When you think of innovation, what comes to mind?

Recently, we were working with an M&A practice group on defining their vision for their group. One partner suggested “Innovative” as a word that could describe them, but another partner pushed back. To him, “innovation” was a word to avoid. It meant, perhaps, trying unproven things. Moving in riskier directions. Negative. But what is legal innovation?

Your Tip: Innovation isn’t a dirty word. It’s a way for you to improve how you work, streamline your systems, and turn clients into raving fans who will refer you to friends and family alike. 

To sum up legal innovation, we’re sharing a guest post by Art Wilson. We’ve worked with Art in the past. His thoughts on innovation are valuable for everyone within our LeanLegal community. 

If you’re a lawyer, you’ve doubtless heard the term legal innovation more and more frequently over the past few years. In fact, you’ve probably gotten sick of hearing it, and there’s a good chance you may not even know what it means. It’s one of those terms that has become so ubiquitous that no one dares to put up their hand to ask “what does that mean?” for fear of appearing incredibly stupid. After all, since it flows so easily out of people’s mouths, everyone except you must understand what it is, right? Wrong. Well we’re not afraid to look stupid, so we’re going to take a stab at defining it in this article.

First we have to draw a distinction between actual legal innovation and “Legal Innovation” (with air quotes). It’s possible that your firm does both, especially if it’s a large firm. If legal innovation at your firm:

 

• is the responsibility of your marketing department;
• is otherwise in the control of people who have never practiced law;
• is a label that seems to get hung on anything new that comes into your firm;
• seems to be getting tacked on to more and more job titles where you really can’t tell what contribution the people in those jobs are making to the firm;
• appears so many times in a single firm press release that you’re motivated to calculate its percentage of the word count; and/or
• seems to be consuming a substantial amount of overhead money/time that you can’t tie to corresponding benefit to you or your clients,

then there’s a good chance that your firm, at least in part, is engaging in “Legal Innovation” (with air quotes) and flushing money, possibly quite a lot of it, down the toilet in the process.

The Concise Oxford Dictionary (7th edition) defines the verb innovate as: “…bring in novelties; make changes in…” and from this we can infer definitions for innovation (noun), innovative (adjective), etc. But when we stick the word legal in front of any of these words what should they mean?

The definition of legal innovation should be: “Legal Innovation is a change made to a legal practice that results in the lawyers delivering better value to their clients.” It’s that simple. If it does not add value for your clients then it is not innovative! So what is value?

I’ll be discussing the client value equation in more detail in another article. To summarize here, the client value equation consists of three main variables: cost, benefit, and customer service. The equation will be somewhat different for every client and may even be different for a single client depending on the situation. So if you make changes to your practice that:

• lower client cost;
• increase client benefit; and/or
• improve customer service,
• those are innovative changes for your practice.

Does innovation need to involve technology? No. Make no mistake, innovative changes you make to your practice will often involve the targeted application of technology. But if your firm is waving the “Innovation” banner every time they buy a piece of software, then we’re back into air quotes territory. Buying technology is not innovative. Applying technology in a way that improves client value is.

Remember also that greed is not innovative. If you’re already making good revenue in your practice, lowering your costs of production is not innovative unless you pass a portion of this savings on to your clients. Plus it’s short sighted. If another firm poaches one of your clients because they offered better value in their services, that client is gone and they are not coming back. Instead, play a longer game. People’s purchasing decisions for goods and services are guided by the value they believe they will get in return. Innovate to deliver better value and over time more people will choose you to be their lawyer/firm instead of your competition.

One exception to the requirement that innovation must expressly improve client value is what I’ll call the survival exception. This happens when you’ve already priced your services to stay competitive in the market but legacy inefficiencies in your service delivery model mean that your practice is not sustainable without change; i.e. you’re working hard but you’re not making any money. You may even be losing money. Maybe a large client pressured your firm for lower rates/prices and you agreed rather than risk losing them. Or maybe your firm has lagged behind in innovations that have driven down the market price in a particular practice area and you’ve had to lower your prices just to stay in the game. Whatever the reason, if you find yourself in this situation you need to innovate to reduce your costs or at some point you’re going to have to drop the client or shut down the practice area. In other words, you need to innovate to survive.

In the end, legal innovation is simple in concept: change your practice to deliver better value to your clients. Execution? That’s a bit more challenging. Stay tuned!
— Art Wilson

When it comes to legal innovation, Gimbal is committed to helping lawyers just like you build a law practice they love by doing things a little bit differently…so you can avoid the burnout that comes from doing things the way you’ve always done them. 

Join our Practice Accelerator exclusive small-group coaching program and get a formula for success and an accountability partner to make things just a bit easier.