The chief innovation officer at one of Canada’s largest law firms is calling for a ban on the term “legal innovation.”
“The legal industry seems to have fallen into the trap of focusing on innovation for the sake of innovation. Instead, we should be focused on creative ways to drive value for our clients,” Judith McKay, McCarthy Tétrault’s chief client and innovation officer, and her colleague David Cohen, senior director of client service delivery, wrote on their firm’s blog.
It’s time to ban the buzzwords and get back to what innovation really means: creating value for clients, the pair said.
In an interview with Law.com International, McKay said the pandemic made the legal community a lot more open to change, so now is the time to “step away” and “get back to basics.”
Whether it’s driving change through the adoption of technology or process improvement, everything law firms do should be viewed through the lens of “how do we make lives easier for our clients? How do we help them solve their trickiest problems?” McKay said.
Beyond that, creating value for clients should include new products, services and approaches as well as continuous improvement to existing products and services, McKay and Cohen wrote.
The McCarthy Tétrault duo are not alone in their view. Chris Bentley, a former provincial attorney general who is now the managing director of the Legal Innovation Zone (LIZ), an incubator at the newly renamed Toronto Metropolitan University, doesn’t see the term “legal innovation” as a negative, but he agrees that legal tech’s focus is misdirected.
“We should focus on innovation, or new ways, new approaches that help those who need legal services get them faster, simpler, and more affordably,” he said.
Technology is a big part of that at the LIZ but Bentley stresses that not all innovation is complex—sometimes all that’s needed is a simple solution.
As an example, he cites a company called Notice Connect that went on to be acquired by Canadian legal tech company Dye & Durham and is used by many of the country’s biggest firms. It doesn’t use state-of-the-art artificial intelligence but it “revolutionized the notices that executors have to provide to potential creditors” by putting them online instead of in newspapers for three consecutive weeks, Bentley said.
Another example is web conferencing, which he noted was definitely not new but it suddenly had a massive impact on the legal profession once the COVID-19 pandemic struck, forcing lawyers to use it to get work done.
Indeed, Bentley, McKay and Cohen agree that real innovation is about offering new products, services and approaches to clients in previously unforeseen ways. Incremental improvements on existing products are what ensure value to clients, such as optimizing processes like litigation management or automating commoditized work, they said.
Why Law Firms Can’t Innovate
But law firms are not places that foster the development of game-changing innovation, Bentley said. Their traditional approach to profit-sharing means they are less likely to use revenue for research and development.
“You’re not going to be revolutionizing much at all if you’re not putting money aside for R&D,” he said.
In addition, grand innovation is stifled in places like Canada where the regulatory structure allows only lawyers to have equity participation in enterprises offering legal services, he said.
“You can’t share the profits in a meaningful way with those who aren’t lawyers. And this just restricts the amount of expertise that you can access,” he added.
McCarthy Tétrault, McKay’s firm, has navigated around these obstacles by launching “MT>Divisions”—ancillary businesses that are separate from the law firm and offer technology-empowered solutions to deliver services to clients.
This is one way law firms can get around Canada’s restrictive ownership rules, but few are doing it. Bentley said.
Both McKay and Bentley said another possible scenario that would help foster more legal innovation is one in which law firms collaborate with the Big Four professional services firms. “Definitely, we have complementary skill sets,” said McKay.
But Bentley says it will take more than these few options to attain the kind of innovation needed. Even the so-called legal sandboxes that law societies in a few Canadian provinces have launched are “not about encouraging innovation, they’re about managing innovation,” he said.
Recent moves in the U.S. states of Arizona and Utah that open up law firm ownership to non-lawyers, and rules in England and Wales that do the same, are integral to the legal innovation that will provide value and service to clients, he said.
“Give lawyers the ability to compete and take a look at where that takes us,” he said. “I think the profession would be far better off.”