Law Firms Thriving at the Edge of Chaos

My new year’s resolution was to make more time to read for pleasure, principally to ensure I was switching off from work in the evenings and to get away from constantly looking at screens. It’s been a qualified success. I’ve just finished Michael Crichton’s “The Lost World”, which has got me thinking about dinosaurs and their extinction. Inevitably, though, I end up relating those thoughts back to work and law firm innovation for this column.

Operating under a business model that was originally designed for the horse an cart age, law firms are popularly misconstrued as “dinosaurs”, in the sense of being a relic or a fossil. The very name “dinosaur” has become a byword for a species that is unable to adapt to its environment and therefore becomes extinct. We relate to dinosaurs as fossils or relics rather than complex living creatures.

In fact, paleontology shows us that dinosaurs were highly adaptive and complex life forms, living at the edge of chaos. Dinosaurs and law firms have more in common than I realized, considering one dinosaurs once ruled the world while the other is a more modern artificial legal construct. Nevertheless, I suggest that law firms, like other corporations, can be characterized as complex systems that follows a similar evolutionary path as complex systems that are alive, adapting to their environment by living at the edge of chaos.

Within the context of complexity theory, chaos refers to the interaction of cells in an unbelievably complex way to create life, more complexity possibly than the human mind can fathom. No human activity comes even close.

The word “chaos” is not normally attributed to law firms, which operate with a high degree of hierarchy, order and predictability. But that is to ignore the inherent variability and complexity of legal matters that law firms deal with. Like life, legal matters develop in a unique way that requires a high degree of specialized knowledge and experience to bring to a successful outcome. It is very hard to successfully innovate to automate this complexity or to apply machine learning to legal matters.

The edge of chaos describes a phase transition space between order and randomness. In his book Complexity: The Emerging Science at the Edge of Order and Chaos, Mitchell Waldrop describes the edge of chaos as follows:

“Right between the two extremes [order and chaos] … at a kind of abstract phase transition called the edge of chaos, you also find complexity: a class of behaviours in which the components of the system never quite lock into place, yet never dissolve into turbulence, either. These are the systems that are both stable enough to store information, and yet evanescent enough to transmit it. These are systems that can be organized to perform complex computations, to react to the world, to be spontaneous, adaptive, and alive.”

It’s maybe a world first to describe law firms as being spontaneous, but law firms can act on sudden impulses when opportunity arises, like any great predator. The example that springs to mind is the speed at which law firms move to pick up lawyers and clients at the collapse of a rival law firm.

Law firms are certainly adaptive. The ability of complex systems to adapt is of particular interest to the study of evolution. We see adaptation everywhere: brain cells adapt to signal traffic, the immune system adapts to infection, animals adapt to their changing environment, and law firms adapt to adapt to the marketplace.

A law firm is not alive in a physical sense, but as a corporation, it enjoys legal personality and as an organization it has capacity to make decisions and form a culture.

In order not only to survive, but thrive, complex systems need to strike a balance between the need for order and the imperative to change. The edge of chaos is the place where there is enough innovation to ensure vibrancy and enough stability to keep from collapsing into anarchy. It is a zone of conflict and upheaval, where the old and the new are constantly at war. If the system drifts too close to the edge, it risks incoherence and dissolution; if it moves too far from the edge it becomes frozen and totalitarian. Both conditions lead to extinction. Too much change is as destructive as too little. Complex systems can only thrive at the edge of chaos.

There is a constant tension in law firms between innovation and conservatism. In the end, the desire to innovate has to be reigned in because law firms, as complex systems, know the risks of extinction that come with untrammelled innovation. That is why the first questions asked of an innovator is “Are clients asking for it?”, followed by “Who else is doing this?”.

Law firms know that large risky projects that involve technology can take them too close to the edge. Project management firm Innotas reported in 2016 that over half IT projects fail, principally because the project team loses sight of the objective. If this happens in a law firm, there is a high chance of extinction.

On the other hand, law firms instinctively know that they can’t ossify and lose touch with the marketplace. Incremental change, just enough to thrive at the edge of chaos is instinctive for law firms.

If you want to dig up a law firm fossil, look no further than Clearspire’s “special place in the evolution of the legal industry”.

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