The 13th Annual Law Firm COO & CFO Forum: Fostering Innovation in Law Firms provided domestic and global COO and CFOs with an opportunity to learn how their peers’ are approaching the ever popular theme of “innovation.” While many firms are embracing innovation, some are still in a state of resistance. Below are ten “take-aways” that we gathered from the day and a half-long forum.
1. The market is segmenting in ways that law firms are not structured to handle. Differentiation is becoming more evident as firms diverge from one another and branding is key to portraying how firms differ from competitors. Law firms can no longer afford to disregard what their peers and competitors are doing unless they are prepared to be left behind as profitable firms continue to notably outperform within individual categories (i.e. AmLaw50, 100, 200).
2. “Efficiency” is a key term that is now at the forefront of every executive-level discussion. Prior to 2008, this term was never discussed in law firms[A1] . The term is impacting the ways firms operate, from ground-level decisions, such as spend management and print management, all the way up to partner-level staffing model review.
3. When it comes to law firms being run as businesses, we are further along the curve than some people may think. However, the key challenge now is how do firms support their functions internally to run more like businesses? Some are responding by creating new roles i.e. Chief Pricing Officers/Pricing Departments, Finance Executives, Procurement Departments, Chief Analytics Officers, Project Managers, Client Service Innovation Roles.
4. Client demands are driving firms to think strategically and develop innovative solutions that will have an impact against “disruptive forces.” Firms like Allen & Overy are creating hybrid legal solutions, which allow them to offer unbundled services as a one-stop-shop for high-end work. i.e. Law Firm Business, Contract Lawyers, Document Review, Managed Legal Services, Online Services, Legal Consulting.
5. There may be a true disruptor to Big Law with the big four consultancies moving back into the legal industry where jurisdictions allow it. With each of the four top consultancies reporting annual billings in excess of $20B for fiscal year 2013, their tremendous revenues advantage, coupled with deep brand recognition, extensive corporate contacts, and capital raising experience, make them a very real threat.
6. Firm executives are being challenged to find ways to get firm partners more invested into the concept of innovation. There are two main challenges that executives are currently facing in this area. First, the increasingly ease of lateral movements is causing firm partners to be less incentivized to promote or buy into innovation or change (i.e. if a Partner doesn’t agree with the initiative or changes to the firm, he can easily walk away and take his book of business with him). Secondly, there is a generational struggle to get baby boomers invested on why changes should be made. In many cases, there are key decision makers that are nearing retirement and therefore are less inclined to make expensive, yet necessary, technology investments.
7. CFOs and COOs are currently struggling to find balance between process improvement and process overkill. Some firms have found that designating groups to oversee new processes may actually slow down the business because there are too many approval levels and people involved in the process.
8. With ever increasing competition in the legal market, it is critical that firms find out what their clients truly think about them. Soliciting honest, and sometimes brutal, feedback can be challenging but it is the key to understanding how a firm can improve in order to differentiate itself to clients and prospects. If a firm doesn’t know where it currently stands, then it won’t know how to invest resources to maintain or improve its brand.
9. Corporate clients are becoming more tech savvy internally and therefore are expecting law firms to do the same. If law firms are unable to deliver, corporate clients will continue to bring more and more business in-house ($7B of outside business has been brought in-house in recent years).
10. Metrics and transparency appear to be hot internal topics for executives. Key decision makers across various support functions are trying to determine what information they want to share with partners and staff, and in turn, how they can provide essential data in a clear, concise and actionable manner i.e. through dashboards and general reporting tools.