In the boardrooms of today’s biggest companies, new ideas are no longer taken for granted. A generation of executives grew up reading books like The Innovator’s Dilemma as well as envying the success of mavericks like Steve Jobs. The lesson they absorbed was that just hiring smart people was not enough; organizations need to develop a pipeline for new ideas and the kinds of people who advocate for them.
But most of the legal profession hasn’t caught on yet. Maybe it’s because law school is such an efficient meritocracy — when the top partners at the top firms all come from the top schools, it’s easy to assume that someone up there knows what they’re doing. Lawyers’ privileged position in society doesn’t help either. As Daniel Katz of Michigan State University told us, it’s hard to imagine you need new ideas when you make mid-six figures in a bad year.
Yet firms will need new ideas if they’re going to grow and thrive in the long run. We predict that by 2023 the most prestigious names in law will have chosen one of two paths. They’ll either have an R&D operation or they’ll be an R&D operation.
The latter organizations will have the advantage. Some of them already exist. They’re companies that resemble Silicon Valley startups more than white-shoe firms. Many of them will not be initially organized to provide legal services; they’ll pay their rent by offering related products and services. Then they might capitalize upon the opportunities those products create to offer legal representation as well. Of course, if regulations regarding the ownership of law firms in change, these companies could clean up by creating lawyer-powered products no one has yet imagined. But no matter what the regulatory environment, many of them will not survive in the long run — that’s the nature of entrepreneurship.
Older firms who want to keep up will have to borrow a play from their corporate cousins: start an R&D department where folks are encouraged to be entrepreneurial within the wall of safety the corporate parent provides. One way they’ll do this is by creating “skunkworks” projects, where a carefully selected group is given free rein to tackle some advanced or unusual problem. Others will effect change by letting the firm’s technologists into conversations on strategy — smart firms will have Chief Technology Officers, not “IT guys.”
But in the long run, we imagine an “R&D department” that is in fact much more integrated into the entire life of the legal organization. That’s because we think these units will take responsibility for the learning and development all members of the firm will need.
Demand for learning within the firm of the future will be high. As we suggested in our first design criterion, machine intelligence will make some of the analytical tasks lawyers now perform redundant, while also increasing the demand for skills like client management and strategic wisdom. Barring a revolution in legal education, firms are going to have to grow these capacities from within — a subgroup that already thinks differently about legal services will be the natural leaders for this project.
The availability of more data surrounding all kinds of proceedings will also create opportunities for every attorney to grow more efficient with every case. The R&D department will take ownership of this process, making the firm’s data a common resource to improve the profession rather than a tool some partners use to achieve an advantage over others.
This is just one possible path that organizations could take to add an innovation engine to the traditional firm. Other equally audacious models will emerge over the next ten years. But we feel certain that by 2023 firms will have found a way to add innovation to their organizational culture, or they’ll start falling behind even faster than they are now.