The Enterprise Research Centre has done some interesting work for the SRA and LSB on innovation in legal services. It uses metrics developed in management science to explore the extent and nature of innovation in legal services in England and Wales whilst also attempting to look at “barriers and enablers of change”. The main data source is a survey of 1500 respondents from across the sector although there were also 20 in-depth interviews.
Having read the report, I’d suggest the central message about innovation within the legal services sector as a whole is best summarised by this from their conclusions:
Innovation in legal services is rather ‘closed’. Ideas for new innovative services rarely come from outside the organisations concerned, and we do not see in legal services the extensive networking with external knowledge sources which characterises innovation in some other business and professional services. Innovation is more often than not incremental in nature with very few providers consider themselves to be radical innovators….
…Overall, the impression is of a profession in which ideas for new services and new ways of working are internally generated and rarely radical in nature. …Our evidence also suggests, perhaps surprisingly given the legislative changes that have occurred, that the profile of innovation in the sector has changed relatively little since 2009.
Indeed, if one looks at the actual innovations that are offered up by survey respondents as examples of innovation we get a mundane list. One set of examples involves simply doing an area of law that they did not do previously (agricultural law is innovation, in case you didn’t know it). Another for solicitors was:
…the use of electronic communication with clients, including the use of electronic forms, and improved case management systems. …Among Barristers’ chambers innovation was focussed on direct access to clients and the need for a more client-focussed approach.
A shift to communication from email to post gets quite a strong mention. I wonder slightly despairingly how recent that was. Other examples I was not really blown away by include:
changing opening hours…
…We didn’t previously have a website
There was though perhaps more genuinely, if rather low level, development of:
a new file view facility…
improved on our case management systems [and
changing] …the way that they priced services…
Only very occasionally did there appear something rather more interesting:
We’ve developed a training delivery package. We’ve developed a project using law students to deliver services. There are some specific projects to support refugees and asylum-seeking women. We’re also leading on another project to introduce sustainability for advice services’.
[We] provide hot-docs documents online.
It gets worse if one takes literally the following finding:
Just over one quarter of all respondents had introduced a new or improved service in the previous three years…
Now reverse the statistics to tell it’s other ‘truth’: almost 75% of all respondents (may) have not improved service in the last three years. Again, depending on how literally one interprets the logic of findings. Perhaps, more incremental, natural service improvement escaped such research questions.
There is also a sense in which understanding and commitment to service improvement (which is essentially what we are talking about when innovation is discussed) is rather shallow. So:
80 per cent of legal services organisations feel they have in place a leadership and culture which supports the development of new ideas…. [whilst] 40 per cent have put in place the practical steps to promote the development of new ideas.
On the other hand, in terms of more radical innovation:
The introduction of a new-to-the-market innovation is much less common, indicated by less than 8 per cent of respondents.
Interestingly, though, the adoption of ABS status appeared on the researcher’s modelling to have a positive effect on innovation.
“All else being equal, they are 13-15 per cent more likely to introduce new legal services.
…They are also more likely to engage in strategic and organisational innovation. These findings allow for differences in characteristics, age, area of work, gender, and the ethnicity of ABS and non-ABS Solicitors.
In truth the researchers’ approach cannot fully control for differences between ABSs and more traditional business forms, but it is interesting evidence that ABSs may be trying significantly harder to be innovative (that does not answer the question of whether they are being successful in the market of course, or that quality is better, or cost lower – which some separate studies have begun to address).
The report is perhaps most interesting to innovation anoraks in considering the antecedents of innovation from the management literature and examining the adoption of these more innovation friendly strategies and management practices. Here again ABS Solicitors’ show a, “higher level of investment, staff engagement and external involvement in innovation.” Indeed, the report seeks to make distinctions between, “Service innovation – relating to the production and delivery of new (or improved) legal services”; “Business process innovation – relates to the way in which legal services are delivered.”; “Strategic innovation – reflecting the impact of a change in corporate strategy”; “Management innovation involving the implementation of new managerial approaches such as a structured innovation process.”; “Organisational innovation involving structural changes to an organisation such as the introduction of multi-functional teams or joint development teams.”; and, “Marketing innovation involving changes to marketing concepts or strategies, e.g. a move to media advertising or commercial partnerships. ”
It also seeks to examine what it calls the innovation value chain, a three stage process of knowledge sourcing; knowledge transformation; and, knowledge exploitation, which essentially look at the extent to which firms invest in research and development; do full client review; create multi-functional (and multi-disciplinary teams), and engage with external partners to generate ideas for their businesses, build the products and then sell those products. On this model, according to the report, legal services does not look like a hot bed of management best practice. I am imagining everybody’s surprise.
Similarly, the report is implicitly critical of the what extent to which legal service providers incentivise innovation (answer, not much, even though they (claim to) have a culture of innovation). The report holds up as counter examples:
R&D departments [where] scientists are allowed 10-15 per cent of their time to work on the projects they choose. The type of practices, if any, law organisations adopt to provide creative space to employees is unknown; however, there are some examples, such as the Portuguese law organisation Vieira de Almeida which created a structured programme to promote innovation that includes creativity workshops and ideas campaigns.
They tell us that the management literature evidences, “significant positive evidence on the relationship between workforce quality and innovation.” and elsewhere in the report emphasise how legal service providers tend to only see the recruitment of lawyers as ‘very important’, other types of staff are not so critical to their strategy. Diverse teams are not developed or embedded within the business; indeed team-working generally appears to be on the low side. Nor were legal services providers generally open to, or looking for, ideas from outside on the metrics used by the researchers.
In many ways we should neither be surprised nor disappointed with the general findings of the report. Although, given the low hurdle of what passes for service innovation (we must get on top of email and longer opening hours before we attempt to design and build the first CILEX robot) I don’t think it is unfair to expect everybody to be doing some innovation as defined here. The legal services market does not necessarily need lots of firms innovating radically to develop; it just needs a small number of successful innovators who then develop market share and change practice within the broader market. ABSs were twice as likely to claim to have engaged in radical service innovation – offering something genuinely new to clients. If this claim is halfway to being accurate then there may be the potential for change if such innovations are cheaper or better and persuade the public. Their markedly higher emphasis on marketing suggests they are trying harder to sell those innovations and develop market share. They spend, “more than twice as much of their turnover on reputation and branding” according to the survey. And they were, “nearly three times as likely to be using some form of intellectual property protection.”
A final comment is worth making on the CEO of the LSB’s reported complaint that innovation is not developing sufficiently on the unmet needs of consumers. There are clues in the report about this. In particular the regular complaint that firms that had depended on legal aid (or personal injury) for a substantial part of their income did not have the appetite or financial space to change/invest. I think one has to wonder which parts of unmet legal need are genuinely serviceable by the kinds of innovation currently being adopted in the legal services sector. I wonder if it’s fair to suggest we are some distance from radical cost saving approaches that can be practically let alone cheaply adopted or developed? It seems to me that almost all the big innovation gains (if that is a fair way of describing them) are being made in the backroom, commercial sector. Without significant public investment, legal services has generally chased money. I’m not sure there is any good reason to think innovation will be any different. I think we have to wonder too whether innovation can trickle down into the hard pressed areas without some help.