Innovation is both a modern ideology and a premise for any kind of company that wants to survive in the digital economy. In the legal industry, innovation is a rather new requirement. For centuries, precedence and strong traditions have worked as bulwarks against fix ideas and the ever-changing current of new trends. That is all changing now. In the course of a decade, the legal industry has become subject to the idea that technological progression equals substantial improvements, that new is better and the status quo means stagnation.
One of the more tangible proofs of this development is the rise of the chief innovation officer or head of innovation position in larger law firms. The knowledge manager and the head of IT have either merged or is now being accompanied by a third person who is designated to lead the firm's innovations strategy. The role has been popularised the last five years and is said to have been established in order to:
1. Develop a culture of innovation in the law firm by curating new ideas and facilitating innovation processes.
2. Navigate in the ever-growing plethora of legal tech products by testing, analysing and finally deciding which ones to implement.
3. Differentiate the law firm and sell the message that the firm is innovative.
When browsing around on the websites of the largest Nordic law firms, it quickly becomes evident that there is a common understanding that successful adoption of the latest legal technology requires a chief innovation officer. Some even suggest that the position has become mission critical for the legal industry.
But what do these innovation people think of their own new role? How do they contribute? What are their challenges? And what do they even do? Legal Tech Weekly has asked Henrik Fagerholt from the Norwegian law firm BAHR and Elisabet Dahlman Löfgren from the Swedish firm Mannheimer Swartling for their perspectives.
Löfgren worked as a tax lawyer and with M&A's before taking a position as knowledge manager in Mannheimer Swartling, the largest law firm in the Nordics based on head-count. Her title has since been changed to Head of Innovation and Knowledge Management to better match what she does. She also leads MSA Innovation Lab, the firm’s latest initiative on legal tech, start-ups and cooperation with academia doing research in this field. She believes that her background in law has made her job easier as she knows the workflow and understands the culture.
“We have a strong culture in our organisation. We are a pure lockstep firm which means that we divide profits equally between the partners. That makes it possible to put more recourses into innovation and training because if you are interested in personal gain, then the only way to increase it is to make the cake bigger for everyone,” she says. Furthermore, she tries to uphold a culture where new ideas appreciated even though there is no direct financial return, and new employees are always encouraged to use their fresh view on things to identify any room for improvement.
“We always say that if you have a good idea and you want to work on it, then we are not going to block it. We have even had a scholar doing a study on our culture where people are open and share knowledge within the organisation,” Löfgren elaborates.
Henrik Fagerholt from BAHR also believes that the right culture is key to successful innovation: “It doesn't matter how good tools you introduce if the lawyers are not motivated,” he begins, and elaborates: “The culture also dictates the speed that you are able to implement new tools. If you don't have an innovative culture, then it's going to take a lot of time.” He comes from a background in computer science, programming and product development before taking the role as Knowledge Manager in BAHR. Later he has also become involved as CTO in BAHR Leap - a subsidiary that fuses legal experience with new technology to create innovative solutions for the legal sector.
Fagerholt has used some of the experience from outside the legal industry to try to cultivate a more innovative culture in the firm: “I have spent a lot of time on building a culture that is committed to testing and failing, and to explore. I think that any innovative organisation need to be able to fail smart. You need to believe that the product you are testing is the right one, but you also need to abort it as soon as you understand that it is a dead end. You have to build a culture that understands that you need to go down a few dead ends to find the correct tools and learn from it,” he says. “You also need to get everyone aware of that it takes time to adopt to new tools and that they will almost always cause a short term productivity gap. Every time you do something differently, or try a new tool, you are less efficient for a while. It doesn't matter how great the potential are, for a while you are going to be less productive,” he explains.
BAHR is also structured with a lockstep model with a flat divide where everyone knows that doing work that benefits the company long term also has a high value. Nevertheless, a challenge is that his work is not core-business: “Clients come first. When we have a lot to do, then the lawyers do not have time. It must be a company decision to align innovation work with client work. If you treat innovation work as an open recourse that someone can look at when they have time, then it will not be prioritized. We are working towards a more formal approach for requesting specialist lawyers for innovation work, but more importantly, we have started BAHR LEAP to address this issue. In BAHR LEAP both lawyers and technologists are completely dedicated to product and innovation work and client requests will never absorb the resources.” Fagerholt says.
Löfgren explains that while the IT-department covers the internal IT-infrastructure, her job as innovation manager is to have an out looking role: “The job of identifying and implementing new technologies is new. Before, this was an infrastructure matter and it was enough to have an IT-department. Today, this is not enough. We have new sophisticated technologies that are interlinked with the everyday work of the lawyers. So there is a new and time-consuming task of keeping an overview of what is out there, what we should do and not do.”
From a less abstract point of view, that means she is meeting a lot of ventures and companies in order to stay updated on the latest technology developments. She explains that she is looking for secure solutions that are simple, easy to use and compatible with other systems: “We need something with an easy interface. We are getting so many systems that we can't put enormous recourses into training everyone. We can't train lawyers in 10-15 complex solutions, so I look for something I can roll out without too much specific training.”
The legal is growing larger for every day but they both agree that the current market is too immature: “It is very startup dominated and very niche dominated. It is either people coming with a law background starting a company without even talking to the technology people before they start. And sometimes it is the other way around. You have people that know about technology and think they can create something for law firms without knowing how they work. The gap between technologists and lawyers is still big,” Fagerholt explains.
For instance, when researching about E-Discovery tools, Fagerholt found a list of the 100 best E-Discovery tools. With so many different solutions on the market, Fagerholt spends a lot of time just keeping track of what is there. The aim is to get as few tools as possible that cover the needs of as many lawyers and practice areas as possible, but still the total number of applications is growing. Also, they have to support the firm's overall strategy and to be a leading law firm today means that you also have to be in the forefront regarding technology. To accomplish this, you need both lawyers and technologists working full time in collaboration. We used to be only knowledge managers, but these have today often grown into CIO's or CTO’s in many companies because knowledge management has become so digital,” Fagerholt elaborates.
Besides finding new products and helping with the implementation, Löfgren also uses her knowledge to assist clients in Mannheimer Swartling to find the right legal tech solutions for their business. In general, her innovation work can be summed up like this: ”Our longterm goal and strategy is the provide the best legal advice to our clients. So what we do in the innovation department is the basis and the foundation for the rest of the organisation to provide that. We are the starting point of the result. We follow the next steps and keep ahead, so we can be on the forefront and always use the best technologies to help our clients,” she concludes.