Why the law needs more deviants!
asb law Managing Partner, Andrew Clinton, discusses the role of curiosity in re-shaping the business (model) of law
I like to have two business books on the go at any one time as, often, I make interesting links between two seemingly unconnected hypotheses. This month’s reading has been:
Curious: The Desire to Know & Why Your Future Depends on It by Ian Leslie
“Curiosity is unruly. It doesn’t like rules, or, at least, it assumes that all rules are provisional, subject to the laceration of a smart question nobody has yet thought to ask. It distains the approved pathways, preferring diversions, unplanned excursions, impulsive left turns. In short, curiosity is deviant.”
The Risk-Driven Business Model by Karan Girotra & Serguei Netessine
“Innovating business models in established companies can be far more difficult than in new ones; established firms are often the captives of their industries’ entrenched ways of doing things, whereas new businesses tend to differentiate by breaking the mould of old practices.”
I am sometimes asked whether I think the (now not so) new entrants are a threat to law firms. My response is that any new way of solving the underlying industry problem represents a competitive threat, if the buyers will go with it. The new entrants – whether that is the Big Four or new law companies – are a threat because they can satisfy the needs of the buyers of legal services and they represent a significant threat precisely because they distain the approved pathways of law firms.
As the authors of The Risk-Driven Business Model point out, every business model, without exception, imposes a number of key decisions on the business. They describe these key decisions and the context in which they are made as the decision pattern.
Many senior lawyers show no real curiosity about the business model of the law firm – they own and accept without question the decision pattern imposed by that model. This is either because they don’t see it as a matter of choice or, if they do, they conclude it is too difficult to move to a new business model and, frankly, why should they be the ones to kill the golden goose?
The conventional model tends to be short-sighted (how much will I earn this year?) and inward-looking (how do we increase demand for what we do and in the way that we do it?). This product-driven model is, in essence, an expensive lawyer base, arranged by service line, in search of buyers who are prepared to pay a price large enough that it covers that cost base plus the desired level of profit in that year. Put another way, the input effort justifies the output price. That’s fine until there is a genuine alternative.
There is a lot of talk about innovation in law. However, innovation that does not address the decision pattern imposed by the conventional business model – and thus the day-to-day behaviour of the lawyers – is unlikely to lead to a precision focus on enhancing the value created for clients. After all, that is the only key performance indicator that really matters in a fully functioning market.
In the conventional model, the structures, where power resides and how it is exercised, how information flows, the incentives and the culture (which is no more than observed behaviour over time) are all set up primarily for the law firm’s benefit. Sure the clients get quality, but do they really get best value? We have probably all heard similar stories of how the economic model has killed off good ideas.
Maybe the starting point is to get curious; to ask the smart questions that risk lacerating the conventional model. My question has always been – what business model do we need if we wish to align the incentives to the benefit of everyone in the value chain whilst providing us with a competitive advantage?
In my experience, when they are working in the system, lawyers quite like to be deviant; they don’t easily relate to the concept of a single operating model, nor do they readily accept that much of what we do is capable of being standardised. However, when it comes to working on the system, they are far less willing to apply their considerable powers of curiosity to the business model, the decisions that this drives and the behaviours it rewards.
In my view, we need more deviant, atypical and unruly lawyers if we are to properly address, what Karan Girotra & Serguei Netessine describe as, industry-engineered dissatisfaction.
We are always happy to talk about how legal service delivery can be improved - if you would like to discuss the issues in this briefing, please contact Lyndsey Ratcliffe, Head of Corporate Relations.
Published: 24 Aug 2018