Big Law Innovation: Too Slow, Too Little, Too Late?

The good news is there are now 58 Chief Innovation Officers (CINOs) working at major law firms in the U.S. and Europe; the number is steadily rising.

The bad news is that only about 25% of these firms are making significant and meaningful simultaneous investments in people, process and technology.

So many disruptive players are outspending major law firms. The Big 4 (plus 6), ALSPs, and NextGen Legal Tech firms are all investing at a fiercer pace than the established players.

To make matters more challenging, the vast sums being invested at “the edges” of our industry will increasingly spark a competition to attract and retain the talent that knows how to create and compete in the future of the legal industry.

Common wisdom says the practice of law is slower to be disrupted than other industries, but if you look at what’s actually happening, this industry is being disrupted in a near-textbook manner. Disruption isn’t coming; it’s here.

Did you know there are two key ways to go wrong when it comes to NextGEN legal technology:

1. You can under-invest in technology

2. You can over-invest in technology and under-invest in people

To me, people drive everything. They are the ones deciding which technologies to acquire and how to best utilize them… and the talent that knows how to do this is in short supply.

The latest study from the UK says that “while 86 percent of UK firms believe automation is an important factor in managing client terms, just 17 percent have actually adopted the technology to implement this.”

In other words, the vast majority of firms are making both mistakes. The ironic thing about this report is that the very firms that are agreeing with the value of automation are reporting their own under-investment.

Another study from MIT’s Sloan Management Review focused on the adoption of AI across all industries. It found that 18% of the companies they surveyed can be considered Pioneers “that both understand and have adopted AI. These organizations are on the leading edge of incorporating AI into both their offerings and internal processes.”

The report dispels the myth that “widely available sophisticated AI tools will level the playing field” between organizations. Instead, “Pioneers are increasing their investment in AI, widening the gap with others.” 88% of Pioneers invested more in AI in the current year than the previous... but in the next two groups—Experimenters and Investigators—just 62% increased their investment.

Another myth this report challenges is that the greatest promise of AI is to take mundane knowledge work and automate it. Nope. In reality, “leaders are applying AI to develop new offerings that focus on revenue creation.”

This study cuts across many industries and functions, and is not limited to the legal industry.

Here’s the bottom line…

The legal industry is being disrupted, now. Over $2 billion has been invested already, and over the next several years we’ll see the tangible results of those investments. But at least 75% of the established, mainstream players in this industry are not investing enough and are not moving fast enough… even some of those that have hired CINOs.