Ask any athlete who aspires to greatness about the main tools he or she relies upon to succeed and the answer will inevitably highlight the value of getting high quality feedback.

So why, as professional people who desire success (howsoever we define it), are lawyers, so reluctant to have robust discussions with clients and other industry experts about what we do and how we could do it better; and, most importantly, what we could do to help our clients achieve their goals or make their lives better?

Is it arrogance? Do we deem ourselves as more knowledgeable than our clients, and therefore discount the possibility of receiving any information of value?

Is it that we think we know our clients’ priorities and the ‘usual’ complaints (timeliness, fee uncertainty etc), and so consider the exercise a waste of our income earning time?

Is it fear? Fear of hearing uncomfortable truths, or fear of what our clients may actually think, if we have open discussions about them and their businesses?

Is it ignorance? Do we assume to know that our clients don’t want to give feedback; that they expect us to be infallible in what we do and how we do it?

Or, is it a lack of leadership? What of law firm leaders who are unwilling to challenge the status quo because they have their established client relationships that are predicated on a certain type of lawyer and client role? Or those lawyers who have no desire to do anything different and challenging before retirement? Is this leadership?

Each of these questions raises important issues. None the least as important as how do all these behavioural drivers combine to stymie change and development in the legal profession?

This Innovation Insight explains briefly the benefits of incorporating client and industry expert-feedback into your legal practice. Our call to action – challenge yourself to understand why you, personally, resist seeking feedback. If you do, you will be amazed at the opportunities that arise from making small changes to your behaviour.

Gaining feedback is not a new concept. The idea of feedback loops has been around since the 18th century. Feedback loops are used in varying fields – biology, engineering, human-resources, sport and executive coaching to name a few.

A small selection of law firms and lawyers use client and industry feedback successfully as a strategic tool to plan and develop their services and the manner in which they provide them. Ideally it becomes standard practice.

Others avoid, misuse or don’t even consider using feedback. This could be the result of negative experiences, under the general heading of ‘feedback’ (broad scale generic feedback systems in the HR field included), or of unsuccessful client-feedback exercises in the past. This usually arises from a failure to complete the final stage of the feedback loop, i.e. acting by having the time, opportunity and commitment to pursue different behaviours.

Historically, client feedback exercises may have been delegated to the practice management side of the legal business, which by-passes the crucial potential implicit in the individual client relationship.

As quoted by Bill Gates ‘we all need people who will give us feedback. It’s how we improve’.

So, bearing this in mind, it is worthwhile to refresh our minds about the benefits of formal and robust feedback for law firms and clients.

The benefits

Benefits can include:

Giving your client a voice.

Feedback is important to clients.It gives clients the opportunity to let lawyers know what is and isn’t working for them.It gives each client a voice.When each party in a relationship has real opportunities to be heard, the overall relationship strengthens.Two-way communication is essential to trust and successful results in any relationship.

Uncovering opportunities to excel.

Done correctly, client feedback programs enable lawyers and law-firms to understand their clients on a deeper level.This enables lawyers and law-firms to uncover ways to excel at what they do for their clients.It can uncover opportunities for learning, growth and increased revenue generation.

Generating competitive advantage.

All clients expect their lawyers to be hardworking and get the job done. Simply doing the job is not a competitive advantage. It does not set one lawyer or law firm apart from another, something that is becoming more and more important due to market pressures. Participating in a robust client -feedback program builds a more credible and stronger relationship between client and lawyer, based on the idiosyncrasies of each party. This helps to distinguish lawyers and law firms from each other.

Supporting strategic direction decision-making.

Client and industry feedback is a key tool in strategic growth. When it is actionable and incorporated into both day-to-day operations as well as law-firm strategic planning and development, it contributes to building a prosperous client-centric law firm.

Call to action

So, what is holding YOU back from; growing your practice, increasing your income, developing better relationships with valued clients?

We assist individual lawyers and firms grow revenue by innovating what they do and how they do it by becoming more client-centric.

If knowing more about how to use a client-centric approach in your legal practice interests you, please get in touch on +6421 973 963 or innovate@viewconsulting.co.nz.

View Consulting is located at Wellington, New Zealand.

Melissa Lyon is an Associate Principal at Hive Legal, an award-winning Melbourne based law firm that incorporates design-led thinking at the core of what it does.

We chatted to Melissa and asked her five questions about what drove Hive Legal to adopt these practices and what it means for the firm, the clients and the staff.

Q: Firstly, congratulations on being awarded Business Development Professional of the Year at the recent Australian Law Awards. That’s quite an achievement. I understand that your firm, Hive Legal, has received various awards since its inception in 2014, including being named one of the most innovative firms by the Australasian Lawyer in 2016. What does receiving these awards mean for you, your firm, your team members and your clients?

For those of us who want to ‘change up’ the profession, recognition that what we are doing is innovative is both rewarding and motivating. Being a disruptor also brings with it the ability to spread the word and hopefully inspire others - awards help us to do that.

Two years ago I described the Hive business model at a conference and an attendee said to me afterwards ‘That’s fabulous but you may as well tell us we can dance on Mars!’ I am very happy to say there are many more firms dancing on Mars now - to the benefit of their teams and clients. The Hive team is extremely proud of what we have achieved so far and we always celebrate our successes as a team.

For me the Business Development award allowed me to voice my strong belief that the legal profession is not just made up of lawyers, there are so many other professionals with many skills that make up the profession. Whilst some firms are recognising this (and benefiting from it) many have a long way to go.

Q: You describe Hive Legal as a ‘contemporary law firm with a real difference, unhindered by legacy infrastructure and process, liberating [y]our best people to use their core skills and energy to do what they do best’. How does this work in practice and what was the driving force behind establishing Hive Legal on such concepts?

Hive was founded by a group of experienced partners from traditional ‘top tier’ law firms who redesigned legal services to better connect with the needs of clients and our team. Hive’s vision is to improve the experience (for its clients and team) and the main elements of its innovative business model are helping us to achieve that vision.

We value price. No time sheets or hourly billing - we work with clients to agree the value of our work allowing for certainty and aligning of incentives.We are infrastructure lite- we only have fixed infrastructure where it provides value to clients.We have a contemporary workplace – we utilise a cloud platform allowing staff to work when and where they are most effective and in a way that enables work/ life integration.We embrace innovation – all staff are actively encouraged to think innovatively about how Hive could operate.

