Navigating from Crisis to Innovation: How to Move Forward and Break the Mold
Conduit Law Founder and President, Peter Carayiannis, spoke with Rachel Zahorsky, Director of Marketing at Novus Law, to discuss how the legal industry is at a crossroads and must resolutely choose new paths toward sustainable innovation.
Rachel: Welcome Peter! You’ve been a favorite source since my early reporting days – as much for your deep industry knowledge as your no-holds-barred honesty, so let’s jump right in! Which pillars of the legal industry have shown their weaknesses?
Peter: The billable hour. The full-service law firm. In-house clients who call for change, but refuse to do so themselves.
If the industry wants sustainable innovation – especially from law firms – those things must come to an end. Despite recent appearances of ‘innovation labs’ among Big Law firms and overtures of alternative fee structures – the sniff test fails. There is little incentive for law firms to innovate under the current compensation model.
As long as the predominant legal services are powered by the hour, innovation will not get sustained interest from law firms. It’s not in their interest to do so. If you sell a product that makes you more efficient and more productive while the entire legal business model remains premised on not being efficient, you will always be at odds with the legal industry.
Lawyers – because of their training and background – generally like being paid for their time while assuming little or no risk. Being paid for value is different. It means you will stand behind the value of your services. That mindset is required. This shift most likely won’t get across the entire legal industry, but groups of lawyers will get it in pockets.
R:Let’s dig into the full-service law firm: How is the demand for it changing?
P: This model grew and prospered during the post-World War II economic boom, but it impedes sustainable innovation. Today, the legal industry needs useful tools that play together in a collaborative sandbox – law firms, technology solutions, new model legal firms, data scientists, and other specialists. These new connections cannot be made at the exclusion of others nor by people trying to own the market with their single lightning bolt of inspiration.
R: Are there other verticals that have lessons to teach the legal industry?
P: Take the rise and fall of the department store. A family, whether kids or adults, could walk into Sears or J.C. Penney, and each person could leave an hour later with something they needed. Housewares, clothing, and automotive needs were all serviced through the department store model. We no longer operate that way as consumers. Retail is falling apart. We buy just as much – if not more – but use different markets and channels at different times. For a large body of consumers, regardless of spending power, Amazon is for fungible goods, down-market items are purchased at Walmart, and unique pieces are purchased in new, specialized ways. However, clients are becoming much more value-sensitive and looking for the right solution for the right price by the right service providers, allied professionals, or boutique law firms.
The legal market hasn’t similarly adapted. We remain married to the methodologies of the full-service law firm. Lawyers must make that leap to put the hat they wear as general consumers into legal thinking and budgets. This critique isn’t levied at law firms alone. It is common to hear the in-house community at conference after conference, panel after panel, event after event, explicitly state they are not interested in the billable hour and want innovation. Yet, when presented with alternatives, they put up every objection to the sale. Whether it is procurement, committees, or corporate red tape, those are not real objections – they are objections to buying, objections to trying. The industry will always need sponsors and patrons. In-house clients must use their buying power as an affirmative tool for good – and not balk at flexing that muscle to make a difference. It will still need someone who will take a bite so that their success can become a positive feedback loop for the innovator to gain traction in the industry. The in-house community can make life-changing decisions for those driving sustainable change.
R: So there’s light at the end of the sustainable innovation tunnel?
P: There are beacons of light. There are some in-house legal execs – particularly those within the legal ops community – who see the art of the possible. Nobody is saying to big pharma to reinvent the entire practice of law. Go and find strategic projects in areas where there can be wins and generate buy-in from the business. After all, we didn’t build the jumbo jet overnight. Incremental additive innovations were developed over time to create success. If legal operations professionals genuinely want to sponsor and be patrons to the innovative parts of the industry, they need to find those quick wins and opportunities where interests are aligned (a big part of managing stakeholders) and engage new providers. Together they will shine. Together they will make meaningful change.
Peter Carayiannis is the founder and president of Conduit Law, a leading alternative model law firm. After practicing corporate law for several years at one of Canada’s largest national law firms, Peter set out to build a new model of law firm focused on finding more efficient and effective ways of working with clients. The experience of providing on-site and on-demand legal services led to the founding of Conduit Law. Peter has also worked closely with the Canadian legal tech community and is a frequent speaker on entrepreneurship and innovation, especially as it applies to the practice and business of law. He has spoken at numerous conferences and events in the U.S., Canada, and Europe.
Rachel Zahorsky leads the development and implementation of marketing and new business strategies and tools, internal and external branding and communications, and media content at Novus Law, an award-winning global legal services firm. She is also a Contributing Editor of the ACC Legal Ops Observer. She’s an award-winning former legal affairs journalist and notably co-authored the ABA Journal’s Paradigm Shift series, which discusses how the current economic and technology climate is changing the future of the legal profession. She has reported for Bloomberg News and the Associated Press.
This article originally appeared in the ACC Legal Operations Observer, July 2020.