Who really drives innovation at your firm?
6 minute read
According to PWC’s recent “Law Firm of the Future” survey, it’s smooth sailing ahead for the legal sector. The vast majority of firms are optimistic on fee income and profit growth from 2018 to 2020, with a significant number of firms predicting that profit growth will outstrip that of fee income up to 2020. Even Brexit hasn’t been able to ruffle many feathers, with no firms expecting to have to relocate a head office, close a regional office, or even see much movement in terms of partner and staff headcount. Yet there is one big thing on everyone's mind. Innovation.
Why is innovation such a challenge for law firms?
Quite simply, because innovation has the potential to yield profits. Believe it or not, despite the legal sector’s conservative reputation, the law industry is already going through somewhat of a renaissance. Up to 80% of firms have clocked on to the potential advanced technology solutions such as artificial intelligence (AI) and machine learning present. We’ve come into the digital age, and it is clear that tech will change how the world works, just as roads did for Rome. According to Deloitte as many as 39% of lower-skilled responsibilities could soon be automated by 2036. This frees time for more valuable activities, which means higher billing rates and more profit for the firm by allowing lawyer to spend less time on the tediously repetitive, and more time on the problems that require a spark of creativity. Ironically, it’ll be robots that allow us to work less like machines.
Brewing Innovation: The secret recipe
So we know innovation is the not so secret ingredient for success, yet why is it still so elusive?
From what we’ve found, the biggest blocker to innovation is convincing everyone else it's a really great idea. While attending a recent event hosting the top innovation managers across London’s legal sector, one innovation manager gave their take on the situation, stating:
“The main challenge we have at our firm is getting the buy-in from each team we work with - both on the fee-earning and businesses services departments - to change their ways and try something new. Without involving them in the process, we cannot innovate the way we work.”
Law firms have been extremely successful in building innovation teams, but to further fuel innovation, it’s important to build the right culture and teams to participate in the innovation process, from identifying opportunities to tackle, to testing and implementing them.
A study by Amlaw examined the relationship between the existence of various C Suite positions and the profitability of a law firm. According to this study firms with a “CIO/CTO reported an average of $209,000 higher PPEP than firms without someone in that position”.
This recognition of the impact of technology can be seen within the market, as according to PWC,
“Finance and Risk & Compliance continue to be perceived as the two strongest performing support functions in 2018 and IT has overtaken HR as the third strongest performing function”. Yet Amlaw found that despite this, “Chief HR/Recruiting Officers reported an average of $356,000 higher PPEP than firms without someone in that position”.
Clearly, HR and Technology strategies go hand in hand. The challenge is that existing talent attraction and selection in law firms is not designed around building an innovative talent strategy.
The Talent Innovation Formula
If we want to enable the law firm to innovate, we need first and foremost to innovate the way we think about people strategy - and in particular how we can attract, nurture and foster talent to innovate.
The talent innovation formula is what we see as being the first step to cultivating an environment to let innovation develop naturally.
1. Attract tomorrow’s innovators
2. Nurture cognitive diversity
3. Hire for the traits that matter
While it might not roll off the tongue quite like E=Mc2, we think this formula might have the potential to hold a candle to Einstein’s.
In our next article, we’d like to shed some light on how certain firms have cracked this problem. From Allen & Overy to CMS, we will uncover some of the best-kept secrets to innovation in the legal sector.
Want to share your thoughts or learn more about innovating your talent strategy?