‘Legal innovation’ is no longer an oxymoron. The staid, precedent bound, legal guild is slowly morphing into something different. The contours of the new legal order are still being shaped and the dominant players have yet to emerge. Even confirmed industry Luddites concede the legal profession/industry is changing. Many lawyers, to borrow from T.S. Eliot’s Journey of the Magi, are “no longer at ease in the old dispensation.” That’s the good news for those in need of legal services and existing legal buyers.
But “Curb Your Enthusiasm.” With all the buzz about innovation—articles, conferences, awards, legal tech, new providers—law has yet to overcome its biggest challenges: (1) the access to justice crisis; and (2) widespread dissatisfaction among legal buyers. These ‘wicked problems’ are not unique to the U.S., the world’s largest legal market by spend. Nor are they new. Derek Bok, a lawyer and former Harvard University President famously quipped in the early ‘80’s that ''There is far too much law for those who can afford it and far too little for those who cannot.”
Fast forward thirty-five years and Bok’s commentary is still spot on. Why? One reason is that what passes for ‘legal innovation’—alternative fee arrangements (AFA’s), budgets, and various forms of labor arbitrage—is neither innovative or designed to solve law’s biggest challenges. These measures are palliatives intended to mollify disgruntled clients, not solutions to law’s big challenges. Instead of the legal industry’s fixation with ‘innovation,’ why not focus on ‘improving access to and client/customer satisfaction with legal delivery?’ That lacks the sizzle of ‘innovation’ but frames the challenges that must be met.
The self-regulated U.S. legal industry has failed to distinguish between legal practice and legal delivery. This has resulted in the repeated frustration of efforts—especially in the retail segment-- to utilize technology and process to leverage legal expertise to expand and democratize access to legal services. How can ‘protecting the public’ be rationalized when approximately 80 percent of the population—including most businesses—cannot afford legal services? The profession is enamored of ‘innovation’ but resistant to change-- regulatory, technological, ownership structure--that would accelerate it.
‘Legal innovation’—from the lawyer perspective—has become a buzzword for adaptation to a changing marketplace. Law is rife with ‘innovation departments,’ ‘legal pioneers,’ and ‘visionaries.’ Why, then, do corporate law firms have such low net promoter scores? Clients, not providers, are the arbiters of what’s innovative-- they vote with their pocketbooks. Lawyer proclamations of innovation—absent consumer acknowledgment—are meaningless.
What is Innovation? It’s More Than a Catch-Phrase
'Innovation' has several meanings dependent upon context. “The introduction of something new” is the Merriam-Webster definition. In business, 'innovation' is applying ideas to satisfy the needs and expectations of customers. Innovation is the causal connection between/among idea, application, adoption, and result—satisfied customers. Innovation produces results that benefit clients.
Uber, Amazon, and Apple are three among several innovative companies that have disrupted industries during the past decade. Each has displaced dominant providers by expanding access, making purchasing easier and more transparent, providing customers more choice, reducing cost, and offering a platform for buyers and sellers to evaluate each other. These companies all have a customer-centric approach. They set out to design and implement a better experience for customers—introducing new delivery paradigms propelled by access to capital, utilization of technology and process, removal of the middle-man, reconfiguration of existing economic models, and challenging existing regulatory barriers to competition. Buying goods and services became easier, faster, and cheaper. Markets expanded, consumers were generally satisfied, and the companies prospered. How does legal ‘innovation’ stack up?
Legal Innovation is In Its Early Stages—It Should Focus on Solving Wicked Problems
There is mounting evidence of early-stage innovation in different segments of the legal ecosystem. LegalZoom (LZ) boasts nearly five million customers—including well over one million small businesses. Its net promoter score (NPS), a key business metric of customer satisfaction, is sky-high—far better than top-tier corporate firms. LZ’s efforts to improve access to legal services on a scalable technology platform and different levels of lawyer involvement have encountered resistance from the start. The company has successfully defended a legion of unauthorized practice of law (UPL) claims brought by various state Bars. The defense costs would have bankrupted most providers, but LegalZoom had institutional investment backing to withstand the regulatory assault. Like Uber, LZ has become too popular to fail at the hands of regulators.
