Innovation At Law Firms – Yuk – Above the LawAbove the Law

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I love the concept of innovation but hate the use of the word, as it stands for so many pointless exercises in futility. I won’t get into them here — if you want to read articles that are well-intentioned but completely useless, subscribe to The Harvard Business Review. There you will get 5,000-word articles with more about innovation and less about useful outcomes than you can stomach, no doubt. Sorry to beat on my alma mater, but they can take it.

Now for law firms …

Let’s start with “What is the purpose of the law firm?” The answer to this is surprisingly difficult to really think about. Peter Drucker says that the purpose of a business is to create a customer.

Note his use of the word create. He doesn’t say, go get a customer. He says you should create one.

I think that applies just fine to a law firm, but there is a tricky little wrinkle to think through: What is our customer?

You might say, “Duh, Bruce, it’s the client,” but if you said that, you would be blowing it. There are two customers for a law firm:

2. The lawyers

Those are the customers, and any analysis has to think of both of them. Indeed, today, in New York City, isn’t there a plethora of clients and a shortage of lawyers? A year ago, it was the opposite.

Going back to Drucker now, law firms aren’t here to get clients and get money from them or to get lawyers and bill them out (even if, of course, we have a profit motive); instead, we are here to create clients and create lawyers at the law firm, just like Drucker says.

Innovation should be angled to this purpose, or it is more jejune. For example, technological innovations are hardly game changers. They are more like table stakes.  If you don’t have at least a reasonable ability to crank out documents, blackline them, and shoot them out super fast on email, then you can’t be in the game.  But if you take a step back, cooler or faster or more impressive ways to do the foregoing are not, in my view, going to really create clients.

I have been around for eons now in the legal world, but I haven’t yet heard of a client coming to a law firm — or leaving a law firm — because its technology was superior or inferior. And although lawyers hate technologically backward law firms, they rarely, if ever, change jobs due to tech and things like that. The exception to the foregoing is for a law firm to be so inferior that the client or the lawyers think the law firm is trapped in the past and should be avoided for that reason.

As an aside, I know you aren’t creating lawyers; my intellectual leap here is to define it so that creating lawyers means attracting and retaining those who work at the law firm and thrive in their careers at the firm.

So how does one create a client or a lawyer?

Now that is a great question, isn’t it? I propose that future (successful) law firms will answer that question very well. And the ones that either never even considered this question or couldn’t answer it will struggle with either failure (or merger into a stronger player) or gradual movement to irrelevancy over time.

So what is the answer — how does one create a client or a lawyer — here are some quick thoughts:

For both lawyers and clients, focus on one industry and be a pure play in that industry. This allows the lawyers and clients to gain legal benefit, business ideas, contacts, and other benefits from interacting with useful counterparties. For example, we focus on real estate as our pure play. I have seen other firms as pure plays in:

For lawyers, focus on the heart of why they would want to be at the law firm.  Usually, it is due to a chance to build a career, build a book of business, learn their craft, etc. Our concept is called ATR (standing for Attract, Train, and Retain talent).

For clients, focus on what they want more than anything, which is usually assistance in building their businesses. Clients often think of all the lawyers as a commoditized group; however, we have found that a distinguishing factor is focusing (not on our business goals) but on the client’s.

For (some) clients, focus on relentless cost reduction. For other clients, focus on incredibly high quality. Different clients value different attributes in their lawyers. Some clients value the talents of the lawyers much more than saving money.  However, for other clients, the cost is critical, and for them, being a low-cost producer could be a great advantage.

For lawyers, emphasize lifestyle, culture, and other humanistic elements.

For lawyers and clients, too, emphasize diversity, flexibility, and similar items.

Overall, the point is you don’t want to try to be all things to all people. It just doesn’t work, or at least it rarely works. Instead, there should be some niche — dare I say a power niche — that focuses everyone on what the law firm is all about.

These innovations distinguish the law firms that will have future success from those that I think will struggle.

Bruce Stachenfeld is the chairman of Duval & Stachenfeld LLP, an approximately 50-lawyer law firm based in midtown Manhattan. The firm is known as “The Pure Play in Real Estate Law” because all of its practice areas are focused around real estate. With almost 50 full-time real estate lawyers, the firm is one of the largest real estate law practices in New York City. You can contact Bruce by email at [email protected]. Bruce also writes The Real Estate Philosopher™, which contains applications of Bruce’s eclectic, insightful, and outside-the-box thinking to the real estate world. If you would like to read previous articles or subscribe, please click here.