Our first 4 years have seen great success:

We have a high quality team with a great culture - Hive has built a motivated, happy and diverse team with multiple skills (including coding) now numbering 25.We advise iconic Australian clients and act on major transactions.We incubated and spun off Xakia Matters, a technology platform specifically designed for in house legal teams to drive efficiencies through the aggregation of matters, dashboards and automated reports. We have launched HiveGC+, an innovative outsourced service offering for our corporate commercial clients.We have received numerous awards for general excellence, innovation, diversity and inclusion, staff health and well-being.

Q: How would you describe your design-led thinking philosophy and how do you apply it at Hive Legal?

We have developed HiveThinkP- a new way for the Hive team to think of, develop, assess and implement, innovative ideas. The P stands for the power of purpose which in Hive’s case is to ‘improve the experience for our clients and our team’.

We saw how other professions are using Design Thinking to bring ideas to life and recognized the synergies between Design Thinking and our values of contemporary thinking, creativity, courage, character and collaboration.

HiveThinkP incorporates the core elements of Design Thinking including:

Empathy – being inspired by those you are creating for (user focused)Ideation – generating lots of ideas (through collaboration)Experimentation - Rapid prototyping to make ideas tangible, getting feedback from the people you are designing for and iterating if necessary.

HiveThinkP is focused on identifying what problem we are trying to solve, who for and what they need. It then provides a process to encourage the idea to be developed, assessed and proceeded with or rejected, quickly.

We launched HiveThinkP at our whole of firm strategy day in 2017 where we discussed what innovation means at Hive. We then used HiveThinkP to identify a number of problem solving ideas. True to Design Thinking methods, we were user focused, used a lot of Post Its, ideated collaboratively and even role played our prototypes.

We have implemented a number of solutions using HiveThinkP and have many more in the pipeline. These include both internal and client solutions. HiveGC+, our flexible outsourced Legal service offering for corporate and commercial work was developed and implemented using HiveThinkP.

Although Design Thinking is being talked about in terms of specific innovation projects in some legal firms, we believe that we are one of the few legal firms embracing it as a framework to drive all innovations.

[more questions below]

Q: What have been the main advantages of adopting such a design-led philosophy for Hive Legal, your team members and your clients?

Using a design led philosophy means our innovations and processes are user centred. We get better outcomes and faster development and implementation. It also means that we identify solutions we could have missed if we had stated from a known base or relied on assumptions.

Our team is encouraged to find opportunities for innovation in the way we work internally, the way we work with clients or even how we can help clients with some of their processes. Our team has permission, and is encouraged, to be creative and we use our commitment to collaboration to bring ideas to life.

Using HiveThinkP to develop offerings and solutions for clients means that we can truly say that we are client focused in our approach.

Q: Recently, I read a description of the legal industry as ‘insular, pedigree driven, parochial, balkanized, risk-averse and monopolistic’. These concepts seem the antithesis of innovative change. There is no doubt change can be difficult. Overall, what has your experience taught you about the nature of the legal profession and the difficulties of being a leader of change in your field?

If you are are motivated by the challenge of influencing behaviours and changing mind sets the legal profession is a good place to be! The last few years has seen an amazing shift in terms of the rise of innovative business models, flexible work practices, use of technology and increased collaboration and creativity. There is hope that we are moving away from the depressing description you recently read!

With change comes the opportunity to change even more and I see the next big opportunity for the legal professional as being to truly embrace the skills of all of those who work in the profession (not just lawyers) to deliver better outcomes to clients.

In terms of what my experience has taught me; be brave, use all of your experiences (good and bad) to build the momentum for change, cast off the fear of failure, surround yourself with (and be inspired by) others who are leading the charge, also look outside the legal profession for inspiration, read, connect, learn, have an open mind, give yourself permission to be creative and have fun. In fact… do the complete opposite to all of those things in the quote!

A prediction: By 2020 there will be less involvement by lawyers in many of the tasks that until now have made up their staple diet’[1].

What are the key drivers of this predicted change? Summarising the Future of Legal Services research completed by the Law Society of England and Wales (‘Study’), this Innovation Insight outlines these factors.

The Study states that ‘[i]t seems inevitable that solicitors and lawyers face a future of change on a varied scale, depending on area of practice and client types. Business as usual is not an option for many, if indeed any, traditional legal service providers’.

The Study highlights the following drivers of change, and comments that there is considerable overlap among them: none of these drivers operate in isolation.

1. The business environment

Globalisation is said to have helped the big firms with strong client relationships to increase their global footprint.The Study further suggests that the developing markets, such as China and India, along with the emerging ones of Indonesia and Mexico, will continue to bring out more cultural and legal differences that impact how business is undertaken.

2. Private client purchasing behaviour

Considering the lawyer to personal client relationship, demand for legal services will continue (people will still get divorced, commit crimes, die etc).However, the Study notes that, currently, there is a ‘. Further, for even knowledgeable clients (something which is the same here in NZ). Generation Y and the Millennials are beginning to make their mark on the economy, and their significance will only continue to grow. Currently, there is a significant gap between how traditional law firms communicate and connect, and the expectations and methods used by Generation Y and the Millennials.

Our May Innovation Insight will expand on this topic with an article titled 'Our clients’ behaviours are changing with an increasing number being ‘connected’. What does being ‘connected’ mean? And how does this impact legal service delivery? Sign up to our newsletter to get it delivered straight to your Inbox.

3. Business client purchasing behaviour

The Study suggests that demand for legal services in the business arena will increase due to the business environment becoming more complicated.But also, it notes that buyers of corporate legal services (e.g. the c-suite and in-house counsel) have an increased bargaining power due to shifts in the power relationship with law firms.These shifts include greater access to information allowing comparison of costs between providers, an increased willingness to unbundle legal services, and a growing availability of alternative providers.

4. Technological and process innovation

Technology enables change to occur.The Study suggests that technology impacts the provision of legal services in five ways.It enables lawyers to become more efficient at procedural work and that work able to be commoditised; reduces costs by increasing efficiency (e.g. AI systems); enables new law firm models to be established; generates new work around new ways of doing things, cybersecurity and data protection etc; and supports changes in clients’ decision-making processes and purchasing behaviours.

