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Time to innovate
In this article, Simon Tupman urges law firms to innovate if they want to emerge as the new front-runners from the current economic downturn.
These are exciting times, for lawyers and law firms. Yes, exciting. Perhaps not the first word that comes to mind for many managing partners at the moment, given the downturn in business and the consequential squeeze on law firm profits. Yet I do believe that this slowdown is a blessing in disguise for many firms of all sizes and in all locations, providing them with the impetus and the incentive to really think differently about their businesses and to make lasting changes so that they can emerge from this downturn stronger, leaner and more effective than before.
Cost-cutting not enough
Economically, this recession has created some novel and pressing problems for firms, notably the shrinkage of work in some core practice areas leading to salary caps, cost cuts and redundancies, particularly in the UK and US, on an unprecedented scale. While such measures may be necessary and even desirable, (and not just to preserve the profits of senior partners and appease the banks!), they do little to address the underlying workplace 'disfunctionalities' that have hampered progress in law firms for many years. Some of these are attitudinal, some behavioural, some systematic and are epitomised by a lack of leadership, under-delegation, non-communication, archaic or non-existent business practices and pricing and productivity methodologies governed by the insidious billable hour. In these areas, compared with many leading-edge businesses including some professional service firms, the legal profession has been in recession for years.
Thinking about your future
What is needed now is fresh, proactive thinking rather than just reactive cost cutting. This is a perfect time for firms to innovate; in other words, to introduce new ways of doing things so that their practices will not just survive this downturn but thrive beyond it.
This will require lawyers and law firm leaders to be open to new ideas and to challenge any assumptions that they may hold regarding their legal businesses and the delivery of their services. Thinking deeply about what you are doing and how you are doing it will help you to ask better questions, break out of fruitless or meaningless routines, forge stronger relations with clients and staff, make contacts with new businesses and experiment with fresh ideas.
As Edward de Bono, regarded as the leading authority in the field of creative thinking and innovation writes, 'Traditional thinking is all about 'what is'; future thinking will need to be about what can be.'
Innovation starting to happen
It is encouraging to see that, in recent years, there has been evidence of increasing innovation in law firms globally. Already some firms have been recognised for their efforts and (at least) two bodies are doing their bit to encourage more firms to take up the challenge:
Since 2006, The Financial Times in London has sponsored the FT Innovative Lawyers Awards to coincide with their annual special report on law firm innovation. This year, the awards will recognise innovative European private practices and in-house lawyers. Categories include innovations in legal expertise, management, resourcing, client service and billing and fees.
Since 2004, the College of Law Practice Management, an honorary worldwide organization that encourages creativity in law practice management, has hosted the Innovaction Awards. For the fourth consecutive year, the InnovAction Awards have recognized outstanding innovation in the delivery of legal services, demonstrating to the legal community what can happen when 'passionate professionals, with big ideas and strong convictions, resolve to create effective change'. Firms anywhere in the world are encouraged to enter. (The closing date for entries this year (2009) is June 1).
As the Innovaction website reports, one of three winners last year was Australian firm Mallesons Stephen Jaques who were honoured for an innovation called 'PeopleFinder', the technological spearhead of 'ClientFirst', a program of continuous improvements to the firm's standards of client service. PeopleFinder gives individuals who contact Mallesons using a BlackBerry the ability to determine whether the person they are calling is available, and if not, when and where they can be found. PeopleFinder has rerouted more than 10,000 phone calls per month from voice mail to a person who can provide assistance.
But innovation is not the preserve of large firms; nor are all innovations rooted in technology. Alan Lewis, Head of Employment at George Davies, Solicitors in Manchester, England recently he took an innovative but simple idea from my book Why Lawyers Should Eat Bananas (idea #5 Host a Scenario seminar) and wrote to me subsequently explaining the outcome:
"We gained a new client with major restructuring issues worth lots of fees to my firm within 24 hours after their attending both sessions. Not only that, feedback from attendees is very impressive. Relationships with existing clients who came along have been greatly enhanced. This really was a simple and fun exercise to prepare and present. I feel we have a winning blueprint for future seminars and I know that none of our regional competitors is doing anything like this."
Taking action is key
The point is this: Alan read about an idea, saw its potential value and experimented with the idea to great effect. Not only did he position his firm differently from its competitors but he also won new business. That is what innovation is about. As Canadian innovation specialist Ed Bernacki writes, 'Innovation is a lot like physical fitness. Talking about it will not make you fit, nor will investing in a pair of running shoes. It's how you use the ideas, the technology or the resources that makes you innovative.'
