The past few years have shown exponential growth in the influence of technology. Netflix disrupted the DVD market, Uber damaged the taxi industry, alternate finance gave goose-bumps to the Venture-Capitalists and Airbnb left its mark on the hospitality industry. Interesting developments also lie ahead of us: 3D printing is on the horizon to potentially disrupt the traditional manufacturing model, autonomous vehicles will change the transportation industry and artificial industry will virtually change the whole caboodle. Clayton Christensen, the prominent business academic and author of The Innovator’s Dilemma, sees disruptive innovation as a threat to everything from Microsoft to Japan.
However in the midst of all these developments, the legal field seems to be lagging behind. No company or business model has disrupted the legal industry. Its traditional aversion to risk has meant that the legal profession has still not exploited the potential of artificial intelligence and data mining. The hierarchal business model has prevented young members of the team to freely discuss their ideas. In client service and relations, the business model by and large has remained the same over the past many decades: standard hourly billings, infrequent communication and the preference of fixing problems instead of preventing them.
To be fair to lawyers, when it comes to actual legal work, they can be highly innovative. Corporate finance lawyers have devised some of the most innovative and profitable financial instruments, IP lawyers have been successful in finding innovative ways to commercialize intellectual property, and litigators have found a whole array of new angles to argue their case. However, comparing the legal industry with some of the aforementioned ones, it is fair to say the legal profession is just not quite there.
Most people do not like change and would rather stick with what they are comfortable with than go down the uncertain path. Lawyers live in a world of certitude and risk avoidance and through the logical of induction it is easy to conclude that what has worked in the past will work in the future. Despite the economic conditions, most of big-law has got it pretty good; so why innovate to fix a problem when it is not there to begin with? If the traditional practice is bringing in clients and generating billable hours, innovating for something that may be better does not occur as an attractive option.
Many industries which succeeded as fostering innovation have used a “never fail to fail” approach. The Silicon Valley mantra “Fail Fast, Fail Often” has invited both fierce criticism and appraisal. However, both schools of thought will most likely agree that it’s okay to fail as long as you learn from your mistakes and work on improving them. Google is known for YouTube, not Google Video Player. Nintendo’s initial offering the Famicom console, had to be recalled after only a few months, before the Mario and Luigi changed the history of video games. Dyson took 5,127 vacuum prototypes and 15 years before he struck gold. Launched in 1977, Apple I, the company’s original product was a flop, before Apple II began the personal computer boom.
Innovation requires risk taking and praising the fact that one might fail many times before one can taste the fruit. But lawyers simply hate to fail, and why shouldn’t they? Clients are interested in the outcome, and winning is the bread and butter. Lawyers get paid to identify potential problems to avoid risk, not to take it. So the nature of the profession is such that practitioners do not have any incentive to take risk. It could also be argued that people who are naturally more risk-averse are likely to become lawyers whereas more risk-loving may be prone to enter the field of finance or the start-up world. This may lead to a chicken and egg scenario; but be it a natural aversion or a work requirement; failure is not looked upon too favorably.
Businesses all over the map have realized the importance of innovation and have taken active steps to foster creativity among its work-force. Google implemented ‘20 percent time’ giving engineers the flexibility to work on whatever they want, to encourage new ideas. Proctor and Gamble has tried to make innovation the norm by including it with rest of their business, thereby creating a culture of creativity. Many VC’s and start-ups have adopted a very horizontal culture where new ideas are encouraged and young members of the team are expected to contribute from the very beginning.
In contrast, law firms evaluate the value of its lawyers by the billable hours and businesses generation, not by ideas. Firms still remain top-down, where knowledge flows from the high level to the entering class and therefore the incentive to bring new ideas to the table is less. Moreover, even the clients are so used to the traditional model of client service and relations that they may resist any innovative attempt.
The view of many industrialists, tech experts, and academics is that the intrusion of technology to disrupt the traditional business model, product or service is only a matter of time in any industry. The legal field has so far resisted the urge. The paradox is perhaps best summed in the words of Bryan Delaney, an Ottawa based lawyer: “it’s hard to take law and technology seriously when they still have a typewriter at the courthouse – and a pen remains the judge’s weapon of choice.”