5. Increased competition and new entrants into the legal marketplace

Historically the legal marketplace has been protected with barriers to entry because of the specialised nature of legal work, the level of rivalry between top firms and the difficulty of displacing law firms from established client relationships.However, these barriers are coming under pressure from legal technology companies, accounting firms, niche providers, unregulated providers and clients themselves.In the lawyer to business marketplace legal technology companies and accounting firms are the two main competitors. (Note:The Study was published in 2014, and to date even more top tier accounting firms have entered the legal market). Also, an increasing number of in-house counsel are likely to be taking work back in-house and opting for unbundling of their legal needs (where they seek expert advice only at key stages).

The Study concludes that these drivers of change bring both challenges and opportunities for those providing legal services.Opportunities include using technology to continue to improve efficiency and user-experience, along with finding different answers to challenges around scope of work, teams, pricing, management of business risk and strategic innovations.

Finally, the report predicts that:

“If a business is not reinventing itself to adopt to changing market conditions then it is highly likely it will go into decline or be taken over by those that are better adapted to the new environment. This is no less true for law firms than for any business".

[1] The Legal Services Consumer Panel, 2020 Legal Services Report, The Law Society of England and Wales, 2014.

Do you really know your clients? We mean beyond the basics: beyond the type of work you do for them, beyond the discrete set of instructions you've received, beyond their email address and ddi, beyond how much you can invoice them without questions being raised, beyond those attributes you think they want from you – less fees and faster turn-around.

This Innovation Insight uses a well-known case study to demonstrate how being truly client-centric differs from merely asking the question ‘what attributes do you seek from our services?’, and explains how adopting this approach to engaging with clients drives profitability.

But selling milkshakes is nothing like providing trusted legal advice!

Regarded as one of the world’s experts on innovation and growth, Harvard Business School Professor Clayton Christensen uses a case study about a fast-food company trying to improve sales of milkshakes as an illustration of truly client-centric engagement[i].

To some, this example may seem trivial and easily distinguishable from the practice of law. Milkshakes are a low value consumable product, whereas providing legal advice is a professional service involving high value expertise. However, the benefit of this example is the clarity that comes from its simplicity. In his work with private consulting firm, Innosight, Prof. Christensen has used the same client-centric engagement tools (and others) as highlighted by the milkshake example to help more than 1/3 of Fortune 50 companies, in various industries both product and service based, to achieve transformational growth.

The case study example: selling more milkshakes

At the beginning, the fast-food company (‘the Coy’) engaged marketers who:

defined the market in terms of its product (people who buy milkshakes);further defined it according to demographics and personalities of those who bought the product (market segments); andinvited representatives from those market segments to form a focus group and asked them to evaluate the existing product and answer questions about what attributes should the milkshakes have (e.g. whether it should be thicker, thinner, chunkier, more flavoured etc).

The Coy then implemented change based on the answers the respondents gave. But, sales failed to increase.

So, a new researcher was engaged. He didn’t define the market; nor did he ask anyone about their suggestions for improving the milkshakes.

The new researcher did spend time watching people and considering what the consumer was trying to get done when they bought a milkshake (‘the job to be done approach’). He then interviewed those consumers.

Following this job to be done approach, the researcher determined that the primary consumers who had two jobs to be done. Firstly, working fathers who were rushing to get to work and didn’t have time to get breakfast before their long commute. They wanted something to fill them up till lunch time and which needed to be easily consumed with one hand when driving. Secondly, consumers who would take the kids out for dinner in the evening and would offer a milkshake as a treat after their meal.

These two different jobs being completed required two different solutions. One, using a milkshake to overcome hunger and as an experience to overcome the boredom of the commute. This required a milkshake that was highly viscous and perhaps with chunks of fruit to make it more interesting (but still able to be consumed with a straw). Two, using a milkshake as a treat in a quick way. Milkshakes that were less viscous and fruit free were preferable.

Using this approach, changes were made to the product and the manner in which it was delivered and sales increased dramatically.

Client-centric engagement drives profitability

Although it is a seemingly unconnected example. It is a good example of truly understanding your clients.

It is not enough to consider just what you think they want, or even to ask them what they think they would like. What has been proven to be successful is understanding what your clients are trying to achieve, the barriers to them doing so, and the ways in which your knowledge and expertise can facilitate their success. It is then up to you to innovate what you do and how you do it based on the opportunities that information provides.

In doing so, you will increase customer loyalty, drive new instructions, generate competitive advantage that is hard to replicate, and cement yourself as an actual trusted advisor.

For more on client-centric processes in legal services – contact us on innovate@viewconsulting.co.nz or call 021 973 963 to have a confidential chat.

[i] Clayton M Christensen and Michael Raynor, The Innovator’s Solution: Creating and Sustaining Successful Growth (Harvard Business School Press, Boston, 2003) 75-79; and Mark Johnson, Seizing the White Space: Business Model Innovation for Growth and Renewal (Harvard Business Press, Boston, 2010) 117-118.

‘Law firms can’t innovate and bring out new law in the same way some companies can bring out new products’[i].

Well, that’s that then. Game over.

No. Although law firms cannot invent the law, firms can be smarter and more savvy about innovating how its lawyers match their expertise with the needs of their clients, and how its services are provided.

This Innovation Insight outlines a broad meaning of innovation. It explains how understanding that some professional strengths can be counterproductive to innovation allows firms to better structure their innovation processes and individuals to ‘reprogram’ themselves in favour of innovation.

Innovation is not limited to new software for CRM or AI. Being innovative also includes incrementally adapting existing service offerings, including how services are provided, or coming up with new service offerings.

We suggest this type of innovation is best achieved based on better understanding and meeting the unmet needs of clients and potential clients. And, often (but not always) using breakthrough technology is a great enabling tool.

Sometimes professional traits that make good lawyers great, can hinder these types of innovative efforts. This can occur subconsciously and, often, with no mal intent.

Four of these characteristics include:

Selective Perception: We can look without seeing. Perception is always selective, limited and bias. We are the product of our environment, education system and professional experiences.

