Q. Why aren’t we “there” yet in modernizing Legal? (286)

By Anusia Gillespie on February 4, 2022

Posted in In-House Legal Departments, Legal Innovation, NewLaw Fundamentals Q&A

A. Because it requires us to evolve our culture.

The building blocks to create the next level of Legal are now available, so why aren’t we “there” yet?

In this month’s NewLaw column, I suggest that Legal’s modernization journey is cultural as well as technological. Indeed, without the evolution of our culture, our innovation efforts are destined to frustrate and underwhelm our key stakeholders.

Letting go of “but”

To illustrate the cultural challenge, consider our natural resistance to “Yes, and” thinking, which is a rule-of-thumb in improvisational comedy that has been widely embraced by organizations trying to solve their most vexing bottleneck problems.

In brief, “Yes and … ” thinking asks us to expand on the implications of someone else’s “yes” and, at least for the purposes of the current conversation, forgo the killer “but.”

I recently asked Richard Susskind, the legal industry’s most renowned futurist, why we aren’t “there” yet in modernizing Legal. Richard replied, “When it comes to the leading law firms, it’s hard to convince a roomful of millionaires that they’ve got their business model wrong. Self-disruption is rare in mature professional firms. This is why the market is open for new providers.” Susskind, LinkedIn Post, Nov 2021.

For those of us who have seen NewLaw opportunities from within a traditional law firm, we agree, “Yes, we are still making a lot of money from the traditional service model,” feeling compelled to add:

but we have a professional obligation to embrace better, more efficient methods
but we are missing opportunities to do even better
but this feels like a bad strategy for the younger members of the firm.

As a result, we are not truly hearing Richard’s full message that “yes, the mindset of mature firms creates a market opportunity for new providers who see the world changing (yes, around the inert) and are positioning themselves to fill the growing white space that is engulfing client need.”

For those following the NewLaw Q&A series, you might recall the Bjarne Tellman, General Counsel of GSK Consumer Healthcare, commenting last fall:

There are huge white spaces of Total Addressable Market that no one is filling. NewLaw is beginning to understand that and filling those spaces much more rapidly and with much more innovation. That’s what clients need.

Post 258 (discussing how the needs of clients are changing).

The new providers are here. It’s not just an open market, it’s an active market. And one that many corporate legal departments are organizing to influence, as they want to create a shorter, more direct route to a future state of legal that:

Delivers 5x value without 5x-ing resources;
Manages complexity and reduces system-level risks for the business;
Embraces a culture of legal change-makers who can use experimentation to guide continuous improvement;
Aggregates shared knowledge to enable data-driven decision-making; and
Allocates repeat work to technologies to let lawyers be lawyers.

The reason we are not “there” yet is not because of the collective failure of law firms to meet the challenge of change. Evolving legal is no longer about the law firms. We’ve moved on. We have reached the inflection point for a faster ride into legal industrialization.

However, we still have not reached a smooth and safe passage. The convincing pain continues, albeit now with new audiences.

Modern GCs are scaling a mountain

In virtually every industry, the top priority of business leaders is to design and implement a successful digital transformation strategy. This means integrating technology into all areas of a business, fundamentally changing how the business operates and delivers value to customers.

The fear (or reality) that underlies digital transformation is that a competitor or new entrant will decimate the business by getting there first.

In a recent Legal Evolution post, Jason Barnwell, who runs the digital transformation effort for Microsoft’s legal department, makes the compelling case that unless law departments can support system-level change in how legal work is performed, they will be unable to keep up with the needs of the broader business, making the legal department the fail point. See Post 277.

Understandably, many modern GCs feel that they are scaling a mountain. Further, to enable their success, they exert an inordinate amount of effort trying to persuade their C-suite counterparts that the legal department requires investments on par with the rest of the business.

Over the several decades, general counsels have grown in power from the role of air traffic controllers to valued C-suite executives. See Post 258. Yet, what’s ahead is daunting. Failure to digitally mature the in-house legal function over the next five years is a risk for General Counsels of all sized departments, though the reasons might differ.

For large legal departments, there is a giant wave of demand coming in the next five years from the digital transformation of peer business functions. Without moves now, these legal teams simply will not have the capacity to handle that influx.

For others, mandates are less focused on capacity and more on enabling the business to make smart decisions, quickly, with actionable data. Without the right processes and technologies to keep pace with the speed of business in an increasingly digital world, legal teams will not have that data available fast enough.

