Next month in San Francisco, the College of Law Practice Management will meet to consider some interesting empirical studies on why law firms – especially in North America – seem so slow to innovate.
The working paper published this month seeks comments.
I’ve been spending part of my summer on a research project looking at innovation in US law firms, or the lack thereof. According to the interviews I’ve been conducting with lawyers, consultants, and law practice administrators, law firms may be some of the least innovative organizations in the US economy.
This is partially due to the nature of law as a profession. Laws don’t change very often. As one of my interviewees noted:
“Lawyers practice a profession that is rooted firmly in the power of precedent. They don’t want to change and are very suspicious of change efforts.”
Retired Chief Administrative Officer of several law firms, July 06.
It’s also due to the ways in which law firms structure themselves. It’s hard to be innovative when you’re billing by the hour and you’re measured by the number of hours that you bill.
“Innovation is not a dominant strategy; profitability is. Law firms will do anything to preserve profitability and not take risks”
Consultant to Law Firms, July 06..
Considering that there are over 50,000 law firms in the United States, you’d think that a few might be bucking conventional legal wisdom and would be working on innovative products or practices. And there are a number of firms that are innovating within the legal profession.
But what the legal profession finds innovative is often quite unremarkable for other industries. For example, Orrick Herrington, a large global firm based in San Francisco, in 2002 combined the back office operations of all its different offices at the Orrick Global Operations Center, in Wheeling, W. Virginia.
In most industries, this kind of move (which happens frequently) might not fit into the “innovation” bucket. According to the editors at California Lawyer, however:
“Orrick’s move has revolutionized conceptions about normal law-firm structures …”
California Lawyer, 2003.
These kinds of successes are rare enough that they are often republished as case studies.
Too often, innovative initiatives flounder and fail. “[Most law firms] won’t think about innovation in a larger sense. They’ll try little things that are new, and they usually don’t succeed because they don’t have the infrastructure or support.”
Consultant to law firms, 2006.
Why should lawyers want more innovation? Even with its absence, US lawyers are prospering. As of May 2005, according to the Bureau of Labor Statistics, there were almost a million people working in legal services industries. More than half of these were lawyers, and their average compensation was about $110,000 a year. There are a few other occupational categories, like surgeons and CEOs, that get paid more. But there’s no other category with the combination of so many people being paid such high wages.
The entire post / billet is worth reading.
It closes with a wonderful provocation from David Maister:
“Perhaps the greatest advantage lawyers have is that they compete only with other lawyers. If everyone else does things equally poorly, … even the most egregious behavior will not lead to a competitive disadvantage.”
David Maister in The American Lawyer, April, 06.