Selective Problem Solving: Our experiences prompt us to rely on certain methods of problem solving because it has worked in the past and it feels good to be successful; rather than exploring the different solutions that may also fit the problem.

Stereotyping: Our brains have cognitive limits and they look for patterns based on familiarity in order to simplify data. This can lead us to quickly label our perceptions.

Framing: When we look at a problem, we can be eager to delineate it, to frame it in a way that makes it easier to solve and less risky to go forward. This can lead to premature convergence; narrowing of our ideas to early in order to come to an answer that fits within our frame.

When a firm is considering how a lawyer's expertise can be matched to the needs of clients, these characteristics can severely narrow the quantity and quality of new ideas that are generated.

Having an awareness that these traits may exist (even if disputed), means that law firms can implement innovation processes that are specifically designed to overcome or minimise the effects of these constraints.

For very self-aware individuals, understanding and acknowledging these traits can enable a change of mindset that opens the door to exploring different ideas around how and what legal services are provided.

For more information, see View Consulting’s Blueprint Program at www.viewconsulting.co.nz/programs or download the paper titled 'Inherent Barriers to Innovation Within Law Firms' from our Knowledge Centre. If you're interested in enabling innovation efforts within your firm, contact us on innovate@viewconsulting.co.nz.

[i] A Giometti, Holman Webb Lawyers.

It has been said that ‘[t]he innovation journey for many companies is little more than hopeful wandering through customer interviews’[i]. Therefore, not surprisingly, the results are often less than desirable.

However, lawyers can learn to solve the problem of what a firm’s service offerings (and manner of service delivery) will best meet their future clients’ needs by adopting a human centred design methodology.

This Innovation Insight describes how human centred design differs from traditional client surveys and interviews, and explains why such an approach is preferable.

What is human centred design?

It is coming up with new initiatives for products and services by thoroughly understanding, often through direct observation, what people want and need in their lives (personal or professional).

Essentially, it matches people’s unmet (and sometimes unknown) needs with what is feasible based on what a firm’s viable business strategy can convert into client value and market opportunity.[ii]

In a recent discussion about client feedback with a partner of a firm, he stated dismissively that ‘we all know what our clients want: faster advice and to pay less’. It may be true that clients do want both these things. However, his viewpoint is too narrow and coloured by his own opinions.

Clients have other issues and other knowledge that opens the doors to new possibilities. This is the space where firms looking to do things differently explore. Focussing on the client, the client’s business and industry is the primary objective. Focussing on what the law firm does, or does not do, is not.

Using a human centred design approach to information gathering uncovers latent opportunities where a firm’s legal knowledge and expertise can be matched to clients’ needs.

Traditional feedback surveys ask questions such as: how do you rate our service? What could we improve on? What don’t you like about our service? Etc. These surveys focus on the law firm, not the client. Using these types of surveys will result only in responses that are closed and of little value (and as the partner above described, they will probably show that clients want faster advice and to pay less fees).

Why is adopting a human-centric approach preferable?

An innovation process that uses this methodology has a greater likelihood of resulting in ideas being generated that actually meet clients’ needs, rather than producing ideas that are the lawyers’ opinions of what clients’ need (which can be hugely off the mark as a lawyer typically only sees a snapshot of a client’s life at a certain point in time).

With the right processes in place, ideas generated by using a human centred apprach can be converted into new services, or changes to existing services or methods of doing business, which create intense client loyalty, goodwill and generate revenue.

Adopting the right method as part of a firm’s innovation process leads to less likelihood of ‘innovation fatigue’ (the disinterest in exploring new possible products, services and service delivery methods due to previous failures) provided the good ideas generated are appropriately shepherded through to completion.

In of itself, the human centered design process generates customer loyalty (what client isn’t happy for their lawyer to take a thorough interest in them and their business without being on the clock?).

Talking to industry leaders to gain their insights using the same methodology not only uncovers other useful information about potential future needs, but also it helps firms to gain further credibility in that area of practice.

Also, it often results in new instructions from clients as a by-product (although it is important that this is not the purpose, or even perceived purpose, of the client interviews).

How to start?

Lawyers get good results by knowing their specialties. This is the same. The best place to start is to engage a professional who knows about human centred design and who understands the legal environment. Generating ideas, using this methodology, is one of the initial steps in a good innovation process.

For more information, see our Client Engagement Program, or contact us directly by email to innovate@viewconsulting.co.nz or by calling 021 973 963.

[i] The Customer Centered Innovation Map, HBR May 2008, L Bettencourt and A Ulwick.

[ii] Based on the work of Tim Brown, IDEO.

Is ‘innovation’ just a buzzword? Or, is innovation important for the future of legal services?

This Innovation Insight discusses McKinsey’s Three Horizon’s Framework and gives an introduction into how innovation can become a key strategy for revenue growth.

Three Horizons Framework

Developed by one of the world’s leading management consultancies, McKinsey & Company, this framework enables business owners to avoid merely focusing on short-term issues relating to existing offerings.

It sets of a framework that guides business owners into thinking strategically about the short, medium and long-term futures of their business.

This framework has three ‘horizons’ (in terms of years): horizon 1 – now and short-term; horizon 2 – medium-term; and horizon 3 – longer-term. It suggests that owners consider their business, and their product or service offerings, within these horizons along the following lines:

Horizon 1: core products, services and markets comprising current revenue with a focus on extending or defending these core activities.Horizon 2: relatively new or emerging products or services, or existing products or services aimed at different markets, with a focus on marketing and development.Horizon 3: new opportunities for growth in the longer-term future.

Used as a diagnostic tool it puts in place a platform to work towards business goals and objectives, while still balancing the demands of present business.

How does implementing an innovation process fit within this framework?

Innovation can be about making leaps due to breakthrough technologies. This is often how people think of innovation.

However in addition, being innovative can be about incrementally adapting products or services to better suit client needs. Incorporating an innovation process specifically designed to meet the objectives of an organisation can be a vital strategy in all three stages of The Three Horizons Framework.

A well designed innovation process helps determine improvements and adaptions of current products and services to extend or defend current core activities. Also, it helps to develop and refine new or emerging products and services. With a focus on client engagement, it can be essential for strategising marketing and development efforts. And finally, it leads the way when looking towards the long-term future.

