Two Paths to Legal Innovation that Change How Lawyers Work

My big theme for 2018 - and perhaps beyond - is that unless innovation changes how lawyers work, it likely delivers little benefit to firms or clients. Three recent items suggest two ways to get lawyers to change how they work.

Law Department – Law Firm Collaboration

Toby Brown‘s piece, The Future of Change is Client/LawFirm Collaboration (Thomson Reuters Practice Innovations, March 2018), lays out one path to innovation with good likelihood of changing how lawerys work. I summarize it here:

• Most client requests for innovation are vague and when firms propose changes, clients often demur.
• “The elephant in the room, in my humble opinion, is driving change in the way lawyers work. We need to develop methods that require fewer and cheaper hours, but that provide the same or better outcomes.”
• General discussions of change don’t work. Toby’s example is document automation, where discussions often go in circles and end up with no action. Lawyers on both sides are too busy to focus on it and can’t agree on language to use.
• Driving changing requires clients and firms to work together closely, on a specific set of matters.
• For those matter, agree on specific cost-saving changes. Measure those changes. And adjust fee arrangements to motivate both sides to accept them.
• For example, to achieve a 10% savings on acquisitions, Toby suggests identifying an element of work that repeats and can be automated: due diligence review. Both sides agree to use technology to accelerate the review and lower cost, non-partner track lawyers, all under a legal project management umbrella. The client has to sign-off on each and the firm has to invest in each.

For a great example of this, read The Law Firm Disrupted: Walmart Won’t Pay You to Cut and Paste (Roy Strom, Law.com, 5 April 2018). It explains how a Walmart law firm proposed using a tool it built, LegalMation. That software reduces by up to 80% the time and cost to respond to complaints by automatically generating first drafts of several required documents. That surely changes how lawyers work. [Side note: LegalMation is built on IBM Watson.]

LegalMation is talking to some Am Law 100 firms but the founder says “partners at law firms almost always worry about the loss of associate hours that corresponds with licensing a tool like LegalMation.” This illustrates Toby’s point about collaboration. Someone must propose a change for a set of matters. Both sides must agree to a set of steps to make it happen. And fees have to be worked out that motivate both sides.

Unilateral Client Action that Creates a Motivating Framework.

Another path to change how lawyers work comes from Jeff Carr, GC of Univar. He recently sent his outside counsel an email saying

We believe that the relationship between Univar and its outside counsel should reflect core principles of delivering value with integrity. We define “delivered value” as (1) effectiveness, (2) efficiency, and (3) experience (of the customer). We call this “E3.” We wish to meaningfully reward firms for exceeding our expectations in these areas. By the same token, the compensation paid for performance that does not meet our expectations should be and will be reduced. To accomplish this, we must clearly communicate our expectations on service, performance, and outcomes, and provide you meaningful feedback.

You can read the entire letter at the Remaking Law Firms blog, publish by George Beaton. This sets the stage for law firms to collaborate – if they so choose – and to win a spot on a panel that will include fewer firms. Jeff outlines some of the changes he expects in two law firm guidance documents, which include:

• Setting, agreeing on, and recording a scope and budget for all projects.
• Defining RACI protocol per matter. (Responsible, Accountable, Consulted, Informed.)
• A portion of the budget at risk, subject to client evaluation of E3.
• After action reviews by Univar that lead to process improvements.
• Re-use work product wherever possible, use technology where possible, and improve processes continually, and do not go for perfection unless agreed upon in advance.

This approach sounds more top down than collaborative but the letter also states “We hope that you will want to join us as we innovate and create new, mutually-beneficial ways of working together.” Carr has a long history of motivating and supporting innovative law firm approaches. His innovative ways of working with law firms as GC at FMC was widely publicized for many years. I believe his approach creates strong incentives for changes in how lawyer work that that reduce costs and provide Univar with greater value.

I would love to hear from readers if they see other paths to innovation that changes how lawyers work to create more value for clients while protecting or increasing firm profits.