A glimpse of the professional service firm of the future

Blog
01.08.19

Innovation is a fashionable word in professional services at the moment, with change coming, albeit relatively slowly, to some of our most traditional firms such as law firms, property firms, accountants and architects. It took a forward-thinking conference that brought together these professional service firms at the Tech and Innovation Leaders Summit, held over 2 days in June 2019, for me to gain some fresh perspectives and insights that emerged out of the discussion and contributions from across the professions. I am most familiar with law firms, having held down roles in transformation and innovation in a couple of large multinational firms recently. So, I write this article in terms of law firms, with the belief that very similar challenges and solutions will apply across professional services.

The legal industry is changing, with clients becoming more sophisticated in meeting the challenge of becoming a trusted partner to the business, whilst delivering more and more, for less. Law firms are investing in innovation and change, although at the current time the pressure for significant change in most areas of the commercial market is not sufficient to drive wholesale change in the way legal work is delivered. However, law firms beware, because the disruptive players in the market are, and will increasingly, pull work away from the law firms. Why? Because the law firms are absolutely excellent at the higher value, complex advice, where experience and depth are essential, but they will struggle to compete with the Big 4, the Law Companies and other managed service providers, where these firms can work with clients to solve the wider legal business problems that require technology, automation, standardisation and process-thinking to eliminate, simplify and self serve huge amounts of legal work that will no longer go anywhere near the law firms.

All is not lost for the law firms, far from it. Their power lies in the depth of expertise, and geographic coverage. I believe that over time, as disruption changes the shape of the industry, the law firms will have to fight for the best talent, both lawyers and non-lawyers, who can work together to provide complex, tailored business solutions which are far more client-centric and business-focused than is currently the case. Volume work attached to these transactions or disputes will either have to be outsourced, or the law firms will have adapted, identifying the key technologies, processes and expertise required to retain certain volume work as part of the service.

No one is yet suggesting that this level of change will happen overnight, but the world of legal will continue to change with ever-increasing speed. So, how did a conference bringing together a variety of professional service firms prompt ‘a brief glimpse of the legal firm of the future’?

On Innovation

If innovation is all about the fundamental change themes across the industry, then there are some key areas of innovation that are building momentum:

Product and Service Innovation – There is a move towards productisation within the legal industry.  Legal has not been very client-centric, with firms selling legal expertise through individual relationships with clients, rather than the firm really standing in the client’s shoes and designing and packaging their offerings as solutions that clients need.  The increasing availability of technology, new skills and new ways of working, coupled with the need to differentiate and create value, is encouraging firms to become more client-centric, and more targeted with innovation initiatives, focusing on solving specific client challenges.

Delivery Innovation – The work itself is changing. Regulatory environments create ever greater workloads, whilst technology is rapidly providing ways to process much more work than was previously possible. Add to that clients wanting more for less, and no longer willing or able to pay expensive lawyers to undertake work that is repeatable and less complex, as well as the opening up of the legal market to non-legal firms who bring competitive pressure and non-legal expertise to bare. Whilst delivery innovation may not be the most exciting for lawyers, there is no doubt that over time the work of a lawyer and how they execute that work will change drastically.

Talent/People Innovation – Currently seen as a ’nice to have’, this area of innovation will increasingly become central to the sustainability of the industry, and a key differentiator for law firms. To be at the forefront of the changes coming, firms will have to fully embrace all aspects of the way the firm operates. The essential purpose of a law firm will change from legal advice to legal services and business solutions, bringing with it a drastic change in the legal work itself, as technology and automation free people up from the need to go to an office to work, rather to go to an office to collaborate in integrated teams bringing together legal, technical, data, process, consulting, and specialist industry knowledge, working collaboratively to solve client issues. The importance of in-work education will increase as jobs morph and change so quickly that it is better to nurture the talent within rather than continually chase the latest skill shortages.  All of this will undoubtedly change our current concepts of partnership, billable hours, performance, working hours, working location, job roles and titles, support functions versus lawyers.

Technology Innovation – Mention innovation today and the immediate thought is about technology.  It is fashionable, exciting, and inspiring, yet the relative lack of progress to date highlights the issue. Technology must solve the problems we want to solve. Being clever and complex is not sufficient to drive meaningful take-up and adoption. So technology innovation is the enabler. It highlights possibilities and opportunities, but its true value is when it serves as a component part of a business solution. As we focus more on the innovation challenges above, technology will provide the backbone of many of the changes.

The Challenges

Much has been written about the challenges of innovation and change, although a few insights stood out:

  • The key outcome of all of the innovation effort really comes down to three critical elements – client value, talent engagement, and building collaboration and flexibility
  • Law firms are not going to disrupt themselves – the pressure needs to come from clients becoming more mature and capable of driving change, supported by disruptive technologies and new entrants that do not compete directly with the law firms, rather solve client legal issues in a way that eats away a fair chunk of the work of a traditional law firm
  • Innovation requires a tolerance of failure – yet in reality, lawyers are experts in risk management and intellectual rigour. Making it safe to experiment and fail is easier said than done, and requires visible leadership from the top, backed up by what really happens when failure occurs
  • The ‘muddled middle’ need to be addressed – our leaders may be enthusiastic about innovation and change, having seen the direction of travel that they must embrace. The younger generation as digital natives expects their workplaces to have the latest technologies and to understand what is important to them. It is the muddled middle who may well struggle with the need and the pace of change, and as these people often run the teams and lead the work, firms will fall behind unless real attention is paid to engaging this group at every stage
  • A firm can be both the disruptor in certain markets and specialities, as well as the disrupted in other areas of the business. Recognising the strategic position of the firm will be essential to plan and prioritise initiatives

A Glimpse of the Future Law Firm

So if we come back to the idea that over time a law firm will shift from lawyers doing lots of processing and thinking work, in order to provide legal advice, to a law firm bringing together expertise to provide solutions to business issues, whilst technology and new ways of working will minimise the legal workload, along with the talent/people innovation that will be required, we could start to speculate on what it may be like visiting the office of a law firm in the future.

  • The office is no longer a place to sit with your specialist team, processing emails and documents – all work is online and mobile-enabled, with drastically less administration and volume-tasks. Communication is via mobile apps and social media type communications not dissimilar to how we communicate in our personal lives
  • You come to the office to collaborate with multi-disciplinary teams around client assignments, or to engage in learning and education, or innovation and creativity initiatives. To accommodate these activities our offices will be transformed into education, collaboration and social hubs rather than places to carry out tasks
  • Performance is based on outcomes and contribution, not simply on billable hours, encouraging you to eliminate work, focus on value, and be recognised across a broader contribution
  • Administrative work could be done at home, on the train, or in communal areas in the office – you no longer need an individual office or fixed desk, as it just does not support your work patterns
  • Lifelong learning is at the heart of your role, as the firm proactively encourages you to build the skills required to stay abreast of the changing workload
  • The distinction between lawyers and non-lawyers is totally blurred as the client work cannot be done without the breadth of expertise. This will change the nature of the partnership model, and the social structure of the current law firm

Summary

All of this from turning up at a conference on Tech and Innovation across professional services. No one is pretending that change will happen overnight, as we know the current struggles to adopt new ways of working. However, we need to stand back and have some perspectives on the direction of travel, and how we might differentiate ourselves from competitors, through leading the change rather than following. The conference did what it was meant to do, stimulate ideas and help shape the current and pipeline initiatives.

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Written by By Adam Hembury – formerly Director of Innovation at DLA Piper