Focus On

Many large law firms averse to innovation, study finds

Thursday, March 16, 2017 @ 8:00 PM | By Ann Macaulay

A recent study warns large law firms that they must embrace innovation, radically change and develop creative strategies in order to promote access to justice, cope with the civil justice crisis and remain viable in the business landscape. But the study’s results indicate that while firms often talk about innovating, it’s not actually happening at many of them.

The Illusion of Innovation at Canadian Law Firms, out of McGill University’s Faculty of Management, points to a big disconnect between how associates and partners perceive innovation at their firms. The survey of 105 lawyers found that 84 per cent of partners and senior managers agreed that innovation was one of the highest strategic priorities at their firm. But only 42 per cent of associates agreed with that statement.

The study’s author, McGill law and MBA student Aly R. Háji, said he doesn’t see much innovation taking place and adds that if law firms don’t change, “their future does not look bright.” He pointed to two underlying factors that explain his findings. The partnership model “promotes a kind of organizational groupthink and inhibits creative innovation and thinking” and the billable hour model is “purposely incentivizing a lack of innovation. It promotes inefficiency.”

One key study finding was a lack of leadership in implementing structures and channels in order to promote innovation at firms. Háji found it “shocking” that “people, associates especially, don’t feel heard.” A majority of associates said they don’t believe there are channels or structures to bring forth innovative ideas, “while partners overwhelmingly feel that there are and that there are no barriers to bringing ideas. So clearly there’s some mismatch of communication there.” Firms need to ensure that “leadership is listening to those people who have different thoughts and ideas.”

Háji said that, in contrast, consulting and accounting firms are increasingly using practices that let millennials’ voices be heard by the senior partners. Much of this comes down to a strategy of reverse mentoring. When an associate or student actively helps a partner, “it becomes a reciprocal relationship. That’s one way to make voices heard — create actual relationships as opposed to hierarchies.”

Firms also need more diversity, Háji added. “The more dissonant voices you get at a law firm, the more diversity of opinions you have and the more innovation can flourish.”

The Capturing Technological Innovation in Legal Services report, released in January by the Law Society of England and Wales, reveals a legal sector increasingly engaging with advanced automation as lawyers take “advantage of new opportunities to reshape the legal services sector.” Still, it adds that there are obstacles to legal sector innovation since “more than half said they were likely to wait for others to pioneer new technologies.”

Háji’s study examined technology as merely one measure of implementing innovation. It found that “78 per cent of lawyers indicated they didn’t know whether or how much investment in new technology was taking place. And only 4 per cent of all of our respondents indicated that technology was being used effectively.”

Still, some law firms are rising to the innovation challenge, said Matthew Peters, national innovation leader and partner at McCarthy Tétrault in Vancouver. “I think there’s tangible evidence of it being done at certain firms,” but “quite frankly at other firms it is an illusion.”

Peters pointed to several innovative initiatives his firm has been involved in, including a Lean Six Sigma team and an offshore delivery capability offered to clients that allows for very low-cost delivery of certain types of services. On “M&A transactions, we staff the team with a dedicated deal co-ordinator whose primary responsibility is to ensure seamless and timely service.”

Peters is not surprised at the perception gap between associates and partners because, at least in part, partners are much more directly connected with clients on discussing different ways to price or deliver services. But that communication has to be filtered down to all firm members. For the past five years, innovation at McCarthy has been “one of our strategic goals that we articulate so that the whole firm knows what we’re doing.”