UK: Innovation - Opening a Can of Worms

Last Updated: 2 June 2009

By Richard West, Head of Kennedys Liability Division

The Can

This article begins a journey, one that begins to look at the concept of innovation in the field of providing legal services. The field that I explore is that in which the liability lawyer is camped. The article poses some questions for debate. I offer no single answer but hope that readers will be patient and understand why that is the case.

My inspiration for this discussion is three-fold. Firstly I have a sense of growing unease at the way in which lawyers and their clients discuss innovation. Secondly, the content of a lecture I attended, given by Richard Susskind the well-known legal "future-thinker", and finally, a developing belief that lawyers need to radically change and that the best law firms will lead that change.

I hope that by the end of this article I will have been able to spark some interest in just what innovation within our professional world can realistically mean, the probable speed of development and to look beyond the next five years in a way that most lawyers seem frightened to do.

"Innovation and Innovative Legal Services" will be the topic of Kennedys' Liability Division's Annual Event this year at The Magic Circle on 24 September - and so I hope that those of you who find this article interesting will also be encouraged to attend that event and take part in the discussions at that time.

Other than that, I promise no hard sell - just (I hope) a brief and reasoned discussion of innovation and the legal world that we may all inhabit from 2015.

The Worms

There are two principal and obvious risks of setting out my thoughts and suggestions.

First, competitors may decide to adopt my arguments for themselves and strive to advance their own case. For that reason I hope the reader will understand that I put into this article my own original thought - but not by any means all of it.

Second, clients and potential clients may decide that the future should be advanced more rapidly and that the status quo should indeed be undone as quickly as possible. That, to my mind, is to be encouraged. I don't doubt that the best lawyers in the best firms will always survive - as long as they place their clients' interests first and can provide a service that clients want.

Before moving on, I should say here that I come to explore the fact that there are some who instruct lawyers who do not seem to know what it is that they want. It surely can't just be the same product but delivered more cheaply? That is product development and not innovation. Such product development of course is to be welcomed and indeed expected. However, what is it that each client really wants from the legal process?

Some Susskind Thoughts

Every year Kennedys, like many large law firms, holds a partners' retreat. In 2008 our guest speaker was Richard Susskind, who gave a fascinating talk. He outlined some areas covered in his latest book, "The End of Lawyers?" - particularly emphasising that the question mark in the title was key.

In his book Susskind explores how the future of legal services and professional advice may look as a result of developments in the areas of Information Technology and the delivery of Knowledge Management. His book is aimed fairly widely across a commercial legal world. He suggests that change will be necessary and gives some thought to how that may happen.

I make no secret of the fact that I was inspired and excited but equally depressed by what he had to say.

The problem for any liability lawyer to wrestle with (assuming of course that Susskind's warnings are not just ignored), is how to translate his portents into the wheels and cogs of a legal service for insurers and their customers that fits with the 21st century - and above all, one that creates a "product" that is actually wanted by those buying the legal services.

Susskind points out that lawyers have no inherent right to profit from the law. He draws parallels with the ancient Guilds of London, who centuries ago held huge power and wealth and, at the time, no doubt seemed eternal. The Guild of Wheelwrights (the builders of wheels) was one such organisation.

We still need wheels and indeed need more of them than we ever have done, but, as Susskind points out, technology and a changing world have done for the wheelwright.

There is no longer any need for one man to routinely provide a bespoke handmade wheel and therefore no future in being a wheelwright. But there is still a need for wheels to be built and a thriving industry in the engineering, manufacturing, production and delivery of low cost, high volume wheels for all manner of diverse needs.

I am sure readers will appreciate that there is no longer any need for your lawyers, generally, to provide you with a truly hand built legal product.

We are as a profession, I would suggest, some distance along the road already ridden by the wheelwrights.

Innovation

Very often insurers and their procurement teams will ask lawyers to be "innovative" or to highlight their "innovations".

I have become increasingly uneasy about such terms. I fear that both insurers and lawyers are missing a golden opportunity by continuing to misunderstand the term "innovation".

If we take innovation to mean the creation of something entirely new - we can see the problem.

