One of the fascinating aspects of legal change is that it is not being driven or architected from within the profession. It is business – and more specifically C-suites and boards – mandating that legal align and integrate with business. Law is a passenger in its own change process. Business is the driver. This irony is consistent with legal culture that has long been reactive and risk averse, not proactive and innovative. (Location 247)

Note: Change ia being driven from outside law

strong law practices have counter-cyclical capability (so that, for example, they can ramp up areas like restructuring as the amount of work in big ticket M&A declines). (Location 268)

With new competition from the Big 4 and emerging law companies; new technologies and platforms coming online; the spectre of the ‘Amazon of law’ always lurking; and clients ever more forensic in slicing up the supply of legal work, law firms were undoubtedly under threat. (Location 276)

the book concentrates on the cultural, organisational and strategic aspects of digital transformation in law firms, rather than on which technologies to implement. (Location 308)

research shows that organisations with fewer than 100 employees are 2.7 times more likely to report a successful digital transformation than are very large organisations. (Location 319)

There are three key learnings that I hope readers will take away from this book. The first is that law firms need to approach digital transformation as a strategic exercise, not as a tactical experiment. The second is that to execute on the strategy, law firms need to look outside the legal industry and learn lessons from digitally effective organisations (many of whom will be their clients). The third is that sustained digital transformation requires cultural change, which may put strain on the traditional law firm partnership structure – but that with commitment, this cultural change can be achieved. (Location 323)

Innovation in law firms did not start when ‘legal tech’ came onto the radar in 2012. Its roots are in the more prosaic world of: - Process efficiency - Offshoring/nearshoring of commodity legal services. The move by a number of large law firms to establish captive centres to deliver more process-oriented legal work was the first (and perhaps the only) truly radical and lasting change to the traditional law firm operating model. It was also a genuine exercise in responding to customer needs. (Location 377)

Tags: offshoring

we can think of innovation as new ways to deliver legal services, using process, people and technology. Usually to drive: - Greater efficiencies, - Increased profitability - Lower risk. (Location 382)

Tags: innovation

Digital transformation is the process of using digital technologies to create new – or modify existing – business processes, culture, and customer experiences to meet changing business and market requirements. This reimagining of business in the digital age is digital transformation. (Location 389)

Why is it that law firms have not yet experienced the kind of disruption that has impacted other industries – and other professional services providers? Sceptics in law firms commonly give three answers to this question: - Revenue. Law firms are making a lot of money, which suggests that the model works. Why try to fix something that is not broken? - Expertise. Legal expertise, the argument runs, cannot be commoditised, and consequently law firms are not vulnerable to disruption in the same way as other businesses. - Brand. The established brand and deep client interactions that many law firms enjoy create a relationship of trust that cannot easily be copied or eroded. (Location 401)

Lawyers are justifiably proud of their professional expertise, and it can be uncomfortable for them to admit that a significant portion of their work is not really all that special. (Location 436)

Tags: lawyers

If the answer to any one of the following questions is yes, this may indicate that your law firm is open to disruption: •Are your customers subject to intermediaries and their associated fees? •Do your customers face long lead times to complete transactions or to receive products? •Are your margins higher than in other industries? •Is there an opportunity to unbundle products and services? •Is the user experience you provide below the level of the best global practices? •Is supplier information less than fully transparent to customers? (Location 533)

Law firms are exceptionally paranoid about their partners – about keeping their star performers happy and not losing them to established competitors. (Location 543)

A relentless focus on the best legal talent will of course continue to be a crucial success factor, but firms should give equal attention to hiring the best digital talent and to the long-term digital strategy they will put in place to counter the competition. (Location 554)

Education is a significant part of the remit of the team leading digital change. That team will need to convince a partnership of highly intelligent, sceptical individuals to invest in entirely new ways of working – potentially to change their entire business structure – and to sacrifice drawings into the bargain. It won’t be enough simply to tell partners that competitors are making investments in digital. Partners will need proof that digital transformation is crucial to the continued success of the firm. In short, they will need to see a persuasive case for change. (Location 562)

My approach to finding examples of digital best practice was twofold. - First, I looked outside the legal industry (essential given the relative digital immaturity of the legal services market). - Second, I looked for examples that could actually be applied in a law firm environment. (Location 595)

