Legal Disrupted. A Case of the Innovator’s Dilemma

lawyer-450205_150 Scales of JusticeNo profession is immune from disruption. A business with a value of $400 billion per year is a attractive target for newcomers, ranging from financial institutions to startups. Can legal ward off its challengers? Not without changing.

“The Innovator’s Dilemma” refers to Clayton Christensen’s theory that successful companies are too focused on customers’ current needs and that they fail to adopt technologies that will fulfill customers’ future or unspoken needs. When the goose is laying the golden eggs, it can be challenging to focus on what happens after the goose is gone. Think of Blockbuster’s collapse to Netflix or Amazon’s decision to develop the Kindle. The question for the mammoth book retailer was whether they should dig in their heels and fight ebooks which threatened to cannibalize their hard copy book sales. Jeff Bezos was savvy to the Innovator’s Dilemma and chose to lead in ebooks. Today Amazon controls 67% of the ebook market.

But the Innovator’s Dilemma pertains to technology. The legal profession is not about technology…or is it?

For context, let’s look at the thoughtful internet debate over the past few weeks. The catalyst was the post, “The Profession is Doomed,” by Toby Brown, published in 3 Geeks and a Law Blog. Toby had participated in a National Conference of Bar Presidents panel on the future of the profession.

One of the panel members described a change coming in Washington State where the first licenses to Limited Licensure Legal Technicians (LLLT) will be granted this spring. An LLLT is a new non-lawyer legal professional who may advise and assist clients. An LLLT must meet certain criteria but can qualify with an associate level degree. Approval of LLLT was opposed by the Board of Governors of the Washington Bar Association but was approved by the Washington Supreme Court. Brown writes that the focus of the conference presidents and executives was on finding ways to kill the LLLT.

Brown left the conference that day convinced that the profession is doomed because those in power in the profession won’t drive change, leaving it open to disruption from without.

Another compelling post on this topic, “Big Law as Legal Fiction and the Lack of Innovation,” is written by Ron Dolin who is with the Stanford Center on the Legal Profession. Dolin looks at how Big Law firms make decisions and how they decide to innovate, or not.

Dolin points out that the stagnant growth in 75% of the AM100 contrasted with the rapid growth in lower margin legal services startups such as LegalZoom and Rocket Lawyer is evidence that change in Big Law is needed.

Dolin references Prof. William Henderson of Indiana University Law School who commends the innovation of Bryan Cave, Seyfarth Shaw, and Littler Mendelson, yet estimates that “only 10-15% of large law firms have embarked on strategic initiatives that take into account the ‘New Normal.’” Henderson has warned of a train wreck along the lines of the Innovator’s Dilemma coming in Big Law in the next 5 to 10 years.

So why are Big Law firms moving slowly? Per Dolin, Big Law grapples with various paralyzing questions: Is change really needed? Would it best to see if a few firms fail before action is taken? How significant will the costs be? It’s easy to see that PCs make sense, but how does one know how far to take new technology? And, will the benefits of these new potentially expensive changes be realized after current partners retire? Dolin points to the partner system as deterrent to innovation in Big Law.

Our view is far brighter. Today’s solutions can enable traditional legal to become more nimble and cost-effective. As a matter of disclosure, our company, Mobile Helix, provides a mobile app designed specifically for lawyers which allows lawyers to work with DMS, files, SharePoint and email from anywhere. In essence, we enable lawyers to be more responsive to clients and to get greater value from their time.

Mobility is a huge gift to lawyers. Every day we support firms which are earnestly working to provide more productivity to their lawyers. As one legal IT director stated, the ROI on any ten or fifteen minutes which a lawyer can recoup on the go is high and the personal satisfaction is great.

Mobility reduces costs because time is used more productively. Lightweight mobile solutions are a very effective way for law firms to drive efficiencies. There are technologies, including ours, which can be adopted today without massive investment. The ROI begins on the first day, not years from now.

Toby Brown did legal a service by raising the flag on this subject. Legal need not be doomed. But innovation and action is required…and the clock is ticking.

–Maureen

Legal IT Gems from the ILTA 2014 Technology Survey

legal it

Credit Viktor Hanacek

If you love data and Legal IT, the new International Legal Technology Association 2014 Technology Survey will be right up your alley. At 301 pages it is chock-full of fascinating data.

Over 450 law firms and legal departments responded to nearly 200 questions. The firms range in size from under 50 attorneys to over 700 attorneys on staff. I encourage you to take a look at the report for yourself. Legal IT is not like IT in other sectors. Legal IT moves more slowly in some arenas and more quickly in other arenas. Some of the data will amaze you, especially if you are from the west coast of the United States where Cloud-hosted solutions have been more readily adopted.

Email

For example, attorneys, as they will tell you, “live in email.” What email platform do they live in?

MS Exchange 2010: 78%

MS Exchange 2007: 13%

MS Exchange 2013: 6%

Office 365: 1%

Gmail: less than 1%

By far the dominant email platform at law firms is Outlook, with 91% of those surveyed still using 2007 or 2010. Email hosted in the Cloud, much like file storage in the Cloud, is far from mainstream at law firms.

Document Management Systems

Law firms use an abundance of products to manage data, search data, and discover data. One widely used type of solution is known as document management. It provides strict version control and document check-in and check-out. Firms were asked which DMS they use. Shown here are the 2013 / 2014 responses. WorkSite (now from HP) has long been the market share leader, but NetDocuments is emerging as the growth leader.

Autonomy WorkSite:  47% / 49%

OpenText/Hummingbird: 19 / 20%

Worldox: 11 / 12%

NetDocuments: 6% / 8%

At Mobile Helix, we provide mobility solutions for law firms and were especially interested in the mobile data.

Tablet Usage

Adoption of tablets is strong in law firms. An average of 40% of legal IT teams report that their attorneys use tablets or iPads. 90% have iOS tablets in use, 44% have Android, and 42% have Microsoft Surface Pros in use. Notably, this 42% for Surface Pro is up from zero percent reported last year. Surprising? For insight, read Leo Sun in Why Microsoft’s Surface Pro Could Be One of the Most Important Devices of 2015.  He accurately makes the point that legacy enterprises are dependent on Microsoft Windows products. This won’t change in the next few years. For those entities, the Surface Pro 3 provides lightweight mobility as well as compatibility with existing software. Per IDC’s report in August, tablet demand is leveling off. While the volume of Surface Pros in use at legal teams may not be high today, Legal IT professionals in many firms are testing them or have pilots in place.

Mobile Device Management

Legal IT professionals were asked, which third-party systems are you using for MDM? The responses:

None: 54%

MobileIron: 12%

Good Technology: 8%

AirWatch: 8%

The data on Mobile Device Management show that there is no clear leader in MDM in the Legal sector.  Usage is fairly evenly distributed between the top three providers. As the data show, many law firms are in the process of defining their mobile strategy and solutions.

Financial Support of Smartphones

Of the firms responding, 82% provide some type of financial support for smartphones for partners. 47% provide partial support for the phone. With respect to the service plan, 55% pay for the entire data plan while 47% pay for a portion of the data plan.

Finally, a resounding bit of data. Do you force the use of a password to unlock the screen of mobile devices? Yes – 83%.

–Maureen