'Innovation means putting your neck on the line' - How cutting edge is the UK's legal sector?

The legal sector is faced with a raft of market challenges that mean its need for innovation is perhaps greater than ever.

As the deadline for Legal Week‘s Innovation Awards approaches we speak to senior lawyers in the sector on what innovation means and why the profession often struggles to do it.

bright-susan-300Susan Bright – regional managing partner for UK & Africa, Hogan Lovells
This perception that law firms are bad at innovating may have been fair in the past, but it is certainly not a fair reflection of all law firms today. There are a number of law firms – and Hogan Lovells is one – where innovation is becoming embedded in what we do, every day.

For Hogan Lovells, innovation means incremental improvement in the services we offer our clients; how we offer those services; and in the structure and strategy of our business.

In our experience, innovation usually requires collaboration between people with different skills. Innovation will flourish in businesses where people are empowered to collaborate to come up with ideas, to act on them, to experiment, to make mistakes and to learn.

Last year we launched our own internal Hogan Lovells Innovation awards, designed to seek out, share and celebrate innovation within our business. We were overwhelmed with over 200 entries from around the globe. Innovations include unprecedented legal solutions (eg for our client Nortel which achieved an award winning billion dollar victory for 33,000 UK pensioners); our business and social enterprise training programme (HL BaSE), providing those starting out with the knowledge and skills to understand business fundamentals and the importance of social impact on the way clients do business; and our legal project management programme which is being embedded in our business.

Matthew Keogh, head of investment management group, Linklaters
The legal sector is as ripe for innovation as any sector in business. Innovations in technology, client services, project management are taking place, all of which are necessary to drive competitiveness in the sector.

At Linklaters we are pushing ahead with artificial intelligence (AI), document automation, delivery of services through web portals and bringing in external project managers who can help the client interface with large deals in the way the accounting firms have done for years.

In some respects it requires you not to do what your average lawyer does which is, ‘how did I do it last time?’, but to deliberately think differently.

The legal firms have tended to rely on their lawyers to do everything but in the last few years that has changed more and more because of a recognition that a variety of different skillsets are needed in order to be competitive.

In some respects it requires you not to do what your average lawyer does which is, ‘how did I do it last time?’, but to deliberately think differently.

Last year we had a client ask us if we would advise on how they would market their products in 60 jurisdictions in the world. Usually, that would turn into a 300 page memo that would end up in the bottom of the drawer, instead we provided an interactive web portal that the client’s marketing people could access on their tablets wherever they were in the world, it was the same advice but being provided in a far more useful way.

rawlinson-paul-baker-mckenzie-webPaul Rawlinson, UK managing partner, Baker & McKenzie
The best innovation we have undertaken is our Belfast operation which is our second low cost service centre after Manila. We have innovation there not just in terms of the concept of having lower cost legal services at high quality but also in implementing technology and project management expertise to ensure that we can deploy those services quickly and efficiently. As one client who visited our premises said “It is like looking into the future of work”.

Very few areas are not susceptible to more efficiency. Some people think that their own practice area isn’t capable of improvement or efficiency but it’s not true. In terms of other areas of innovation, leveraging knowledge on a global basis to provide clients with commercial solutions e.g. heat maps to assess risk, online tools to provide overviews of local issues, is very much an area that allows firms to shine.

michael-chissick-webMichael Chissick, managing partner, Fieldfisher
Law firms are traditionally bad at innovating because of numbers – law firms are driven by end of month and end of year numbers, and innovation takes time and requires significant investment. That said, I don’t fully accept that law firms are bad at innovating – we’re seeing lots of good innovation being done by a number of firms.

Innovation means putting your neck on the line and there is of course an element of risk to it. But some change is inevitable, and if you lead the way in embracing it then you’ll deal with the change a lot better.

We are seeing plenty of good innovation in the industry. On the technology side some firms are embracing artificial intelligence, and on the HR side flexible working schemes are still fairly new in law. We’ve trialled some that have been very popular. Open plan offices, too, are becoming increasingly popular – we’ve been open plan since we moved to Riverbank House in 2014 and it’s been very successful. Only last week we saw Olswang get headlines for moving to open plan offices.

Generation Y expect technology at their fingertips. Firms employ so much technology that integrating it all is a challenge, but our move to [management software] LexisOne will do so and will make people’s jobs easier as a result.

Where is innovation needed? There’s still a lot of disclosure work, document management and file-keeping that takes considerable time and I’m sure we’ll see innovation in that area before too long.

scott-cochraneScott Cochrane, global head of corporate, Herbert Smith Freehills
I think if you look over the last 20 years, it is probably fair to say law firms are bad at innovating. As a profession, we’re trained to be conservative risk spotters and that’s not a great place to start an innovation conversation.

Having said that, I would say that over the last couple of years, the speed of change in the markets has made us all far more aware of the need to think innovatively about what we do – it comes more easily to some than to others.

At the highest level, I think innovation is being able to step back from the historic relationship we’ve had with our clients and ask how the internal and external factors in our market are changing, and will change, that. This could be around technological change, new pricing models, the size and structure of our resources, using alternative delivery models or thinking about how the careers of our fee earners might look different in the future.

I think the way that big law firms use technological solutions to change the way they are able to price services is going to continue to be a huge issue. Developments in things like natural language programming and complex algorithms mean that we are all going to have to challenge our historic thinking around what clients really value from big law firms.