Tags: outsideinnovation

I have done a fair amount of horizon scanning, of the legal sector and beyond, to find examples of digital effectiveness that will be helpful in a law firm context. Such scanning, indeed, is a critical success factor for innovation. Sometimes, however, the horizon can be a bit fuzzy. (Location 607)

Successful digital companies: •focus on customer/client needs and the customer experience above all else; •take a strategic approach to digital transformation; •commit to seeing the transformation through; •hire the best people to make the change happen; •create a culture in which transformation can continue to flourish. (Location 637)

The highest priority and the starting point must be the law firm’s clients: (Location 661)

Law firms should not rely on anecdotal evidence – an increase in questions about law firm technology use in RFPs, for example, or press releases about how other firms are innovating – to inform their strategy. Law firms must speak to their clients, openly and regularly, and understand their pressure points and needs, so that the strategy can be designed around what every other industry refers to as ‘the customer’. (Location 668)

The principles that IDEO applied to humanising this process were simple: •Start with citizens (understand their needs and aspirations). •Map the journey (understand each step in the customer journey, including what happens before and after the interactions with the ministry). •Forget the ‘average’ (there is no average customer – design must be inclusive). •Visualise change (prototype and visualise rather than use long documents to describe the change). •Simplify in the face of complexity (look for the root of the issue, even where the system is complex). (Location 717)

Tags: ideo

There are three common barriers to adopting human-centred design in law firms: •Lawyers assume that clients expect a ‘Rolls Royce’ approach to delivery. •Lawyers are reluctant to show vulnerability. •Lawyers are generally transactional thinkers – they are not curious about the end-to-end client experience. (Location 735)

the billing processes is a known pain point for most law firm clients. Many lawyers are simply not curious about what happens before and after their involvement with the client. They do not like to participate in open sessions in which clients explore in detail the strengths and weaknesses of the client experience, because it feels uncomfortable. (Location 798)

The ultimate aim should be to map the entire law firm client experience from beginning to end; however, this is a significant undertaking. It would need to cover each part of client-facing and professional support in the firm, across a number of different areas: •horizon scanning for new client opportunities; •new relationship building and marketing; •pitching; •client and matter opening; •matter delivery; •matter closing; •billing and recovery; •document management. (Location 815)

Tags: lawfirm

Spotify co-founder, Daniel Ek: So many companies talk about innovation, and they try to put processes in place … I don’t think that works. I don’t think any innovation happens at a desk – by someone structuring a creative brainstorm. Innovation is serendipity. It happens when people get totally new influences or ideas that come totally from the sidelines. (Location 907)

Tags: innovation

my experience as part of the team developing Freshfields Bruckhaus Deringer’s award-winning digital transformation strategy, suggests the following eight practical steps to strategy development (which are not necessarily interdependent or sequential): •Understand your law firm’s business strategy. •Undertake a diagnostic of your current strengths and weaknesses and identify opportunities to create digital value. •Undertake a comprehensive review of the competitor landscape. •Talk to clients. •Create a business case for funding. •Create a roadmap for delivery. •Create your vision and strategy document and communications plan. •Communicate widely. (Location 925)

Tags: innovation

It’s one thing to be a major and an innovative financial institution today. But I think we have to recognise a lot of innovation is being driven from outside of the financial industry. 30 years ago, most innovations were initiated by the industry, by a small number of large players, and also by a small number of technology vendors. That has completely changed. Today most innovation is coming really from the outside-in. (Location 975)

Tags: outsideinnovation, inovation

Look ‘outside-in’: When developing a strategy for digital change, radical answers are unlikely to come from other law firms, or other legal services providers. Corporate law firms have privileged access to some of the most innovative companies in the world. Ask to speak to clients about their digital strategies – learn from them. (Location 992)

Tags: outsideinnovation, innovation

There are eight steps to developing the kind of digital transformation vision and strategy outlined in Chapter 2: Step 1: Understand your law firm’s business strategy. Step 2: Undertake a diagnostic of current strengths and weaknesses and identify opportunities to create digital value. Step 3: Undertake a comprehensive review of the competitor landscape. Step 4: Talk to clients. Step 5: Create a business case for funding. Step 6: Create a plan for execution and assemble the right team. Step 7: Create your vision and strategy document and communications plan. Step 8: Communicate widely. (Location 1375)

