Tag Archives: law firms

Innovation, the child of intrinsic motivation

I read with great interest Richard Moorhead’s blog last week entitled “Big Law. New Law. Ethical Risk”.  I want to pick up one theme in my ongoing thesis that the model in which lawyers operate is broken.  It’s the ills of the model and the lack of genuine creativity in fashioning an alternative that are at the root of the travails of struggling law firms.  It may be that economic indicators are more positive as a generalization, but that will be of little comfort to practitioners large and small who face deeper structural challenges.

chitty

I want to play with the concepts of innovation and what it motivates or is motivated by.  The idea that innovation is more likely to result in a greater emphasis on extrinsic motivation or introduce a cavalier risk taking approach to practice is one dimensional.  There is a need to look more broadly at how intrinsic motivation can drive happiness, success and generate greater rewards. Yes,  you read it correctly. I did use the word “happiness” in a blog about lawyers, law firms and structure!  By starting the discussion with a question like “why?” rather than “what?” or “how much?” the parameters for debate change significantly.  A little “why” goes a long way in working out what motivates lawyers (well some of them at least!)

The practice of law is a profession that is, in the views of many lawyers I speak to, akin to a calling.  Granted not all lawyers would believe that there is a higher calling to be a hot shot deal maker as opposed to a champion of human rights.  But that would be to render the argument to a binary form which doesn’t reflect the complex array of reasons why lawyers become lawyers and develop the beliefs they hold.

Innovation is also not binary – by which I mean it is not just about trying something “different” at the expensive of ethical practice.  Innovation can be about the translation of concepts, values, practices, working methods, customs, structures, systems that already exist or that can be adapted from other parts of society.  They need not simply be different for the sake of difference.

Innovation is as much about re-birth as it is about new life.  I believe that there is a movement of change in the practice of law.  A restlessness.  The movement is most obvious from my conversations with “perspirers” and “retirers”.  The former working very hard in a traditional and flawed structure towards the promise of partnership, the latter no longer required as young blood pushes for its share.

Why is it like that?  Why can’t it be different?

The answer seems to lie in the structures within which lawyers practice – the vast majority of which are pyramid-shaped.  That they are this shape is beyond this discussion but the apprenticeship model has a lot to answer for when interpreted into law firms in the 21st Century.  The irony of the Pyramid model is that the risk taken is inversely proportional to the capital invested.  That may be why some perspirers are questioning the value of a partnership which leads to shared liability, financial exposure, decisions made by committees or not made at all and inertia in the face of the need to change – fundamentally change.

There is in addition a growing body of academic work that points to the failure of extrinsic motivation when seeking higher performance (for instance the work of Dr Bernd Irlenbush at the London School of Economics).  The days of the “carrot” and “stick” belong to an industrial age which is now behind us.  The knowledge-based economy is more sophisticated and requires much greater autonomy and self-direction.  In that regard I think lawyers have much to learn from Dan Pink’s now 4 year old, but still very entertaining, lecture on TED “The Puzzle of Motivation”.  A good use of 20 minutes or should I say 4 units!

I encourage a proper debate about the extent to which lawyers and their firms could develop and innovate if they started with “why” and the intrinsic motivation for “going to work every day”.  This could be based around a desire to innovate for the combined good of the lawyer and most importantly their client!

Are Law Firms Really Time Machines

time machine

Yes and No!

I want to suggest to you that law firms are time machines in one sense, but not in another.  The majority of law firms measure their services using time and build business plans and targets based on time.  The minority are time machines in the HG Wells sense of travelling to the future and then innovating in the present.

Changing Times

All lawyers know that we are in a time of unprecedented change in the legal services sector.  The simple fact is, however, that change is being forced on the profession by external factors – legislation, regulation and economic factors.  The sadness is that change is not, at least in the main, being driven by a profession that is fascinated with innovation.  Lawyers, are we are told, conservative by nature.  That conservatism is no excuse for a lack of innovation.  In all other sectors of the economy innovation is at the heart of the drive to develop, to grow and to succeed.

Let’s look first at where the majority of law firms are right now, before daring to picture a very different future.

Today’s time machines

Today’s law firms are time machines in that their currency is time.  They measure pricing and performance by units of time.  Time is even a reference point when fixed pricing is adopted.

There is nothing inherently wrong with a professional charging for their input or service by reference to the time spent.  Naturally, there are the issues of efficiency and experience which have a bearing on whether measuring service and value by time spent is the most appropriate mechanism. There is a real danger that in the modern climate, with talk of the demise of the hourly rate, that law firms wanting to be modern and different will ditch this tried and tested pricing tool.  That would be a mistake. Pricing according to time spent is one method of determining value that should be used when appropriate to the circumstances, it’s just not the only one.  It’s also not the basis for building a business plan for a modern law firm.