For more information on other benefits of an innovation process, see https://www.viewconsulting.co.nz/questions.

As a lawyer failure is not usually desirable. Some suggest that combining the prevailing personality types of lawyers with the nature of the business of legal services exacerbates a success ethos, where failure is considered very negatively. In contrast, doing things differently and seeking innovation, by its very nature, involves exploration of risk and possible failure.

This Innovation Insight discusses disruption in innovation and why some people advocate the importance of setting out to disrupt your own business in order to succeed.

Disruption in innovation

Innovation can be viewed as incrementally adapting products and services, based on the unmet needs of clients, as well as implementing new initiatives that radically change the landscape of legal services. Either way, innovation results in change. And, change can be disruptive.

Lawyers and people within law firms can be resistant to change for many reasons. One reason can be the fear of failure and the perception of consequences.

But, what happens when the resistance to change conflicts with the fear of losing instructions and a plateau or decline in revenue? What if the scales start to tip in favour of doing things differently?

Strategy of innovation

Management consultant powerhouse McKinsey & Company advocates use of the Three Horizons Framework in strategic planning. This framework provides a basis for planning and investing in future growth, while balancing the competing demands of the present (see more in our upcoming Innovation Insight: Innovation – A Key Strategy for Growth).

As part of this framework a business considers changes necessary to extend and defend its core business from competitors, in addition to looking for alternative business opportunities. This framework includes, therefore, actions which comprise our definition of innovation.

Strategically then, a firm may develop a new product, or method of doing something, on the basis that there is the potential for a competitor to do something in the same space which may cause disruption to the firm’s core business (‘Risk of Disruption’).

But what of failure?

Non-success because of inadequate planning or resources, or failure to follow best practices is not strategic.

However failure, for the right reasons, is acceptable.

The rationale is, that if initiatives developed to counter the Risk of Disruption fail, the potential disruption is probably not as much of a threat as initially thought. Therefore, such failure is not negative.

If the business succeeds, disruption occurs but, hopefully, so does a growth in revenue.

Conclusion

The fear of failure, either personally or as embedded into firm culture, likely hinders innovation efforts. And, innovation is essential when planning for future growth.

For firms seeking strategic change through innovation, identifying whether or not the ‘fear of failure’ or a ‘success ethos’ exists, and to what degree, is necessary. This factor directly affects the success or non-success of an initiative. Once identified, firms can take steps to mitigate its potential effects on innovation initiatives (i.e. changes to products and services).

For more information on some inherent barriers to innovation that can exist within law firms, see our article available for download at www.viewconsulting.co.nz/knowledgecentre.

Sound familiar? In some cases, the rational and logical case for implementing a change to how a law firm practices may be clear cut. Despite this however, implementing change successfully may be very difficult.

This Innovation Insight describes some of the more common reasons why people resist change, and outlines why a good innovation system should include an assessment of a firm’s resistance factors early.

Resistance to change.

People resist change; it’s what they do.

Knowing that people resist change is hugely powerful. Resistance can be overt or, in some cases, covert.

Four common reasons for resisting change include[1]:

Parochial self-interest: a person focussing on their own self-interest, as opposed to that of the firm, because that person fears they will lose something of value;Misunderstanding and lack of trust: a person does not understand the implications of the change and believes that it might cost them more than they will gain;Different assessment of costs and benefits; andLow tolerance for change: a person may resist change because of the need for new and different behaviour, relationships, or because of the loss of current accepted relationships or methods.

To overcome resistance, people seeking change need to utilise various strategies. This is due to the differing nature of the reasons for resistance (‘Resistance Factors’).

Strategies to overcome Resistance Factors

There are various strategies that can be implemented to minimise or overcome resistance to change.

These strategies may include[2]:

Education and communication;Participation;Support: for example, providing training;Negotiation;Co-optation; including an individual merely for his or her endorsement; andCoercion.

A danger is that in dealing with resistance (or in an attempt to prevent it), the person seeking change utilises only one strategy to deal with every different Resistance Factor.

This danger is exacerbated when the strategy is chosen because it plays to the strength of the person seeking change rather than being due to the nature of the Resistance Factor.

In many cases, unless there has been some formal assessment undertaken, strategy may be subconsciously chosen due to the identity of the person seeking change.

To increase the likelihood of success therefore, it is important to identify and diagnose the Resistance Factors so that appropriate strategies can be considered and implemented.

Resistance Factors and innovation systems

Innovation, by its very nature, involves change. Change can be difficult.

To successfully innovate, law firms will be required to overcome reluctance to change. And, dealing with such reluctance in the same way as other business is dealt with, may not achieve the desired outcome.

At View Consulting we believe this type of analysis is vital and that is why we include it as a tool in our Blueprint Program. To see more visit www.viewconsulting.co.nz/ourprograms). If you want to discuss this article or innovation in legal services in general, email us at innovate@viewconsulting.co.nz.

[1] Kotter J P and Schlesinger L A, Choosing Strategies for Change (Harvard Business Review, 2008).

[2] Ibid.

Legal firms prosper by being efficient. Partners and practice managers are experts in the management of investments and expenses. In doing so, often the Return on Investment (ROI) financial measure is used as the definitive decision-making tool.

This Innovation Insight sets out the inherent difficulty in making innovation decisions using ROI methodology, and describes two alternative approaches.

Return on investment

ROI measures the amount of return on an investment relative to that investment’s cost.

As a formula, ROI can be expressed as follows:

ROI = (Gain from Investment – Cost of Investment)/ Cost of Investment.

As a tool for making decisions about allocation of investment funds, or comparing alternative investment proposals, ROI is a simple, quick and versatile measure. However, it is not without its drawbacks.

The main drawback when using ROI to assess new business ideas arising from innovation, is that a person is required to accurately forecast overall returns[i]. This is problematic.

The inherent difficulty for new business initiatives is that it is nearly impossible to accurately forecast revenues for products and services that don’t yet exist.

For law firms, two negative consequences of requiring innovation decisions to fit within the ROI model are that:

law firms may fall into the trap of not innovating at all. Requiring the measurement of the unmeasurable becomes an insurmountable barrier in getting initiatives off the ground; orinaccurate figures are used in the ROI calculations to fulfil the decision makers’ requirements. This then leads to incorrect forecasts, misleading ROIs, negative experiences, and resistance to invest in future ideas.