Tags: diigitalstrategy

In the ‘adjacent’ section sit products and services that the firm might create to serve clients (existing or new) in new ways, for example: •Expanding the nature of the professional services that the firm provides. One example might be moving from pure legal advisory work to providing business consultancy in areas in which the firm has expertise – for example, post-merger integration. (Location 1568)

•Serving clients in a new way. This might include automating elements of legal advice using expert logic tools and providing the advice to clients on a self-serve basis, under a subscription model. •Developing entirely new products to meet changing client needs. Examples will depend on the client and the sector, but could include using legal expertise from previous global investigations to develop a forward-looking compliance tool for a particular client or client sector (Location 1572)

The expectation is that products or services in the adjacent segment contribute to the revenues of the firm, rather than simply offering greater efficiency. (Location 1577)

The ‘transformational’ segment is where firms should place their big bets. In this segment will sit research and development into new technologies that are not yet routinely deployed in the legal sector but which are likely to impact in the future – for example, blockchain and distributed ledger technologies. Also in this transformational space will sit initiatives that relate to fundamental business model change. This is the space for truly radical thinking about size and shape of the firm and the future of the services it will deliver. (Location 1578)

When shaping a digital transformation strategy, law firms should focus less on competitors’ public relations activity and more on their organisational strategy and the extent to which they are investing in digital capabilities. For each potential competitor (law firm, law company, alternative legal service provider or Big 4 legal team – or, increasingly, corporate legal team) the law firm should try to answer the following questions: •Who are they hiring and from where? •What digital capabilities are they developing? •Who are their clients? •With whom are they collaborating or partnering? •What digital solutions are they developing, using or acquiring? (Location 1617)

It is important to test the digital strategy with clients. There is little point in creating something that customers do not want to buy. Be tenacious in probing elements of the strategy with clients. - Are they interested in the firm providing services via a subscription model? - Are they confident in the firm’s product development capabilities? - Do they see a law firm as the best source of legal operations consultancy? - What is it about your law firm that clients really value and how can you use digital solutions to deliver more of it? (Location 1675)

Note: ENnsure to sense check the strategy with cients

Choose a range of clients that are important to the firm for different reasons: - a long-standing and loyal client; - a newly acquired client; - one in a growth sector; - one that is undergoing or has undergone its own digital transformation; - if possible, one in the TMT sector with a high level of digital literacy. The range is important. You may be surprised by how many partners will try to exempt themselves from engaging with a digital initiative on the grounds that digital has no relevance to their practice or their clients. For the same reasons, if the firm has an international presence, make sure to involve clients from the largest or most profitable regions – or the regions the firm is looking to grow. (Location 1679)

Note: Check the strategy with a range of clients

**There are many ways to become more digitally effective that do not involve buying expensive new technologies. ** - Changing ways of working - Being more disciplined around data - Understanding clients better - Partnering with others to augment digital capabilities - Making better use of the technology the firm already has are all cost-effective ways to effect change. (Location 1742)

As an example, rather than law firms investing in building proprietary technology products, or in developing entirely new delivery solutions, they could instead partner with a third party (a technology provider or alternative legal services provider, for example) to deliver a digital solution to clients. (Location 1745)

below). McKinsey research into the benefits of digitisation shows, for example, that __companies that fail to invest in digital will on average see a decline in revenue of 12%. __ Those that “lead from the front with a disruptive strategy (and at least decent execution)” will see gains of 16% above that depressed level. (Location 1772)

Technology costs and the total cost of ownership: Most digital transformations will involve investment in technology. For a lay person, calculating the true cost of technology investment is more complex than it might first appear. Rather than focusing simply on the cost of the kit (in the case of hardware), or a licence or service contract (in the case of software), the business case must reflect the total cost of ownership of the investment. This means understanding the true cost of the service, including staff, maintenance and support, and the share of infrastructure used by the service (eg, processing, storage and networks). (Location 1789)

Other technology costs that will need to be included and that can get overlooked include the cost of remediation of legacy systems (discussed in Chapter 5) and the change management costs associated with encouraging lawyers to adopt new technologies or ways of working. (Location 1800)

People costs: The people costs of a traditional transformation would usually be divided into two buckets. - The first would be the cost of experienced leadership to direct the transformation and the resources required to do the hard lifting to get the programme of work underway. - The second, smaller bucket would contain the ongoing costs associated with sustaining the transformation to make it successful. (Location 1803)