So, the real issue is not with time as the measure of price and performance.  The central question is with the business model that is operated by law firms.

Law firms need to change to become law businesses.  This does not mean the end of professional standards, independent advice, integrity and other important qualities that lawyers (and their clients) value.  Law and the provision of legal advice is about service delivery.  It is about solving problems, by the application of a particular tool kit – in this case the legal toolkit.  It is not about time at all.  Clients don’t buy time – they buy results.

So at the moment law firms are, in the main and despite what many will assert, still time machines in that they measure their services by units, minutes and hours.

What they are not is time machines in the HG Wells sense – travelling to the future and returning to the present to innovate towards that future.  My argument is that for too long there has been no reason to change and so lawyers have not changed.  But now there are multiple drivers for change that are irresistible it should come as no surprise that many lawyers – even those who are prepared to embrace change – do not have the skills to implement it.  They have accepted the “why”, they may even have ideas about the “what”, but they don’t have the skills to deliver the “how”.

HG Wells Calling

A modern legal advisory business that you might visit in a time machine set to 2020 should look very different.  It’s business model will have been constructed with a different mindset.  Sophisticated business people see legal services as one of a number of tools available to them to help them to work on, and in, their businesses.  So in delivering a legal service we need to make sure we have the right tools for the job and make them available to the clients in the right way, at the right time, with the right price, quality and most importantly result or outcome.  To labour the analogy people buying drills in a DIY store are not really buying the drill they are buying holes – the result.  Trite maybe, but if lawyers approached every client engagement like that the results would be amazing.

Working with a client to understand the business outcome and then to interpret this into a packaged solution, competitively priced and which delivers a profit for the law firm is not easy.  It brings together a range of skills that are themselves professional disciplines.

If that is the case why expect the lawyer to do all of these things?  Why not assemble within law businesses the different skills sets required to deliver the client outcomes?  Why not accept that lawyers are themselves highly skilled technicians and use those skills in the right places within the service delivery to the client?  Why not package the service solution in a way that brings together the fruits of the collaboration I have described?

So a 2020 model law firm might have the following features:

  • A central service hub that manages and controls service delivery to clients by a range of professionals
  • Some specialist, highly technical lawyers (even offering advice on hourly rates in some cases);
  • Programme and Project Managers
  • Customer Relationship Managers
  • Sales Managers
  • Process Designers
  • Procurement Experts
  • Relationships with offshore or outsourced service providers
  • Flexible resourcing
  • Flexible premises

Imagine a world in which a client was visited by a Programme Director and a Lawyer from a law firm.  A consultancy process would follow.  The client would be lead through a “factfinding process”  that would allow an understanding of the issue and most importantly the client’s objective and reasons for seeking that objective.  The Lawyer, skilled at interpreting the legal issues, would work alongside the Programme Director to build a process that would deliver the client’s objective – the business result required.  A project team would then be assembled across disciplines, not just across practice areas as happens today.

Through collaborative working in a project lead by project managers the legal toolkit deployed by the project would work alongside the other commercial areas within the client in a multi-disciplinary team delivering a connected business outcome.

That business outcome delivered at a price that was highly competitive but was still profitable for our 2020 law firm with its flexible business model.

This model and process is, of course, just a thought starter and is designed to provoke discussion….but what if it worked?

The Challenge of “who” and “how”

Richard Susskind in his recent book “Tomorrow’s Lawyers” has repeated his previous suggestion that the solution to legal issues comes in “multi-sourcing”.  This approach has much to recommend it.  There remain a number of questions.  These are how do clients source, assess and select providers of multi-sourced solutions?  If not clients then how do law firms do this for their clients?

Lawyers are not equipped through their training or practice to be process engineers and solution designers.  That is not to say they are not capable of developing these skills.  Clearly some will have more interest and aptitude than others.

Learning to be time travellers

There are so many consequences that would flow from building a law business like the one described here and they can’t all be discussed here.

Law firm models need to change, they can’t do this overnight.  But practices (not businesses) that run on overdrafts and are not themselves inherently profitable and which have no retained profits or reserves are standing on burning platforms.

The point is that if lawyers don’t shrug off the cloak of conservatism and take a ride on the time machine to a vision of an innovative future they will be overtaken by events.  There is still time to change, but the time is now.  This is the time when winners will be born.