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02 Mar 2020

What is the legal industry’s problem with innovation?

Innovation in progress

Is it fear of failure? Or is it more complicated than that?

A 2019 survey by Blickstein Group reported that only 32.7 percent of Legal Department Operations (LDO) professionals believe their law firms are innovative. A notably low level of confidence in a profession that relies heavily on otherwise high levels of awareness and insight.

Remarkably, this statistic hasn’t exactly sent shockwaves through the industry. Law’s reluctance to innovate is widely recognised.  However, what is not readily agreed upon or understood is why.

Is a fear of failure the legal industry’s biggest failure?

If the tech industry has taught us anything, it is that building, testing, failing, recalibrating and going again is part and parcel with progress.

Without Napster there would be no Spotify. There would be no Facebook without MySpace. No Google without AOL. No Google Maps without MapQuest. The list goes on and on. Failing fast is considered a natural part of innovation – just part of the job and in fact, welcomed by some.

Maybe therein lies the problem. How can the legal profession be expected to accept that there will be errors in the way they work when there are millions of dollars and people’s lives and livelihoods literally counting on them not to get it wrong?

When things go wrong for lawyers, it’s not a step in the right direction. It’s potentially a catastrophe.

Andrew Medlicott, senior lawyer at amaysim spent nearly two years building a bespoke piece of software to make the telco’s law department document management easier and more efficient. He believes there are two main inhibitors for the legal industry embracing innovative technology.

“Firstly, there is a small group of lawyers who I believe are afraid of being replaced by technology, and the second inhibitor - rightly or wrongly - is a fear of making a mistake using client facing technology. If there are no guarantees or if they can’t absolutely master new technologies, some lawyers are concerned about being exposed or embarrassed by potential errors. In many ways, it’s still a conservative profession,” he says.

“I once spent time meeting with representatives from top tier firms about a deal management tool. The common response was that the tool and its potential to improve practices was brilliant, but they were too afraid to use it in front of clients.”

Caryn Sandler, partner and Chief Knowledge and Innovation Officer at Gilbert + Tobin has likewise witnessed misconceived threats act as a hindrance. “I think perceived risk in moving to new processes and technologies is a genuine barrier to change. If you don’t fully understand a technology, you will naturally be reluctant to use it or ask others to embrace it. Take AI for example. A lawyer who has always relied on and had confidence in their own ability will question how significantly AI can improve a decision-making process. That perception can be changed through training and experiencing the technology firsthand.”

Upskilling to adapt

Clearly there is an argument for lawyers to hold back before giving the green light to technologies they don’t have the skills to utilise.

Mick Sheehy, partner at PwC NewLaw believes that blame cannot be entirely attributed to fear of failure or a risk and change-adverse culture.

“There is a lack of technological skills in in-house legal departments that has not been addressed by businesses,” he says. “Asking that legal experts, who are highly educated in their own field, become technologically savvy as well is a hurdle.”

Undoubtedly, for all it has to offer, legal innovation technology is complex. Using artificial intelligence, blockchain, data encryption and more to deliver legal services requires more than a passing knowledge of computers.

Says Sandler, “Capability development is a critical investment for legal teams. Time spent now in developing new skills, will reap benefits for lawyers and clients in the future.”

And it is not just a lack of capability that stands in the way of innovation in the legal industry; it’s lack of comprehension. 

“Both organisations and the legal teams within them may lack understanding of the cost-benefit calculation of digitisation for example,” says Sheehy.

“The prize outlined is not well understood, and the cost and effort of digitising legacy contracts or implementing management software or similar is seen as an added burden on a cost centre not thought to be core to the business. Legal departments are often lacking in change management experience, and it is therefore important to put someone who has such experience in place to steer the program. This may mean bringing in external help.”

Reframe the change

One provider of external help is Peter Connor, founder and CEO of AlternativelyLegal, a change management company dedicated to helping in-house lawyers work more innovatively.

“I don’t subscribe to the theory that all lawyers have a fundamental aversion to change,” he says.

“In my experience, the vast majority of lawyers are open to using technology and other means to work more efficiently – in fact, focusing on the technology is the wrong way to go about it. Transformation works better when you reframe it – start by explaining to lawyers why it’s in their interest to change, how to create more time and reimagine new, more interesting and impactful things they could be doing with their time.”

After only one or two days in a workshop, Connor maintains that even the most cynical legal luddites embrace the change and have a clear plan to transform.

This willingness to change after proper education is not limited to in-house law departments either. Gilbert + Tobin’s Sandler speaks of the same occurrence in law firms, “Once they realise clients are invested in transformation and innovation, they are more willing to embrace it. Everyone begins to speak the same language. Initial scepticism is replaced with wholehearted adoption, when they realise the technology or new process saves time and is reliable. It’s all about demonstrating the wins and the value – lawyers are more willing to change the ways they work if they see upside in the new approach.”

Perhaps instead of claiming the legal industry is slow to innovate, the issue should be reframed as slow to be educated?

Hear more from experts Peter Connor; Caryn Sandler, Mike Sheehy and Andrew Medlicott – all confirmed speakers at Legal Innovation & Tech Fest, 28-29 April, Sydney.

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