Depending on the strategy, benefits might include: •cost reduction; •increased efficiency; •risk reduction; •improved client experience; •reduced client attrition; •greater market share; •increased revenues; •improved employment proposition. (Location 1836)

What should be in the strategy document? The contents of the strategy document will be highly specific to the firm. There is no right way to draft it. I would suggest that it should, at a minimum, cover the following four areas: •the case for change (Why are we doing this?); •articulation of the strategy (What will we do?); •envisioning the strategy (What will the new world look and feel like?); •the roadmap for delivery (How will we do it?). (Location 2175)

To encourage a behaviour, you should think about making it: •Easy •Attractive •Social •Timely Easy: If you want to encourage something, make it easy to do. Take out friction and hassle. The converse applies: to discourage behaviour, make that behaviour more difficult – put some obstacles in the way. Halpern gives the example of an individual wanting to save money for a particular item. To encourage saving, make it easy by creating an automatic money transfer to a separate account as soon as wages are paid. To discourage spending, don’t have a bank card for that account. Attractive: This has two elements to it. First, if you want to change behaviour then messaging needs to break through and grab the audience’s attention. This means it needs to be salient (personalised or otherwise relevant). As an example, traffic signs that flash up a car’s individual speed and number plate are much more effective at controlling speeding than a static road sign. Secondly, the suggestion or offer itself has to be attractive or persuasive. Financial incentives may work, but are only one tool. Non-financial incentives such as curiosity and fun can work, as can competition (we are attracted to things that are perceived as rare or that are associated with people we respect). Making sure the message comes from the right person (the ‘messenger effect’) is also key to attraction. Advice about coronavirus control coming from a politician is less attractive than when it is delivered by the chief medical officer, for example. Social: As the COVID-19 crisis has taught us, the behaviour of those around us can have a powerful influence on our own actions. Research has shown that people are much more likely to drop litter in an area that is already littered. We are social beings, and conform to social norms. Halpern draws a distinction between a ‘declarative’ social norm and an ‘injunctive’ social norm. A declarative social norm is what we see others doing or what evidence indicates they are doing (dropping litter). An injunctive social norm is what we are supposed to be doing, or what others approve of (disposing of our litter in the bin). Research suggests that where the two types of norm clash, the declarative social norm (what people are actually doing) will win: We are influenced by what others around us are doing (declarative social norms), and particularly by the behaviour of those we know or feel are like us; by the desire to reciprocate; and even by the idea of other people observing us. Timely: When trying to establish a habit or behaviour, timing is everything. There will be certain key moments when an intervention will affect an outcome or behavioural change much more effectively (the earlier a retailer knows a woman is pregnant, for example, the quicker it can capitalise on the retail opportunity that having a new baby presents). Intervening early, before a habit is established, can also be key in shaping behaviour. (Location 2289)

Most firms do not charge for these products, which are more of a marketing play than a revenue generator. Yet there is always a dollar value to be attached to good marketing, and these solutions help make firms look innovative, modern and responsive, for relatively little investment. Other firms offer a free version of the application as a teaser, with an upgrade to a premium version coming at a cost. See, for example, Freshfields’ Antitrust 101 App. (Location 2472)

7.2 Stage 2: Enablement The next stage is enablement/feasibility. During this stage of the process, the idea generator and the team running the process will assess whether there is market value in the idea and whether it is technically feasible, and will give some thought to the outcomes that should be measured. The person coming up with the idea should provide a lightweight business case to support the proposal. The business case should, at a minimum, cost out the solution, describe the client or market research underpinning the idea, give a view of technical feasibility and include a high-level estimate of the target ROI. (Location 2701)

However, the skills might be summarised as five core capabilities: •Business skills: the ability to understand the firm’s strategy, to prioritise the portfolio to reflect the strategy, and to track performance of a product against metrics relevant to the firm’s business. •Market knowledge: understanding of legal market trends, potential partner opportunities, and what competitors are doing. •Customer experience skills: understanding of human-centred design and how to envision the client/customer journey. •Technical skills: high-level understanding of technology, and issues around technology architecture, security and compliance. •People skills: the ability to lead teams, to translate between lawyers and technologists, and to effect change at each level of the firm. (Location 2786)

