Legal Innovation Is The Rage – With Plenty Of Resistance
The staid legal industry is smitten by “innovation,” even as it lacks a common definition how the term applies to legal delivery and education/training. There’s a proliferation of awards, job titles, and conferences devoted to legal innovation. With all the ballyhoo, one would infer that law’s wicked problems—lack of access to affordable legal services and low legal consumer satisfaction, among other challenges– would be under control. That’s not the case. Why? Short answer #1: “innovation” is an overused, exaggerated term when applied to law. Short answer #2: legal culture- the clash between legal fundamentalists and the legal industry- and regulation are strong headwinds buffeting legal change agents.
“Innovation” Makes Headlines; Change is Tough Yards
Efforts to change the legal industry garner headlines, but there’s plenty of resistance, too. A cultural war is being waged between lawyers and the broader legal industry. Many lawyers have difficulty acknowledging-much less embracing- their industry consists of lawyers and technologists, process/project managers, entrepreneurs, financiers, operations managers, data analytics professionals, paraprofessionals, and machines. Many lawyers bristle when legal delivery is characterized as an industry—even if global legal spend is approximately $1 trillion per year and average partner profit at many large firms is well into seven figures.
Unfortunately—and to the detriment of legal buyers and society—many lawyers regard the growing influence of “non-lawyers” as existential threats, not collaborative resources to expand and better serve legal buyers.
There is a rift between lawyers seeking to preserve the “profession” (or is it really the guild?) and the needs of consumers and the industry intent on satisfying them. The profession still controls regulation, practice rules, state bars, the judiciary, education, and legal culture. The industry has capital, tools, talent and new delivery/economic models to address the unmet demand for more accessible, efficient, and cost-effective legal services. The two, in the words of Rodney King, should “just get along.” Unfortunately—and to the detriment of legal buyers and society—many lawyers regard the growing influence of “non-lawyers” as existential threats, not collaborative resources to expand and better serve legal buyers. Many in the profession mistake change for marginalization. Ironically, their attitude might seal their fate.
The profession relies upon legal culture, regulation, and historic buyer passivity to forestall change to an industry where access to legal services is severely restricted and customer dissatisfaction is high. The profession’s headwinds might prolong the journey of law’s transformation, but they will not alter its course or destination. There is mounting evidence demonstrating law’s transformation from a labor-intensive, lawyer-centric guild to a digitized, multidisciplinary industry that will serve tens of millions of new consumers and offer existing ones “more with less.” The customer-centricity of the industry offers more choice, greater efficiency, predictability, transparency, and holistic, value-driven solutions for clients/customers.
A principal force of resistance to legal change is fundamentalism. Many lawyers maintain that the profession will be compromised if it is subsumed by the industry. They contend that independent legal judgment is compromised when, for example, “non-lawyer” capital is at play. This tenuous argument is leveraged as a justification for resisting re-regulation of the industry to allow outside investment, management, and ownership of law firms by non-licensed attorneys (as is sanctioned in the UK, Australia, Spain, and other advanced legal systems). Fundamentalists have also led the resistance to new professional business models, inter-disciplinary practice, tech-driven companies like LegalZoom and Rocket Lawyer (via a multiplicity of failed unauthorized practice of law claims), and foment fear that technology-notably artificial intelligence– will replace lawyers.
Bob Ambrogi, an astute industry commentator recently wrote an article entitled “Why Is Innovation So Hard for Lawyers and Law Firms?” Having just returned from the annual International Legal Technology Association Conference (ILTACON) where he heard futurist Lisa Bodell deliver the keynote on change, Ambrogi questioned whether the legal profession could embrace innovation the way so many other industries have. His answer: no.
“The obstacles to innovation in law are not merely organizational. They exist outside the organization, in the form of outmoded regulatory rules, an outdated justice system, and a culture that resists change and reinforces the status quo.”
My take: right obstacles, wrong conclusion. Law is becoming a global marketplace, and the marketc – not lawyers, are taking control of it. If the profession cannot provide the market what it demands, others will—utilizing the profession as and when it is needed.