The result is that in-house leaders will lose trust, lose ground, and lose power, slowly receding back into the pre-1980s world where in-house lawyers were in “a position of marginality and subservience.” David Wilkins, “Is the In-House Counsel Movement Going Global? A Preliminary Assessment of the Role of Internal Counsel in Emerging Economies,” 2012 Wisc L Rev 251, 251 (2012).

This would be a significant step backward for the entire legal profession. We know that, yet progress remains slow. What stands in our way?

Legal’s cultural operating system

Maybe we aren’t moving fast enough because our stories aren’t landing, aren’t trusted. Or maybe that’s a symptom of a deeper root cause. Maybe we need to turn the mirror on ourselves and ask: is it us?

In a recent column, Mark Cohen observed that “[t]he real digital challenge, according to [economist Erik] Brynjolfsson, is cultural. It’s not technology, tools, or processes that are holding back innovation—it’s people.” Cohen, “Law’s Tipping Point Is About Digital Transformation, Customers, And Capital—Not Firm Partners,” Forbes, Jun 22, 2021; see also Post 280 (LexFusion team concluding that culture has become the legal industry’s major constraint to successful innovation adoption).

Given all the resources and building blocks for digital evolution (and knowledge/data revolution) available for the taking, the only logical conclusion is that we must be in our own way. The market focus on the right language and stories to communicate value to stakeholders glosses over the major crack running through our foundation, which is how we “grew up” and the self-sabotaging behaviors this upbringing reinforces.

The behaviors are easy to spot. We protect low-value intellectual property (that’s my template!). Hoard work (that’s my client!). Offer opinions only to prove expertise or intelligence, without aiding in the decision at hand (I’m relevant!).

We fear failed outcomes, which can have the adverse effect of producing failed outcomes. For example, we succumb to the promise of a silver-bullet technology that fails because it was easier to understand than alternative mixes of people, processes, and right-sized tech.

We negotiate instead of collaborate, operating as if legal is a zero-sum game. I win, you lose.

These behaviors weave together to form the fabric of a cultural operating system that runs on a scarcity mindset. A scarcity mindset is a perspective that resources are uncommon and must be guarded. Scarcity is valuable in the right contexts — for example, time scarcity in setting deadlines — but limiting when adopted as a worldview. Scarcity forces myopic thinking, with an overemphasis on immediate benefits at the expense of future ones.

Our problem is us. And if the only way to is through, then we must reprogram our cultural operating system to maintain relevance and value.

Q. How might we reprogram legal’s cultural operating system to digitally evolve fast enough to meet demands, protecting the value and power of legal?

Popular NewLaw topics are often categorized as about legal technology, design, operations, or data and analytics, as are the varied siloed industry associations. But, these threads of evolution are all interrelated, and so is our future.

We must now embrace an abundance mindset and collaborate across disciplines, silos, geographies, companies, and even industries to learn, share, build, scale, and evolve legal advice and expertise. There is enough for everyone, but only with everyone. The challenge can no longer live within pockets of experts trying to push the envelope; we must now level-up through ecosystem collaboration.

A brief pause for the skeptics. I can hear you.

Collaborate? Yawn. Let’s hold hands and sing kumbaya, too.

While the term may feel fuzzy, the practice is hard. We shouldn’t underestimate the challenge of the patience, translation, trust, and value appreciation required for productive multi-disciplinary collaborations. Pile on the fact that we didn’t grow up this way, that legal does not have these productive behaviors engrained, and it is no wonder that legal has never “done” ecosystem collaboration. As evidence, a collaboration category was just added to the FT awards last year: Innovative Lawyers: new award to celebrate collaboration | Financial Times (ft.com).

The concept is not an amorphous soft skill, and the imperative is real. If alternative language helps, consider collaboration through the lens offered by noted author and consultant Joshua Cooper Ramo:

What is true for the machines all around us now is true for us too: We are what we are connected to. And mastery of that connection turns out to be the modern version of Napoleon’s coup d’oeil, the essential skill of the age.

Ramo, The Seventh Sense: Power, Fortune, and Survival in the Age of Networks at 35 (2016). We must master our connections — establishing a new cultural operating system that sees opportunity in sharing instead of threat — to evolve fast enough to protect the value and power of legal.