Joshua Browder, a Stanford computer science undergraduate, has positively impacted hundreds of thousands previously denied legal access with his DoNotPay chatbot. His initial application enabled consumers to contest parking tickets. Browder next rolled out a bot that provided self-serve guidance with UK government-provided housing. The young innovator has secured funding to expand his self-help platform to immigration and other critical ‘retail’ legal service areas. Browder’s bots underscore the enormous opportunity for legal entrepreneurs to ‘do good and do well’ by providing affordable ‘just right’ legal services to millions in need of it around the globe. Resources exist—human and technological-- to reengineer legal delivery so that it’s within financial reach of tens of millions presently priced out of the market. This can be an ‘everyone wins’ for consumers, legal service professionals, and society. Corporate legal buyers, likewise, have access to new delivery models, tools, metrics, providers, and collaborative opportunities--not exclusively with lawyers—that provide ‘better, faster, cheaper, and risk mitigated’ solutions to business challenges involving legal issues.
There are signs of innovation in legal education and training, too—not all of it coming from law schools. Programs like LawWithoutWalls and UnitedLex’s Legal Residency Program align young legal professionals with the marketplace, providing marketable skills that augment ‘knowledge of the law.’ Hotshot, a legal education company, offers just-in-time high-quality videos that provide customers the 'how to' of key practice skills. Innovative law schools like Bucerius in Germany (a for-profit University), IE in Spain, and Ryerson in Canada are reengineering legal education by melding legal, business, and technological training as well as exposing students to marketplace developments. Northwestern, Vanderbilt, Suffolk, and Michigan State are among a growing number of U.S. law schools spanning bridging the gap between traditional legal education and marketplace demand for ‘T-shaped’ legal professionals.
The UK is leading the way in legal regulatory innovation. The Solicitors Regulatory Authority (SRA), borrowing from Australia’s earlier adoption of permitting ‘non-lawyers’ to invest in, manage, and share profits with legal entities, has recast legal education and regulation from the consumer perspective. The SRA no longer requires attendance at law school to qualify as a solicitor; competency-based and experiential training can substitute for the traditional law school path. The SRA has also welcomed entrepreneurs and other professionals to enter the legal space and deliver legal services. The SRA regulates the business of law while The Law Society oversees the professional conduct of lawyers. The practice/delivery regulatory counterpoise ensures adherence to professional standards while providing the structural freedom to deliver legal services in a customer-centric, competitive environment. This has accelerated legal cultural transformation in the UK legal market and beyond.
A handful of corporate legal departments have fomented innovation—principally because law firms have been tone-deaf and structurally challenged to satisfy elevated buyer expectations. Most large in-house departments have legal operations departments; work with procurement departments to assist in managing the buy/sell dynamic; operate more closely with the enterprise that engages them, serving as business partners as well as enterprise defenders; embrace diversity; operate from a corporate structure; are measured/rewarded by metrics that measure output—results—not input—hours billed/origination. This is how all legal professionals will operate soon.
The emergence of law companies like UnitedLex, Elevate, and Axiom is also emblematic of legal innovation and the reengineering of legal delivery. These companies leverage legal expertise with technology and process to provide cost-predictable, effective solutions for ‘non-regulated’ legal activities. Their market share, like in-house departments, is rising at the expense of law firms. More importantly, their expertise in ‘the business of law’ and its melding with practice acumen has laid the groundwork for scalable alternatives to law firms and ever-expanding in-house departments. UnitedLex’s ‘rebadging’ of hundreds of DXC and GE legal department professionals and the hundreds of millions that DXC and GE will save is an example of how legal delivery is being reengineered.
'Who has the reputation?’ was formerly a key buying criterion. That is being replaced by ‘Who Has the Expertise and Scalability?’ Innovation means many things for legal buyers: required expertise, reduced cost, compressed delivery time, price predictability, risk mitigation, data accumulation --for a myriad of reasons including prophylactic-- and having the ‘right’ resources assigned. Reputation of legal providers is no longer derived from pedigree and brand--experience, expertise, and measurable results are the new retention criteria for a growing number of legal buyers.
Innovation will occur when legal services are accessible to the many, not the few; the legal profession aligns with the broader industry and jettisons its “lawyers and ‘non-lawyers’” mindset; law’s provincialism yields to a global community intent upon solving common challenges; legal professionals are trained holistically and engage in ‘lifelong learning;’ and law’s focus is on the legal client/customer and society, not profit-per-partner. The focus of innovation should be on the prize--solving law's big problems-- not the awards.
Mark A. Cohen is the Chairman, Board of Advisors & Chief Strategy Officer at Elevate and a Distinguished Fellow at Northwestern University Pritzker School of Law
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