There are many examples of “marketplace activism” in response to law firm inactivity. The migration of work from law firms to in-house legal departments, the growth of law companies, the expanding footprint of the Big Four, the infusion of institutional capital into legal tech and law companies, new legal providers like litigation finance, and just-in-time, self-serve legal service and education companies are the byproduct of it. So too is the recent acquisition of Riverview, an early law company, by Ernst & Young, and UnitedLex, a law company’s “rebadging” of hundreds of legal professionals from the in-house teams of DXC and GE are all examples of the new global legal industry. Most law firms have failed to heed the call of consumers for new legal delivery paradigms, so legal consumers and a handful of entrepreneurs have filled the void. The marketplace is taking matters into its own hands and circumnavigating the profession’s anachronistic regulations, rules, and protectionism to forge new legal service delivery options. This is recasting how, when, for whom, and at what price lawyers are required. It should cause the profession to question what is a lawyer now?
Legal Culture is Changing—But Not from Within
Legal culture is the biggest obstacle to industry change. What is culture and what are the characteristics of “traditional legal culture?” The Center for Advanced Research on Language Acquisition defines culture as: “the shared patterns of behaviors and interactions, cognitive constructs, and effective understanding that are learned through a process of socialization.” Traditional legal culture has been maintained by a self-selection process that begins with who attends law school and the century-old pedagogical indoctrination that follows. Students are taught to “think like lawyers” even if basic practice skills are acquired on-the-job or on-the-fly. The legal profession imbues members with a false sense of “legal exceptionalism”; law is “unique” among professions and unfettered with traditional business standards, operating procedures, and metrics. Lawyers have their own language, writing style, regulations, practice, and ethical standards, and they have created them to set the profession apart.
The profession crafted regulations designed to protect its independence, freedom from competition, and territoriality. Lawyers sold one thing: legal expertise. The legal guild was sustained by its asymmetrical knowledge, expertise, and regulation. Law’s “lawyer and ‘non-lawyer’” worldview became the cornerstone of the legal guild and the characteristics that defined its culture: lawyer-centric, insular, territorial, pedigree-obsessed, homogeneous male-dominant, risk-averse, self-regulated, precedent bound, hierarchical, pyramidal, and change-resistant.
Legal culture perpetuated several myths as part of its socialization process. They included: (1) lawyers determine what “legal” work is; (2) only lawyers are competent to perform it; (3) lawyers- not clients- determine value; (4) all legal work is bespoke; (5) all legal matters are inherently unique; and (6) legal exceptionalism. Is it any wonder that legal change is driven principally by “outsiders”—technologists, business professionals, process and project experts, operations, entrepreneurs, and commentators, not lawyers?
The Profession is At Odds with the Industry
The business world has been transformed during the past decade. This is the age of the consumer. The legal profession is in the age of the lawyer. The global financial crisis and the “more with less” mantra it created; the remarkable acceleration and adoption of technology; a new buy/sell dynamic fueled by tech and process-driven companies that have supplanted monopolistic incumbent providers; and capital to achieve scale and global reach has transformed multiple industries. Professions have not been immune to this transformation–medicine is an example. Medical practice has not vanished, but the delivery of healthcare has been wholly transformed. Physicians are among a cadre of “medical professionals” that, assisted by technology and research, deliver healthcare. Law is in the early stages of this metamorphosis.
Legal fundamentalism, like other forms of orthodoxy, is rooted in an idealization of the past, not adaptation to a changing world. The legal profession will continue to play a key role for clients and society, especially during these turbulent times when the rule of law is under siege. Lawyers now have the tools to ply their services to tens of millions in need of them and to elevate their low net promoter score with existing clients. They have an opportunity to leverage their legal knowledge in ways that did not exist previously—as data analysts, legal technologists, legal operations specialists, and scores of other positions yet to emerge. It’s an exciting time to be in the legal profession. It is also past time for the profession to focus on what’s good for consumers, not themselves. That would be “legal innovation.”