I get a huge kick out of law firm innovation. It’s one of the reasons I signed on last year to be a judge for the College of Law Practice Management‘s Innovaction Awards, and why I’m doing so again this year. It’s like being a film buff on the screening committee for the Oscars.

So I was happy to see this Legal Blog Watch article penned by Carolyn Elefant. The Rosen Law Firm, a major family law outfit based in North Carolina, set up an internal wiki for operational and knowledge management, to which all lawyers and staff contribute. It essentially replaces the firm’s previous Lotus Notes regime and saves them thousands of dollars. That alone is innovative, compared to most firms.

But the kicker is that in order to motivate employees to participate, every Wiki contribution puts the author’s name into a draw for a $1,000 prize. That, as you might imagine, spurred the rapid development of the Wiki, which is now an invaluable firm asset.

This isn’t Rosen’s first venture into innovation: the firm has also distributed dozens of copies of a video game to help kids through a divorce, and name partner Lee Rosen wrote this excellent article on getting the most out of your firm’s technology investment. But I’m really impressed with the Wiki and the $1,000 incentive prize, which sets an example more firms ought to consider.

Law firms ask a lot of their employees, mostly with regard to cramming a whole lot of work into comparatively few hours. The lawyers, in particular, are directly motivated by the compensation and advancement systems built into the billable hour regime, and they place billable activity in extreme priority to everything else, including marketing, business development, practice management, pro bono work and, most importantly, their own personal time. So if firms want their lawyers to do things other than bill time, they need to design a reward system that can compete on those grounds.

I remember a friend of mine at a large firm complaining bitterly about an edict that lawyers must contribute to the new knowledge management system. The firm did not consider the KM contribution time a billable activity, so it was essentially pro bono firmo — for the good of the firm’s bottom line. My friend not only resented having to devote her few non-billable hours to bolster the firm’s knowledge storehouse, but she also had no incentive to donate her intellectual work product to a firm she could leave (or be fired from) any day. Not surprisingly, the KM initiative flopped.

I’m not saying that lawyers are inherently money-focused. I am saying that when the overwhelmingly important criterion adopted by firms for a successful day at the office is how many hours were billed to clients, firms can hardly be surprised when lawyers eventually respond only to monetized incentives. Throw in the fact that lawyers and firms part company more frequently than ever, and the problem becomes more acute. And it’s not just associates, judging from the recent article suggesting that senior lawyers want to get paid for mentoring. Law firms created this monster, and now they’re stuck having to feed it.

Ideally, firms would adopt more nuanced and sophisticated compensation and promotion schemes than the boneheaded billable hour. And very slowly but surely, they’re doing just that. But until then, it’s a smart firm that recognizes the power of financial incentives within the law firm construct and acts accordingly.

And setting everything else aside, there’s one more really good reason to like the Rosen Law Firm’s Wiki sweepstakes: it’s fun. More firms should try that, too.