Innovation – the worm that is still turning?

In 2009, Kennedys’ Head of Liability, Richard West wrote an article entitled 'Innovation – opening a can of worms'. Six years on, Richard revisits some of the ideas that he presented, against a background of the seismic changes that have occurred in the legal market since that time.

In 2009, I argued that lawyers were rather missing the point when suggesting to their clients that as lawyers, they wished to work more closely in a partnership with them in order to solve problems; without realising that they were a part of the problem themselves. The stark reality is that lawyers’ clients regard the instruction of their own lawyers (as one on my partners succinctly describes it) as ‘a distress purchase’. It seems far more likely that the reality is that lawyers’ clients do not want to instruct lawyers at all.

Lawyers who have set their pricing models based on ever-increasing claims volumes or greater levels of attritional work are, therefore, rather missing the point, and missing it by some distance.

Further, I hinted that lawyers had begun to understand that they have to demonstrate value and not solely advertise the lowest price when seeking work from clients or prospects. I explore that further below.

In addition, I suggested that lawyers should recognise that their clients were beginning to see legal services as a product rather than a professional service; albeit a product that was required to be professionally delivered. I offered that clients wished to price in that way and rewarded outcomes in the same way as they did when consuming other products in their lives. Why should legal services be any different?

I also proposed that lawyers needed to stop telling clients what they (the lawyers) could do for them, but rather, stop and listen to find out what it was that the clients wanted. How often have lawyers’ clients been subjected to the 30 minutes of “concise” sales pitch, without once being asked what it is that they want?

Finally, tying up some of the points I make above, I advocated that a realistic goal for clients and their lawyers would be to deal with claims and any litigation arising efficiently together. Doing so would then significantly reduce legal spend and, in the right circumstances, clients’ indemnity spend.

The intervening years

The intervening years have indeed seen a profound shift in the provision of legal services and their delivery. Back in 2009, we could see that external investment in law firms was coming. That has had mixed success. Had I been writing this article four years ago, I would have said that such investment could be judged as a significant success. That is now much less certain.

The introduction of government driven online claims portals and medical reporting criteria for the vast majority of personal injury cases has forced a reduction in the proportion of those claims heading into litigation.

However, the arrival of that ‘portal-pressure’ on compensators to choose to settle rather than litigate has run in tandem with the creation of alternative business structures by a number of insurers in order to offer an improved, broader service to innocent customers in need of legal support. The corollary of that additional customer support is that the numbers of claims have increased, notwithstanding the general downward pressure that I refer to above. Litigation numbers have broadly stabilised because more claims have been generated to begin with, notwithstanding increased settlement percentages, (particularly in the motor arena). In my view, therefore, there is still an important role for the defendant lawyer to perform when representing their client.

As I suggest in my opening however, such a role does not mean on insisting on an ever greater number of instructions. Nor does it mean being involved when they should not be needed at all, or basing their pricing on an absurd race to the bottom, which then damages the service to the very customers that their clients are simultaneously seeking to enhance.

In my view, such a role should mean helping clients to reduce their reliance on lawyers rather than increasing their dependence upon them. A successful defendant legal services provider will be one that at the end of a contract, all things being equal and for all of the right reasons, is receiving less work than it was at the beginning.

The way forwards?

It is, more than ever before, vital for lawyers to ensure their clients understand the full picture – based on legal, industry and political developments. In order to provide true value to their clients, lawyers must make their client less reliant on all of their lawyers and encourage greater self-sufficiency. That means predicting and then solving problems for clients before they arise, not afterwards. It means reporting valuable business information in order to help claims teams, underwriters and each client’s business as their trusted advisor.

To become a trusted advisor means, to my mind, being far more than just technically competent on resolving each legal problem that arises, or offering an ever more cheaply provided legal product. Rather, one mark of a modern lawyer means providing clients with unique insights that will allow them to develop their investment plans and recognise opportunities for business areas. A modern lawyer needs to understand and be able to predict the challenges that their clients will face in the years to come and assist them in taking proactive steps to future proof their business.

In order to bring value to their clients’ businesses, lawyers need to accept that they too must seek to create and realise a USP that allows them to offer genuinely innovative and truly unique service products, many of which may fall well outside of the “traditional”.

Kennedys has designed a range of products to meet that goal and reflect the challenges faced by clients today, of which I am immensely proud.

Such tools are based, for instance, on improving risk management, investigation techniques and fraud detection. By equipping clients with the means to make their own legal decisions and to do so sooner, as well as with the capability to learn from and improve their own dispute resolution and litigation processes, we aim to be there for our clients only when they truly need a lawyer. We do not seek, as others do, to create an interdependence that encourages greater numbers of instructions handled at an ever decreasing level of service as a result of ever reducing pricing.

Kennedys has even created a virtual lawyer that does away with our clients’ need to instruct a lawyer at all in many cases. Indeed, I would urge clients to reject those lawyers who do not see themselves as part of the problem.

The execution of innovation and the resultant evolution into a valued, trusted advisor to a client’s business is only a part of the process. Another key is the effective delivery of the product and how that engages and rewards each client. And that reader is a subject for a future article.