Decision makers in law firms looking to advance innovation may find it beneficial to consider two alternative approaches. These are:

considering innovation expenditure as a cost of doing business; or

valuing innovation as an option, similarly to corporate finance.

Innovation as a cost of doing business

This approach starts from the premise that the cost of the learning involved in being innovative is a new cost of doing business in a market facing increasing competitive pressures.

Innovative businesses are mitigating future uncertainty by developing medium to long term initiatives.

Advocates of this approach argue that innovation is, therefore, a type of profit insurance. And, no-one asks for ROI on insurance.

Innovation as an Option

In the world of corporate finance an option represents a contract, where the buyer has the right (but not the obligation) to buy or sell something at an agreed price during a certain time frame, or on a certain date.

To a financier, an option is a tool to deal with uncertainty – to hedge risk.

Proponents suggest that this approach can be used as a decision-making tool to value innovation efforts. The benefit of using this methodology is that it does not trap innovators into specific revenue projections (which are unknown) in order to justify investment at the outset.

The Option method requires the investment budget, the best-case scenario and the option time frame to be known.

From the initial information, decision makers are provided with a tool that provides a valuation at each decision-making point based on one of three situations being present: going well; staying the same; or, going badly.

Conclusion

In a marketplace that is under increasing competitive pressure from other legal firms, clients themselves and non-legal providers, law firms who want to grow and remain viable should consider how their current organisational strategies may hinder their progress.

Using the same decision-making tools may result in the loss of opportunities and overall innovation fatigue (due to failure because of people being forced to make initiatives fit within limited decision-making models).

For more information on innovation as a cost of doing business, look out for our future Innovation Insight on Strategy: It is better to disrupt yourself than to be disrupted. Sign up to our newsletter to receive our Innovation Insights direct to your Inbox.

Contact us at innovate@viewconsulting.co.nz or on 021 973 963 to discuss how we can help your firm implement an innovation strategy.

[i] Another drawback is that ROI is misleading when product lifecycles may include staggered returns over longer time periods.

What does it mean to be innovative? For lawyers and law firms exploring ‘innovation’, the theory of innovation may seem like a topic best left for philosophical debate. This Innovation Insight explains why, for those seriously interested, an understanding of the different concepts behind innovation is vital.

‘Innovation’, in itself, is a nebulous concept. We understand.

We know that those individuals who are tasked with, or interested in, ‘innovation’ within their practices, are likely time poor. They do not have the time to undertake a learning exercise to unpick the different threads that make up the concepts of innovation. It likely all seems too theoretical. Understandably then, it seems easier and more efficient to wait, watch and follow.

What the research shows

But, decades of research and practical application in other industries (where innovation processes and programs have been at the forefront of revenue generation and competitive advantage), have shown that seeking understanding about types of innovation is an essential first step to being innovative.[1]

Why? Because:

an appropriately chosen innovation approach based on one or other innovation concept will depend on the firm’s strategic objectives;

different innovation approaches require different resources, capabilities, people and structures; and

seeking a definition and scope around which innovation concept is most relevant to an individual firm will enable clarity of communication to all involved.

Alignment with strategic objectives

Initially, it is important to understand whether a lawyer's (or a law firm's) strategic objective is to:

improve or adapt products or services incrementally to remain competitive (‘Incremental Innovation); or

create new business or new sources of growth for the core business of tomorrow (‘Blue Sky Innovation’).

These two different approaches require very different strategies and processes, resources and capabilities.

In practice

The practical lesson is that once a lawyer or law firm understands the different innovation concepts, it is possible to align one with their strategic objectives. Only then can steps be taken to plan and implement an appropriate process to nurture ideas into initiatives that meet those objectives.

For more information on understanding innovation theory in practise and how to get started, please contact innovate@viewconsulting.co.nz or see more about our Blueprint Program at www.viewconsulting.co.nz/ourprograms.

[1] In particular the work of David Duncan et al. of Innosight Limited and regular contributor to Harvard Business Review.

For all but a few brave firms and individuals, when it comes to challenging the ‘status quo’ in legal services, it is tempting to be a follower. It seems easier and more attractive to sit back, wait and watch for either success or failure. This Innovation Insight describes some of the reasons behind why individuals or firms may favour being a follower; as opposed to a first mover. Also, it discusses two consequences of being a follower that should prompt lawyers to challenge their approach in pursuit of growth and success.

A follower is an individual or organisation that imitates the innovations of its competitors. Alternatively, a first mover is one that gains competitive advantage by being the first to market.[i]

Some (understandable) reasons why lawyers tend to favour being a follower include:

Risk aversion: lawyers are experts at identifying risk. However, little may be understood or known about an individual’s, or firm’s, view of acceptable risk in order to gain opportunities or profit.Focus on failure as a result: lawyers (in general) dislike getting things wrong and see failure as a negative outcome. Alternatively, many business people do not view all failure as the result, but understand that failure within boundaries is part of a learning process. Lawyers may want something to be 100% perfect before progressing. This may not be possible when an individual or organisation is a first mover.Inertia caused by lack of knowledge: lawyers are lawyers and may not have the knowledge of the required strategies or processes involved.Reduced costs: typically being a follower involves less cost.Emotion and culture: lawyers or law firms may not be willing to show their approach to others within their industry, or to clients, in fear of criticism or perceived failure.

However, lawyers or firms whose strategy is to follow (either deliberately, or merely as a reaction to market demand) may want to consider two important consequences: one for the individual lawyer or firm; and, the other for the future direction of the profession in general.

One consequence for individual lawyers and law firms

Lawyers or law firms that follow others may lose the ability to control or influence clients’ purchasing decisions in ways that benefit that lawyer’s or law firm’s specific value chain.

Each lawyer or law firm has an individual value chain, being the method by which that lawyer or law firm adds value to its products or services. (It is a mistake to think that all lawyers’ value chains are the same. Doing so ignores the idiosyncrasies of specific industries, clients and lawyers and the effects those idiosyncrasies have on individual value chains).