There are three major archetypes for approaching core-technology transformations: - “repaint” by making the minimum investment required to maintain existing operations and digital channels. - “renovate” through gradual but persistent upgrades of the core and more substantial improvements when necessary. - “rebuild and replace” by building or buying a completely new IT stack (or large portions of it) and migrating the existing business to it. As companies progress on their transformation journey, they may switch from one archetype to another. (Location 3021)

pricing analytics example, if one of the valuable data sources is time recording narratives, the data owners may choose to put in place processes to enhance the data set. This may include asking lawyers to record time to pre-defined phases (forcing the hand of the time recorder through mandatory drop-down menus), or developing rules around wording of narratives to drive a higher level of consistency. (Location 3249)

Tags: timerecords

‘good’ or healthy corporate culture: •organisational diversity (which fuels innovative thinking); •transparency (which unites teams around a shared vision); •agility (which allows organisations to be responsive to change and serve customers better); •customer centricity (which gives an organisation its sense of purpose). (Location 3408)

Tags: culture

Examples include: •an insistence on face time that negatively impacts wellbeing; •a culture of perfectionism that affects mental health; •abuses of the hierarchy leading to non-fee-earning professionals being treated like second-class citizens; •excessive drinking leading to poor judgement and sexual harassment; •a lack of diversity and inclusion leading to entrenched unconscious racial and gender bias. (Location 3486)

Tags: lawyers

Associates are very rarely represented, if at all. This is a missed opportunity, and another example of law firms failing to learn the lessons from their clients. (Location 3613)

Tags: governance

Armour and Sako’s conclusion is that although the established law firm partnership structure is well adapted to support a traditional legal advisory business model, it is not the best structure to support an AI-enabled (for which we can read, digital) business model. There are three structural characteristics of the partnership model that lead to this conclusion: •a lack of speed and agility; •a short-term attitude to investment; •an excessively rigid career framework. (Location 3738)

Armour and Sako’s research identifies three new business models for the delivery of legal services that have emerged in response to the opportunities created by new technologies and the exigencies of client demand. The first is a legal operations model, which is essentially focused on efficiency, and combines process re-engineering, design thinking and project management with digital solutions such as automation to deliver a more cost-effective service. The second is a legal technology model, which involves the design of technology solutions for use in legal operations (essentially, creating digital products to support client-facing delivery). The third is a consulting model, which is the provision of advice to clients around technology selection and implementation, and the design of legal operations processes. There is growing demand for each of these models as law firm clients (and law firms themselves) seek to become more digitally effective. (Location 3785)

I examine six approaches below, each of which reflects a different way of influencing culture while respecting the partnership structure: •acquisition; •captive entity; •intrapreneurship; •incubation; •spin-off; •international public offering (IPO). (Location 3887)

The incubation model Another approach to changing the established culture in a law firm partnership is incubation. Incubation involves a law firm giving early-stage start-ups space in the office to work and develop digital solutions (usually legal tech solutions), and access to the firm’s lawyers and data to build and test MVPs. The firm may also decide to make a financial investment in the incubatee, or to license its software for use in the firm. The incubator model is symbiotic. The law firm: •gains access to interesting start-ups; •gets early sight of their technology solutions; •bolsters its external reputation for experimentation; •is able to expose lawyers and clients to a different way of working in a safe and controlled way. (Location 4075)

4.5 The spin-off model A spin-off is a new entity that is independent of the law firm, but is wholly or partially owned by the partnership and continues to provide services to it. A spin-off will have its own distinct management structure, name and branding, but will remain connected to the parent brand in a number of ways. For example, the new entity will usually be managed by employees who were formerly part of the partnership and will often depend on the partnership for technology and other business support. (Location 4109)

Six UK law firms have to date taken this route, the largest of which is DWF (in fact at the time of writing DWF is the largest law firm in the world to have gone public). (Location 4164)

Tags: dwf

Aligning the Stars is one of the seminal analyses of the relationship between culture, people and strategy in professional services organisations. A former (and brilliant) managing partner at Freshfields insisted that everyone involved in firm strategy read the book (Location 4232)

Tags: tr

Although it may be reassuring for lawyers to work only with lawyers, this can be frustrating for clients. Ultimately, clients care about outcomes. They don’t care about the pedigree of the person who does their document review work (beyond an obvious hygiene factor) provided that the outcome the client needs has been achieved. (Location 4676)

I have argued throughout this book that understanding what the customer wants and needs is a foundational element of successful digital transformation and should be the driving force of a law firm’s digital strategy. (Location 4887)