We should see this as an opportunity – by having technological solutions to some of the more labour intensive elements of our current role, we can use the time to build deeper personal relationships with our clients, working with them to improve their business rather than simply reacting to a request for a specific legal service.

charles-martin-webCharles Martin, senior partner, Macfarlanes

Clients are generally looking for a specific job or type of work done without surprises or frills, which means there is less emphasis on innovation in law firms. Clients want excellent delivery of what it says on the tin, not delivery of a new tin. They don’t necessarily want things reinvented. That’s understandable but innovation does make lawyers’ lives more interesting, exciting and creative.

Innovation is all about finding practical ways to work more efficiently. At a very high level we as an industry need to find ways to marry the increasing capabilities of technology with the human aspects of a people business, which law is and will remain so, at least at the complex end.

Probably the biggest changes that we are seeing at the moment are in the area of e-discovery. The innovation that is going on there will eventually be applied right the way across legal practice. There are also some interesting things going on in document assembly but those are more obviously an evolution of basic precedents.

I do think that the legal industry will eventually be transformed by technology and in particular by artificial intelligence. Much of the more commoditised work will be done through information technology but very clearly lawyers will always be central to the contextualisation and human elements of advice, negotiation, advocacy and client service. That is pretty exciting but has widespread ramifications for legal training and the shape of firms.

Gordon Harris, intellectual property co-head, Gowling WLG
Innovation is all about service delivery, it is about finding better, more effective ways to deliver services to our clients, whether in the context of providing additional services or advice across a broader range, it is around effective and efficient service delivery and finding new ways of delivering that service.

If you can find a way of delivering top quality services which are cost effective to the client but don’t damage your profitability, that is the Holy Grail

Predominantly innovation is around the clever use of IT, a means of using IT in order to provide in a more effective and better way to improve what you do for your clients, how well you do it and how cost effectively you do it. If you can find a way of delivering top quality services which are cost effective to the client but don’t damage your profitability, that is the Holy Grail.

Nicholas Perry, head of London, Bird & Bird
Any innovation in the sector needs to revolve around improving client service. Practically every sector is being disrupted by the power of digitalisation. Lawyers who don’t stay in step with these changes, but who can get out in front and lead their clients through this period and the challenges they face – whether through providing services in a more efficient way or helping clients to navigate their businesses through these challenges – are the true innovators.

The impact of technology and the digital world means that clients are constantly challenged by existing law needing to be put in a digital context. For example, our trade mark team recently obtained a judgment from the High Court which examined how an agreement originally negotiated in 1955 applies to use on the internet and social media today.

Similarly the approach towards data and privacy law is being completely revolutionised as a result of the sheer volume of data generated by the internet, continuous evolution in the way data is used, and increasing concerns about security.

Too often lawyers say to clients ‘this is what the law says’ but don’t talk about the practical.

mike-polson-colMike Polson, managing partner of Ashurst’s Glasgow business support office
I think you have to be careful with any generalisation that law firms aren’t good at innovation as you can quickly point to many examples of successful innovation within the legal market. What there perhaps hasn’t been is a very clear focus on this as a driver of future differentiation and success.

It is important not to constrain innovation by defining it too narrowly. At its core, it is about improvement – whether that is in terms of quality, speed, consistency, which may in turn lead to cost efficiencies.

Our legal analyst team in Glasgow is a successful example of genuine innovation – creating a new business model and a new career structure aligned to that.

The mind-set needs to be that all areas of law are capable of improvement through innovation, which allows a positive environment to thrive.

Jason Collins, head of tax, Pinsent Masons
There are two forms of innovation, the first is delivery of our services, embracing technology and finding new ways of doing things that are more cost effective and user friendly.

The second is developing new arguments in law and developing the law. Law firms have always been good at the second bit, but a little less quick off the mark in the delivery of services.

Too often lawyers say to clients ‘this is what the law says’ but don’t talk about the practical. We are looking at bringing consultants in who can help clients apply the law properly. For example if you have a bank client that is outsourcing its call centre, lawyers are good at writing the contract but then they go away.

Clients would like more help on implementing that contract in practice, how do they make it work? How do they spot problems when they are still small? In our tax team we have a number of professional advisers who aren’t lawyers because tax is an area where law and accounting come together.

Sian Keall, employment partner, Travers Smith
Innovation is any change which delivers legal services more quickly and cost effectively but without compromising quality.

Although AI is ultimately the future, data analytics is probably going to be the fundamental shift for the legal sector. Law firms hold huge quantities of data most obviously in the form of drafting for agreements. Accessing this data in a way which allows fast, accurate outcomes for clients is already happening but will deepen and spread.

I don’t think any one step will feel like a transformation. Even big changes in technology and working practices will just be part of an ongoing process of change. If anything, the fact ‎that change is going to keep happening is the true transformation.

The deadline to enter Legal Week’s 2016 Innovation Awards is today: click here to make your submission. Winners will be revealed at a ceremony on 27 May at the Brewery, London. For table sales please contact Duncan.Campbell@incisivemedia.com or +44 (0)207 316 9223 . For sponsorship enquiries contact Peter.Connolly@incisivemedia.com or +44 (0)207 316 9426 

The Legal Week Strategic Technology Forum takes place from 15-17 June at the Ritz-Carlton Penha Longa Resort in Portugal. Click here for more details.