21st-century legal innovation

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This article was first posted at Slaw on September 25, 2006.

I had the great fortune to attend the annual meeting of the College of Law Practice Management in San Francisco earlier this month. The topic of the day was at the heart of 21st-century lawyering: innovation. Specifically, why lawyers aren’t very good at it.

One of the delegates made an important distinction at the start. When it comes to actual legal work, lawyers can innovate like crazy. Corporate lawyers have designed some of the most innovative (and profitable) financial instruments around; litigators are always finding new angles from which to argue cases, and so on. Where we have trouble innovating is in our two main professional mechanisms: practice management and client relations.

I’ll leave the first one alone — that’s a whole other steamship of fish — and go after the second: how lawyers relate to their clients and deliver services to them. It’s pretty apparent that lawyers’ relationships with clients could use, shall we say, a little sprucing up.

It seems to me that legal service delivery, and client relationships generally, are pretty much the same today as they were 25 years ago. What have lawyers been doing differently in their client relations since 1981? Industry-wide, there’s client newsletters. Individually, some lawyers have successfully unbundled their legal services. A few high-tech lawyers with start-up clients take shares in the company in lieu of fees, where permitted. Some firms have made real commitments to flat-fee and alternative billing systems. Have I missed others?

By and large, though, these are the exceptions. The rule for most lawyer-client relationships continues to be standard hourly billing, infrequent communication, spotty follow-up after the file closes, and a preference for solving problems rather than preventing them beforehand. And the clients don’t love it. Invariably, their chief complaints about lawyers are “failing to respond to inquiries” and “failing to follow instructions.” These don’t have anything to do with the quality of the lawyer’s work, but with how lawyers interact with clients.

Why do lawyers struggle to innovate in client service and relations? Here are three possibilities:

1. Innovation requires a high failure rate. You know Edison’s famous line about the value he found in thousands of failed attempts to invent something: they’d taught him thousands of ways not to invent it? Lawyers are 180 degrees from there. We hate failure, and we’re economically and culturally programmed to avoid it wherever possible. I think the risk of upsetting the applecart by trying something different is too much for most of us.

2. Innovation also requires a competitive marketplace. David Maister noted (correctly) that lawyers only compete with other lawyers, and few lawyers are in a rush to reform their client relations. If a major law firm (a) revamped its entire approach to client relations and (b) showed a substantial profit from doing so, that might get some people’s attention. But lawyers are late adopters of new methods at the best of times, and the watershed point on this sort of innovation would take awhile to reach.

3. Many lawyers just don’t see the need, maybe because we often don’t really get clients. We think clients want expertise and perfect accuracy. Clients expect that, sure — but they really want to know what’s going on with their file and to get their calls returned quickly. A lot of us don’t understand this, and so we de-emphasize the human side of the relationship. Too often, we see clients as problem carriers first, people second — and it’s the problems that really interest us.

So if lawyers are disinclined to innovate in client relationships, is there any reason to believe change will happen? Will the 21st-century lawyer be motivated (or forced) to innovate? I think that’ll be up to the clients. For those of us with a strong interest in lawyer-client relationships, clients have been our Godot: we keep waiting for them to show up and get things rolling. By and large, we’re still waiting.

Most clients — one-time or first-time customers, often in the dark about (and a little intimidated by) dealing with a lawyer — have little knowledge and even less leverage with which to establish a better relationship with their lawyers. It’s been the more sophisticated clients — usually institutional, experienced in buying legal services, and with a lot of purchasing power — that we thought would lead the change. But while corporate clients often complain about their outside law firms, few outside of Dupont headquarters have turned that into meaningful action.

One managing partner at the COLPM conference told this story: his firm offered a major corporate client a range of billing alternatives, including a reduced rate and performance-triggered bonuses that would align the law firm’s risks and rewards with the client’s. No thanks, came the reply. We’ll take the safe, predictable, billable hours route. I don’t think this is a rare occurrence: when firms do try to be innovative, they’ve often found clients reluctant to go along. Can readers provide any similar (or opposite) experiences?

I’d love to see lawyers reform the way they deliver their services: I think clients would be more satisfied and lawyers would be happier (and more profitable). But lawyers don’t innovate well at the best of times, and we’re currently under no pressure from the three key players — the client marketplace, the competition, and professional regulators — to change our ways. So I don’t think it’s going to happen tomorrow — but as soon as any of those three players start exerting pressure, all bets are off.

Addendum: Why haven’t clients risen up and demanded innovation in legal services delivery? I’ve come to think that it’s not that big a priority for them.

Outside of routine transactions like buying a house and filling out a will, most people (if they’re lucky) are only going to have to see a lawyer once or twice in their lives. So, unlike with doctors, there’s no expectation of a continuing relationship (and it’s not like the health-care system is a client relations utopia, either). So clients don’t invest a lot of time and effort into making the contact better.

Regular clients have more motivation (and leverage) to get better service, for sure. But you know, there are a lot of substitutes for better service that are easier for lawyers to provide — discounted rates, for instance, or great seats at the local team’s home opener, or what have you. It’s a lot of work to change your whole approach to clients — sometimes, it’s just easier to deliver another mutually acceptable benefit in lieu of attentive service. It might be interesting to find out what that alternative “grey market” consists of.

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