Creating a slicker, faster, cheaper or more transparent way of selling the same legal product is not, I suggest, truly innovative. Reducing shelf life, claims experience and being more open may all be welcomed (and indeed expected) by a client - but is that all that the client really wants? Such an approach I believe is simply an enhancement of an existing product. It is not the creation of something new.

Once litigation has commenced, can lawyers be truly innovative if they, their clients and the other parties' lawyers are all bound by the same framework of procedure, court rules and timetable?

I believe passionately that they can be.

Some thoughts to take forward

The description of lawyers and their clients "working in partnership" has become a clichéd phrase in the last 5 years, not as a result of the expression being meaningless but rather because it is misused. It is absolutely the ideal and should be the goal - but how many such arrangements truly exist in the liability field?

To be able to truly work together in partnership, insurers, their customers and claims handlers will need to have a better understanding of what it is that their lawyers can do for them over the next 10 years, and then work towards that goal. Lawyers will need to stop telling clients what it is that they can deliver and start asking what it is that their clients want. Lawyers will need to fully engage with their clients' businesses and work alongside them in order to develop particularly focused legal products.

By "particularly focused" I don't mean enhancements of more of the same, for example, by just being "in-house" or by virtue of a slicker delegated authority scheme. I mean a truly integrated legal solution. Such an approach needn't be geographically proximate. It is far more important that the ideals, values and attitudes of the partnering organisations are harmonised. Businesses that share common core values and objectives will be far more likely to succeed together. Innovation will flow much more freely from such harmony.

I can imagine that at this point that readers will want me to place some flesh on the bones of this hypothetical discussion. I attempt to do so below, but these comments are only the slightest exploration into the more obvious areas for discussion.

Information Technology and Knowledge Management

Are new on-line products of interest? If so, to what end? Who will fund their development? What should they contain - just guidance, knowledge management, legal content or far more?

Risk and reward

Charging by the hour is, in my view, going to become anachronistic within the next five years. However, my experience is that potential clients can be slow to respond to suggestions of annual retainers, delegated authority products or of structuring reward for lawyers based upon quantifiable risk management results and Key Performance Indicators. Why should the insurance world not follow lawyers' other commercial clients and seek certainty and eschew the hourly rate?

Product Development

These are exciting times. The Legal Services Act will allow non-lawyers to invest in legal businesses. However, why would they want to? Would now be a perfect opportunity for a forward thinking organisation to partner with a forward thinking law firm and create a truly innovative 21st century product? The two together could generate true innovation. No other organisations will be better placed to understand their market. It would be a bold step. Could that product then be sold to others in the market place?

Can the legal profession truly innovate if clients do not know what they want? Are our clients truly receptive to innovation, and how can that take place within a litigation structure that exists as it does today?

Can leopards change their spots?

You may assume here that I am going to explore whether lawyers are ready for the tectonic changes that will be necessary in the next 5 -10 years. It's true that, for example, asking lawyers to give up billing by the hour will be embraced about as enthusiastically as the Woolf reforms were by some and the Fast Track costs regime by others. The more progressive and more innovative lawyers will however embrace such changes and see them as opportunities to work more closely with clients and provide a proper service; not just a service of last resort.

However, the leopards that I refer to are those providers giving their work to the lawyers. Insurers and their customers I hope will understand that innovation comes about as a result of an exchange of ideas, an understanding primarily of what is truly wanted - and not by starting with the question, "what is it that our lawyers can do for us?"

The Holy Grail I suggest is to eliminate all claims in the first place. That will probably never be a realistic goal for anyone other than the smallest customer or more specialist insurer. A more realistic goal would be to deal efficiently with the claims that do arise, and perhaps even the litigation that arises from it; but to do so with significantly reduced legal input and legal cost.

To achieve such a solution, an insurer would need to work with its lawyers to find new ways of dealing with litigation, reducing legal spend and reducing the numbers of instructions to the very lawyers helping to design the new approach.

To find a lawyer brave enough to work with an insurer in order to square that circle would be a wonderful thing.

Is it possible?

I hope to see you at The Magic Circle in September.

www.kennedys-law.com

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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