A competing legal firm or lawyer that is a first mover may have the ability to offer their services or products to clients in a way that maximises their specific value chain. If this becomes the dominant demand from clients, followers whose value chains do not match may find themselves at odds with the market.

One example of this may be the use of free online templates and precedents. A first moving law firm who does this may have a value chain prioritised on the giving of advice and representation, and client relationship management (as opposed to the generation of documentation). If those free online precedents become the new normal for clients overall, or in specific industries or stages, those clients will be less likely to pay for the same from other lawyers or firms. And, as a result lawyers or law firms who are followers but whose value chains are not prioritised in the same way will suffer.

One consequence for the profession

Being a profession comprised mainly of followers is also a risk to the profession in general. The removal of the barriers to competition in many ‘traditional’ areas of legal practice and the increasing demand from clients for multi-disciplinary (industry, commercial and non-legal) expertise[i], mean there exists opportunities for non-traditional legal service providers to enter the market and influence what clients think they want and need to suit the incomer’s own products or services.

A potential example of this could be the likes of ContractPod and the development of artificial intelligent contract analysis.[ii] Clients who have in-house teams for contract analysis or brief out their contract analysis may find that AI products (developed and sold by non-legal providers) fulfill their needs more cheaply and efficiently.

With an increased demand and desire from those within the profession to address the current challenges in the legal services market, more firms should start exploring their strategies for product and service development and the rationale behind them. To bring about change, lawyers and firms may need to challenge their approaches and mitigate their individual constraints which act as barriers to change.

To discuss the information in this article or how View Consulting may help your law firm understand innovation within legal services, contact us at innovate@viewconsulting.co.nz or on 021 973 963.

[i] There are advantages and disadvantages with each approach which are not the subject of this Innovation Insight.

[ii] Deloitte, Future Trends for Legal Services, Global Research Study, June 2016.

[iii] The Global Legal Post, ContractPod creates world first AI contract analyst, 19 October 2017.

Is innovation the result of a random creative spark or can an organisation strategise to foster innovation? This Innovation Insight explains how innovation processes are central to developing radical change.

The question is who drives radical innovation?

“[I]nnovations are not simply flukes nor the results of a sudden spark of creativity. They [global leaders in innovation] have a process and capabilities, built by entrepreneurs and managers”[i]

A process for radical blue-sky thinking

Professor Verganti is discussing the process he labels ‘design-driven innovation’.[ii] His concept comprises radically changing the meaning of products or services, thereby creating a whole new market. Once developed, consumers cannot live without it.

His view results from 10 years of research into global leading companies in innovation. These companies manage the innovation process, radically change the dominant meanings in their industries before their competitors and, as a result, rule the competition.

Within the market for legal services, View Consulting considers this approach as ‘blue-sky innovation’. What meaning do clients of a law firm give to the provision of legal services? And further, how could that meaning change radically for the better in the future?

Design-driven, or radical, innovation results from a detailed research process. It revolves around in-depth interaction with others (from a wide range of industries and backgrounds) who are engaged also in looking for answers to the same or similar questions of the same or similar clients.

Understanding how to collect and interpret this broad ranging information, to translate it into an achievable vision for how legal services may be provided in the future, is central for firms interested in challenging the status quo and making radical change.

Obviously, repeated investment in detailed design-driven innovation does not occur with the frequency of other changes to products and services (which we label ‘Incremental Innovation’).

However, applying Professor Verganti’s thinking, law firms that undertake a design-driven innovation process, and are successful in radically changing the meaning of legal services, will reap the benefits of creating products or services that stand apart from all others and that generate significant profits over their longer life cycle.

For more information on Radical Innovation or Incremental Innovation within Law Firms and how View Consulting can assist your firm, please see www.viewconsulting.co.nz/services or contact us at innovate@viewconsulting.co.nz or on 021 973963.

[i] Professor Roberto Verganti, Management of Innovation at Politecnico de Milano.

[ii] R Verganti, Harvard Business Press, 2009.

For a potential new client, it is likely that your legal knowledge and expertise do not differentiate your services from that of your competitors. This Innovation Insight discusses how implementing an Incremental Innovation process can result in differentiation, competitive advantage, increased brand growth and increased revenue.

A quick browse of the websites of a sample of NZ mid-sized law firms shows that most communicate the same idea; they deliver client service based on their legal knowledge and expertise, and this differentiates them from their competitors.

From the law firm’s perspective, this may be true. Its expert lawyers may mark the difference between the firm and its competition. Indeed, the firm’s expertise may be validated by others in the profession, who recognise and acknowledge it. But, does it matter for potential clients who are trying to distinguish one firm from another?

From the client’s perspective, if the group of law firms under consideration all say they have expertise, the decision to purchase will likely be based on some other factor. To the client, expertise is intangible and hypothetical at the beginning of the relationship. In this situation where all law firms highlight their knowledge and expertise, the value of it as the deciding client attraction factor becomes diminished.

‘It is currently very difficult, even for knowledgeable consumers, to work out which provider is the most appropriate for their particular issue; and on the Internet, most firms look the same.’[i]

So how does a law firm differentiate itself from its competitors?

One possible solution – engaging in Incremental Innovation processes.

What happens if legal business owners change their approach? Rather than focusing on areas of expertise, and then looking for ways to sell that expertise, there is opportunity for lawyers and law firms to develop products and services based on client-orientated strategies. These strategies start from what clients and potential clients say they need.[ii]

Law firms can start by considering innovation in legal services as a three-pronged strategy, including:

adapting features or form of what lawyers do based on client engagement (View Consulting defines this as ‘Incremental Innovation Strategy’); andseeking breakthrough technologies to provide leaps in efficiency and service provision; andchallenging what it will mean for clients to receive legal services in the future to create a whole new market for legal services (see View Consulting’s Blue Sky Program for more information).

Using the Incremental Innovation Strategy above (which may or may not involve the development of technology), law firms can differentiate themselves from their competitors because:

individual law firms may have a slightly different mix of target clients from differing industries (based on that law firm’s strategic objectives); andengaging with that mix of clients and potential clients to explore their current and future needs, will allow law firms to combine that information with their expertise and knowledge to identify opportunities for developing products and services that answer those needs and demonstrate value to clients in ways different from the competition.

