant—if not illusory—gratification but do not address these underlying industry challenges.
There is a correlation between the proliferation of legal awards and the industry’s overheated use of the word “innovation.” Self-congratulation and buzzwords do not change the widely held consumer perception that legal delivery–especially BigLaw– is out-of-sync with business. It’s not just the exorbitant cost of legal services that vexes buyers; it’s also law’s asynchronous culture, structure, economic model, protracted delivery cycle, cost unpredictability, one-dimensional expertise, that has legal buyers looking for alternatives to “the usual suspects.” Add to that law’s failing grades on diversity, equal-pay-for-equal services, client-driven metrics, and one can readily understand why there’s flat demand for law firm services in a steadily expanding market.
Legal providers would be wise to address delivery deficits and the roots of consumer discontent rather than fixate on “innovation.” That means focusing on what legal buyers want rather, not what they can sell. Improvement and investment in customers—not innovation as an end unto itself—is what matters. Successful companies invest in customer-focused resources—people, technology, infrastructure, data, and customer relations—to satisfy customers and forge relationships that become assets. “Customer-centric approach” is not a buzzword; it is a commitment to the process, investment, performance metrics and constant improvement that creates value for consumers. It’s hard work.
Too Many Claims of “Innovation” and Too Few Answers
Law is enamored of innovation, perhaps because it has been devoid of it for so long. Innovation is a term that is widely used but lacks a common definition. The experts seem to agree on four seminal elements: (1) it is a process; (2) where ideas are turned into solutions; (3) that add value; and (4) from the customer perspective. Nick Skillicorn, a leading blogger, and consultant define innovation as “Turning an idea into a solution that adds value from a customer’s perspective.” Innovation is constructed from the consumer perspective–what do they want that they cannot obtain from existing service or product providers that create value for them? Law firms take an inverted approach—what can we sell to clients that does not require us to materially alter our delivery structure or economic model? This approach is “anti-innovative.”
Corporate legal departments—many of whom initially had law firm mentalities and operated that way—are now thinking more like the businesses they represent. In-house counsel play a dual role of corporate defender and business partner. They are members of the business while adhering to legal ethical and practice standards. They are business experts with a legal background. This is similar to a new breed of well-capitalized, tech, and business savvy alternative legal service providers (ALSP’s a/k/a law companies)—United Lex, Axiom, Integreon and others including the Big Four—are forging innovative approaches to legal delivery designed to suit customer needs. In each case, the delivery model was constructed de novo, starting with “what do buyers of our services need and how can we make that happen?”
Customer Satisfaction is the By-Product of Innovation
Many firms have chief innovation officers (CIO’s) and innovation departments. What does that mean? And why, if there is such a proliferation of “innovation” are legal consumers dissatisfied and aggressively seeking providers with new delivery models, inter-disciplinary expertise, measurable results, and scalability? Short answer: “innovation” starts with the customer perspective—not the provider’s—and applies new ideas that drive value to customers. Very few law firms come close to doing this. Most continue to offer undifferentiated services, raise rates, scour the market for big-book laterals, and expand marketing budgets. This is neither a “customer-centric approach” nor is it “innovation.” Legal providers—especially traditional partnership model firms—would be wise to view the marketplace from the customer perspective. What does that look like? Legal buyers want rapid, risk-assessed, responsive answers to business challenges from experts with relevant experience that rely on relevant data and an understanding of their business to craft strategies. Legal providers that can deliver actionable solutions on a consistent, cost-effective and scalable basis will achieve customer satisfaction and loyalty. Whether that process results from the improvement of existing practices or innovative new ones is of little moment. It’s customer satisfaction that matters.
Legal consumers, not lawyers, are driving the bus now. They are the judges of performance. Lawyers can continue to hand out awards and liberally designate peers as “innovators.” But if clients are not satisfied, the moniker is an oxymoronic punchline, not a recognition of excellence.