Innovation: piercing the legal services addiction

In 2009, a number of experienced authors in this area inspired my thinking. I tried to fit much of the sense that they spoke into the world that I worked in and to consider which aspects might best add value to our clients. 

One option I considered was some form of collaboration between a legal services firm and its clients, whereby we jointly created solutions that streamlined claims processes, allowing those clients to reduce their use of lawyers. I suggested that by dealing with any litigation arising together in such a way, clients would enjoy significantly reduced legal spend, as well as reduced indemnity spend.

Since then the world has moved on rapidly. It is amazing to realise that the first article was written before IPads, Airbnb, Instagram or WhatsApp, and before Uber and Siri.  Indeed, it was written before the first Tesla production car drove stealthily from Elon Musk’s imagination.

Since 2015, the world has continued to evolve at speed– and we have seen the arrival of Amazon’s Alexa, Google Home, Apple watches, as well as a host of machine learning built into wearable and mobile applications. Since 2015, we have seen insurers like Lemonade adding fizz to their industry by providing customers with a fully automated artificial intelligence (AI) based claims experience.

Before I knew of any such things, in 2015’s article, I advanced some thoughts on clients’ increasing dependence upon legal services, and suggested their own lawyers often created this dependency.

The peddling of that addiction it seems has remained the default position of any legal provider who lacks the imagination to offer anything truly innovative. Instead, they seek to differentiate determinedly only on price. In return, their addicted clients gladly hand them ever-greater volumes of work at ever- lower margins.  

Finally, I looked at the possibility of lawyers being far more than just good at the business of law.  I considered whether my profession should also seek to offer broader insights to assist clients’ businesses.

In the first article, I suggested that we should, “take innovation to mean the creation of something entirely new”.

However, it also needs to be unique.

The best route to uniqueness is to ensure that differentiation is founded on any given business’s own personality and particular skills. Products built authentically on a business’s own core culture and skills can never really be copied.

Cooperation and corporate “buy-in” are also crucial. Without it, pockets of best practice and new thinking cannot be deployed more widely.

The concept of a group’s authenticity to its own DNA, and that group’s broad cooperation to achieve innovation and to compete is of course as old as ages. Neanderthals failed to compete with Homo Sapiens not because they were weaker, slower or less successful in themselves. In almost every way they were physically superior to our ancestors. They lost their evolutionary battle because they were not as capable of cooperating with one another as were our successful relatives. They were less able to innovate.

Which brings me to the point that innovation has only recently become a cliché for digital advancement.

In our modern world, “tech” will of course remain crucial, unless in some future season, a sentient form of AI decides that we are the Neanderthals. However, the focus on technology risks preventing other worthwhile innovation.

Innovation should be founded on the creating group’s own particular skills, culture and cooperation. It most certainly need not be based solely on the digital.

Since 2015, the insurance and the legal services markets have consolidated.

When procuring legal services, many clients have switched their focus from “price” to “value”. Many also have a much clearer view of what “value” means to them. Importantly, it often means different things to different clients.

Whether such clients interpret value in order to seek a medium term but overall reduction of indemnity spend, or the suddenly realised benefit of a reduced set of legal fees, is still a choice that needs to be made. I remain concerned that a few stalwarts in procurement teams still feel that both targets can still be achieved.

I made the point above about unimaginative law firms continuing to seek to differentiate solely on price.

Such lawyers‘ ever reducing margins (but ever-larger proportions of their business’s total cash revenue) becomes dependent on larger volumes of work fed by their clients. Consequently, lawyers and firms that seek to differentiate solely on price provide no more than a minimally viable service which needs ever more volumes to feed their own hunger for such clients. They become incentivised not to help their clients, but instead to generate ever-larger volumes of work from those clients. They regularly offer ‘guerrilla-added-value’, camouflaged to persuade each client to leak more legal work, not less. 

At the same time, their client’s focus on price is used by the lawyers as a distraction from barely acceptable service and rising indemnity spend.

In this modern world of external investment in law firms, (I count four or five now in my particular sector), some legal providers even offer loss-leading pricing in order to secure fresh contracts. That is done to bolster their corporate “value” before being sold on. Their owners of course then most definitely profit handsomely on sale. Their clients and their customers most definitely do not. It is a surprise that some procurers of legal services still accept such practices from their service suppliers. They appear not to anticipate the result.

The Client Insights product is the fletching to our innovations arrow. It applies science to the global data that we divine. Data Science allows us to better identify emerging risks and trends patterns from the data itself, and to do so from an international viewing platform.  

It was not so long ago that our lawyers reached educated assumptions, and then asked our data team to prove them. As lawyers, we assumed that we were intelligent enough to just know the answers. Now that we rely on data scientists to gaze further into the future than we could once have imagined, we recognise that offering unproven assumptions is entirely the wrong end of the analytics telescope.

 The science within analytical innovation can predict with extraordinary accuracy emerging claims and underwriting trends from around the world in order to best inform our clients’ wider businesses – wherever they may be.

The Corporate Affairs product is the armoured tip of our innovations arrow. It delivers jurisdictionally focussed horizon scanning: engaging with governments, predicting the consequences of anticipated legislation; and generating thought leadership for our clients.

Armed with such intellectual innovation our clients are better able to align their own businesses for the future, having taken into account such advice from the team. The Thought Leadership that is delivered, in particular, offers clients the opportunities to identify emerging risks that will impact their books of business. That such work is done across borders in a globalised economy also provides an international perspective for our local and global clients.

The R&D product is the shaft of our innovations arrow. It delivers technological innovation building on ideas created from any one of its multiple jurisdictions, and delivering them in a local and dynamic form into others. Such ideas have to date been delivered across the globe, including in Australia, Bermuda, China, the UK, USA and Latin America. .

Expedition is key, but so is ensuring “baked in” legal knowledge at every stage, in every jurisdiction. In this space we are, as one client generously concluded, deliberately de-lawyering by design.

All three strands collectively form our innovations arrow.  Working as one, they fly straight and hit hard - offering a level of insight, guidance and advice to clients and their customers that I could not have imagined possible ten years ago. They can do so with such power and impact because they are embedded into our culture, core strategy and remain authentic to both.

Such an approach has changed how many insurers are beginning to ask what should be expected of a modern legal services supplier. Ten years ago, it was shocking for them to imagine a law firm suggesting that one of its core missions could be “Helping clients to use lawyers less”.  Ten years on, that is what we have achieved.

We will continue to pursue that core mission. However, our global network of innovators is also now tasked with helping our clients to make or save money – which seems to me to be the very essence of what professional service suppliers should be seeking to do.