There are additional benefits for lawyers and law firms that actively engage with clients and potential clients about their needs and wants. These benefits include, for example; better client relationships in general, an increase in industry knowledge, likely generation of immediate fees (due to the ability to help clients with immediate concerns at the client’s request), brand development and positive employee engagement.

From our discussions with purchasers of legal services, many acknowledge that their legal providers say they engage with their clients to understand them better, but such engagement is limited. (We understand that this can be due to a variety of perfectly valid reasons).

However, law firms that understand that client engagement for the specific purpose of generating innovation is more than simply a marketing or branding tool, will benefit.

Of course, Incremental Innovation is not the panacea for solving all challenges faced in the current legal marketplace. But, it is a key business strategy for moving forward.

For more information on View Consulting’s opinions on the benefits of an Incremental Innovation Strategy for legal firms or to discuss how we can help your firm understand and implement a tailored innovation strategy, contact us at innovate@viewconsulting.co.nz or on 021 973963.

[i] The Future of Legal Services Research Report, The Law Society of England and Wales (2017).

[ii] Hedley (2011).

The word ‘innovation’ has fast become part of modern business vernacular. But, within the law profession, little is known about what defines innovation in legal services. This Innovation Insight discusses what defines innovation and outlines the typical approach to innovation taken by NZ law firms.

Currently, the word ‘innovation’ is popular. It appears regularly in media, and is often cited by legal and business commentators. Business owners and companies in all industries are quoted as aspiring to be ‘innovative’; viewed, perhaps somewhat cynically, as a modern-day badge of success. However, beyond the glamour of the word lies concepts with significant importance for lawyers and law firms serious about addressing the challenges facing the future of their industry.

Technological and process innovation is considered by The Law Society of England and Wales (‘LSEW’) as one of five key drivers of change in the legal services market heading towards 2020.[i] LSEW cites that three quarters of respondents in one study ‘strongly agreed’ or ‘agreed’ that ‘innovation is critical to exploit opportunities and differentiate my firm’.[ii]

Over half of the respondents in Deloitte’s Global Research Study, Future Trends for Legal Services, foresaw that technology will replace the tasks of in-house lawyers by 2021. Further, a third of legal service purchasers surveyed stated that there was a need for a new type of legal service provider.[iii]

Despite ‘innovation’ being in common parlance when discussing the future of legal services; what comprises innovation and how organisations can foster innovative ideas has remained, typically, the domain of academics and entrepreneurial start-up business groups and advisors. Alternatively, it is thought of as a concept solely related to advancements in technology. In-depth understanding of innovation remains for many at the coal face an enigma.

Definition of innovation

The Oxford dictionary states that ‘innovation’ is the ‘action or process of innovating’. The verb ‘to innovate’ is defined as making ‘changes in something established, especially by introducing new methods, ideas, or products’.[iv] The word originates from the Latin verb innovare (‘in’ – ‘into’ + ‘novare’ –‘make new’).

Additionally, economists include a requirement that for innovation to be meaningful it must be adopted. Innovation requires the market to see the utility and value of an idea sufficient to adopt it[v].

Traditional management theory about innovation is based around two central concepts. Innovation through:

quantum leaps in breakthrough technologies; andbetter analysis of users’ needs.[vi]

These concepts accord with the above Oxford definition and, most likely, align with what most lawyers understand of innovation within their field.

However, what of ‘disruptive innovation’? The ‘process by which a product or service takes root initially in simple applications at the bottom of a market and then relentlessly moves up market, eventually displacing established competitors’.[vii]

Consider further ‘design-driven innovation’ (perhaps described as radical innovation), which focusses on creating a whole new market by radically changing the meaning people attribute to products and services. This innovation creates a market that previously never existed but, in turn, one that people cannot live without.[viii]

Innovation within New Zealand law firms

Anecdotally, innovation within New Zealand law firms mainly consists of:

using technology to change (and make more efficient) the methods by which lawyers advise clients; andmaking incremental changes to the features or form of offered legal services based on perception or analysis of client needs.

The growing trend of specialisation by law firms allows firms to charge higher fees to more sophisticated clients to grow profitability. But, in specialising do firms risk other firms (or outsiders) innovating at the bottom end of the market with a longer term and greater risk that such innovation spirals upwards, eventually disrupting those firms that have chosen to specialise at the top end of the market?

With clients looking for new types of legal providers with a greater breadth of industry knowledge, flexibility and fresh approaches, is the legal industry in New Zealand ripe for radical innovation that changes what it means to seek legal services?

No matter how abstract the above questions seem, overseas experiences show that firms are looking to future proof their businesses by investing in innovation.[ix]

With New Zealand, often the testing ground for innovative businesses and practises, it may only be a matter of time before the le

gal paradigm shifts markedly. And, those New Zealand firms which are innovative will be in the best position to thrive.

To discuss the information in this article or how View Consulting may help your law firm understand innovation within legal services better contact us at innovate@viewconsulting.co.nz or on 021 973 963.

[i] The Future of Legal Services Research Report (The Law Society of England and Wales, January 2016, page 30).

[ii] Capturing Technological Innovation in Legal Services Research Report (The Law Society of England and Wales, January 2017, page 6).

[iii] Future Trends for Legal Services, Global Research Study (Deloitte, June 2016, pages 6-7).

[iv] Oxford English Dictionary, [ Edition], page .

[v] Strategic Innovation Toolkit for Managers (D A Owens, Professor Management & innovation, Vanderbilt University).

[vi] Design-Driven Innovation (Verganti R, Harvard Business Review Press 2009, pages 3-4).

[vii] ‘Disruptive Innovation’ is a concept coined by Clayton Christensen, Professor of Business Administration, Harvard Business School (www.claytonchristensen.com/keyconcepts).

[viii] Well known examples of radical innovation in other industries, include Apple’s iPod and iTunes, which completely changed what it meant to listen to and buy music; Nintendo Wii, which radically changed the world of online gaming; Endmol Broadcasting, which introduced reality television; and Xero with its radical change to how people account and financially track their businesses.

[ix] UK and US Legal Research Experts, Acritas, states that 43% of legal departments have implemented new and innovative approaches to practise. See www.globallegalpost.com ‘Legal departments prioritise innovation’, 25 September 2017.