Some examples
Other reported examples of recent law firm innovations include:
- The introduction of virtual law firms whereby lawyers work, not from a central office but from home or a client's place of business. Firms who have taken this approach say they can save their clients money, give them a better service and enjoy a better lifestyle compared with traditional 'bricks and mortar' firms. (Eg Virtual Law Partners (USA), Keystone Law (UK) and Advent Lawyers (Australia).)
- The introduction of alternative pricing methodologies that are based on value rather than time billing. (Eg Exemplar Law (US) and Valorem Law Group (US). Both firms operate a truly client-centric economic model that works on the premise that the more effective you can be for a client, the more value this will have for a client. Both firms reject the ubiquitous billable hour model that encourages indolence, replacing it with results-driven pricing models.
- The creation of internal competitions for staff at all levels to generate strategically innovative ideas (eg, Minter Ellison. A couple of years ago, I discovered that in its Adelaide office every month, they have a 'motivation for innovation' competition with cash prizes ranging from $100 to $1,000 for the best idea. Their marketing manager at the time, Amy Lunn, told me that the scheme worked a treat. A great idea but not a novel one. 16 years ago, I chatted with a law firm client who was the head of a major branch of a national bank. He told me how he had asked his staff to come up with ideas that could save the bank money during the recession of 1991. The winning idea came from the oldest serving person in the mailroom. Her idea saved the bank $250,000! She was handsomely rewarded with two first class tickets for her and her husband around the world!)
- The creation of new services available on-line using technology (eg - Mischon de Reya's Tulip (Turning Losses into Profits), the first ever anti-counterfeiting product devised by a law firm to combat the multi-billion dollar industry of international counterfeiting;
- Lane Neave's Live in New Zealand, a dedicated immigration service and website offering a free online assessment for potential immigrants into New Zealand;
- Kemp Little's WIP extranet, a web-based tool that allows clients to see details of unbilled work in progress on active matters and to view details of outstanding unpaid bills;)
- Capital raising and expansion through a public offering (eg Slater and Gordon, the world's first law firm to be publicly listed, who reported a 22.4% increase in net profit for the six months to December 31 2008 to $8.46 million, up from $6.9 million for the previous corresponding period. The firm's revenue increased 35% to $50.5 million over the period. (Currently, a public listing by a law firm is not allowed in New Zealand).
- Initiatives aimed at reducing the environmental impacts of the legal profession (eg DLA Piper who, recognising the need for large scale action, joined forces in 2007 with Business in the Community to establish the Legal Sector Alliance, a growing group of UK-based law firms and organisations committed to working collaboratively to take action on climate change by reducing their carbon footprint and adopting environmentally sustainable practices.)
Your challenge
Forget swine flu'. Consider how you can infect your firm with 'innovation fever'!
- Start by encouraging and looking for ideas. Make it a part of your firm's culture to solicit ideas from clients, colleagues and third parties such as your local business community, other professional service firms, referrers and suppliers. Get stimulation and ideas by reading books such as The Firm of the Future by Ron Baker and Paul Dunne, How to have Kick-Ass Ideas by Chris Baréz-Brown or any of Edward de Bono's work.
- Invite a handful of clients and referrers to sit on an advisory panel that meets quarterly to offer their opinions on how you can innovate internally and externally. Ask them, 'from your perspective, what can we do differently that will help our firm to become even more effective and valuable to our clients?'
With your team, ask them the same question; you can also ask them this question: 'what can we do differently that will enhance your career, make us even more attractive to recruits and make your life at this firm even more fulfilling?'
Web-based technologies such as Free online surveys will enable your team to make suggestions anonymously. Give someone (possibly a senior associate on track for promotion) the opportunity to lead this initiative. Appoint that person your firm's 'Creative Director' or 'Director of Innovation'.
- Get yourself in a 'state to create'. Find the time and an environment that is conducive to idea generation, free expression and brainstorming. Work to an agenda and focus on some specific objectives; for example, how can you innovate in these areas? -
- Generating new business from existing or new clients
- Developing and delivering new services
- Recruiting and retaining smart people
- Using technology to enhance communication
- Pricing services to reflect value
- Training and developing lawyers to build their careers
- Supporting the community through pro bono or other activities
- Taking action on climate change
- Manage and measure your progress and reward contributors handsomely for their dedication, commitment and energy in helping to make your firm an even better place than it is today!
There is an old saying: 'there are those firms who make things happen, those who watch things happen and those who wonder what had happened'. Well, as I was finishing this article, I received a call from a Practice Manager of a provincial law firm in New Zealand. She summed up what is, perhaps, the main challenge in all of this and that is the self-perception that lawyers have of themselves. She said, 'They see themselves as lawyers, not business people; and unless they start to think of themselves a business people soon, then a lot of them could be left to reflect on what happened!
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