Successful law firms in the future will not only keep up with trends and developments; they will lead them.
This is the eight of a series of nine posts that will describe and explore seven characteristics[note 1] that will determine which law firms remain successful in the legal services industry of the future, and what law firms can do now to build them into their operations and professional cultures.
Innovation is more than just doing things better. Rather it is a fundamental change. It shifts the paradigms that control how we think and act today. This justifiably sounds scary to most lawyers, who by education, experience, and ethical obligations, tend to be skeptical and risk-adverse in the protection of their clients' interests.
But clients aren't that way. Today and increasingly tomorrow, clients will expect breakthrough improvements in the responsiveness, practicality, and value for money in the legal services that they receive.
As my colleagues and I at Walker Clark LLC have helped law firms to innovate, as well as to manage the profound changes that true innovation frequently produce inside the organization, we have observed what we call the Seven Secrets of Successful Innovation:
- Act now! In most legal services markets, the window of opportunity for a new idea usually is open for only six to twelve months. The chances are excellent that if you have thought of a brilliant innovation, one of your competitors is thinking about it, too. In even the most agile law firms, the typical implementation time for an innovation will be four to eight months. So move quickly from brainstorms to plans to action.
- Test the concept in depth. How is it new? What are you trying to achieve? How will it improve profitability? What do your best clients think about the idea? What are your competitors doing?
- Write a conservative plan. Challenge the underlying -- often unspoken -- assumptions behind your idea. How do you know that those assumptions are valid? Be sure that you understand what you need for success. What could go wrong?
- Pay attention to the numbers. Include all the potential costs, not just cash. Two of the most frequently overlooked costs are the value of the partners' time that will be needed to implement the innovation and the opportunity costs arising from that investment. Decide what to measure and how to use the results.
- Understand the interpersonal dynamics. Successful innovation requires a high level of trust, which can be built only through a free exchange of information, ideas, and feelings.
- Include an exit strategy. The most successful innovations in law firms usually are "easy-in / easy-out." The costs and risks of the innovation are minimized, monitored, and managed. "Start small" is usually wise advice, using a pilot project before going to firm-wide implementation. The exit strategy should also minimize the costs and risks if the firm must abandon the project and return to the old way.
- Avoid sunk-cost bias. This occurs when a would-be innovator thinks, "We have invested so much time, effort, and money in this project. We can't give up now." Successful innovators know when to give up and move on. They realize that disappointments and even outright failiures can be valuable data that should be examined and used in future attempts, not denied, distinguished, or forgotten. Know when to quit, but keep the lessons that you have learned.
1The seven defining characteristics of the law firm of the future are:
- A conversion from a "factory" model for the production and delivery of legal services to a "shipyard" model
- Closer, ongoing client relationships
- Sustainable profitability
- Very high workflow leverage
- "Anytime, anywhere" service delivery capabilities
- An intense focus on quality management
- A predisposition for innovation.