Why Won’t Law Firms Innovate?

Most law firms still use an “opportunity cost” model to charge by the hour, regardless of outcome and how much is at stake. The reason law firms don’t change the way they are doing business is this simple – law firms won’t change because clients don’t make them. Law firms are waiting for clients to insist on change before they make a move. This is a dangerous waiting game. It’s the chicken and egg problem. Clients suspect that their time and money could be better spent, but won’t make their law firm change because they believe they have no control or are uncertain and afraid.  Increasingly, however, some innovative law firm and dispute resolution business models have started to emerge, enticing clients to look elsewhere for certain legal services.

In a recent article, Why Won’t Law Firms Innovate? Clients Don’t Make Them, author Daniella Isaacson explores the stagnancy of law firms, even in the face of disruptive innovation all around.

  • 66% of attendees at the Managing Partner Forum stated that law firm strategy had not changed at all.
  • 59% of law firm leaders admitted they are unwilling to change because clients do not require it.
  • Between 2012 and 2015 the use of alternate providers grew 33%.

Many law firms won’t change because they believe clients are not insisting they do so. But some clients are waking up and are changing, either by investing in expanded in-house legal departments to handle more functions or choosing to hire an alternative service provider rather than a law firm for more efficient handling of certain tasks and projects. Even litigation services are no exception, with alternatives like arbitration, mediation, and newer neutral-driven dispute resolution methods becoming more widely known and readily available.

In fact, as can be seen in the extensive white paper, Disruptive Innovation by Joan C. Williams, Aaron Platt, and Jessica Lee (which is a research project out of the Center for Law WorkLife at UC Hastings, College of the Law), the only change at law firms is coming from within the industry. Lawyers are leaving more traditional law firms to start their own firms with an innovative business model or with a different firm culture. As the paper states, “Firms that are able to adapt and meet the challenges across these themes have […] ‘Happy Clients and Happy Lawyers’—and wary competitors.”

The bottom line is clients increasingly are doing it themselves or they are finding alternatives to traditional law firms. Disruptive alternative dispute resolution providers like Just Resolve are at the eye of this storm of innovation at the right time.

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