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Will This Big Law Firm’s ‘Innovation’ Strategy Have Legs?

It’s a word that gets thrown around a lot: innovation.

In the legal industry, its use is often followed by a fair degree of skepticism. As Matthew Fawcett, general counsel of NetApp, told me last week: “I can’t see anything interesting developmentally that’s happening out there.”

With sarcasm, he recalled how more than 15 years ago law firms launched Y2K practices in hopes to land business, noting that he didn’t necessarily blame them for trying.

“I feel that world is almost remote to me,” said Fawcett, of law firms’ business innovations, having spent the past six years at the helm of a Fortune 500 data management company’s legal department. [He was once an associate at Morrison & Foerster in the 1990’s.]

But last week, one law firm said it would double down on its innovation. Reed Smith announced the launch of two innovation “hubs” — one in London and another in New York City — where its lawyers are welcomed to convene, share ideas and execute on innovation in three areas: new areas of the law, new ways of delivering client services and streamlining internal processes to become more efficient.

“I’ve always felt we have too many great ideas die in email inboxes at the firm,” said Mark Melodia, practice leader in IT, privacy and data security, IP and innovation.

To bring this talent into the fore, the firm dedicated conference rooms in New York and London to collaboration in recently furbished real estate prompted by lease renewals. Sofas, tables, and a glass wall overlooking the city mark the casual nature of the room, which Big Law Business toured in Manhattan last week. Although the firm is starting with London and New York, it is also seeking input from lawyers at other offices, Melodia said.

The firm is also hiring Alex Smith, a London “innovation manager” from LexisNexis who is tasked with overseeing the firm’s innovation projects. One of the first projects underway: an app in development that the firm declined to publicize, tentatively set to be rolled out in 2017.

The new initiative brings questions: What will these innovation hubs produce? And, will it be any different from the apps and other marketing devices rolled out by firms that have gone unnoticed by GCs like Fawcett?

Greg Nitzkowski, managing partner of Paul Hastings, said there are road blocks to progress on the law firm innovation front: firms are small compared to multi-billion dollar corporations, and investments in technologies are taken out of partners’ wallets.

“With lack of scale… it’s very hard to make long term bets on new technology,” said Nitzkowski.

In one bid to overcome that scale issue, Dentons last year launched Nextlabs, a wholly owned R&D company that invests in technology startups that the firm believes will transform the practice of law.

There have also been some action items in how law firms staff themselves. For instance, Nitzkowski pointed to the fact that Paul Hastings has hired 10 people over the past five years in the firm’s knowledge management department, which includes data scientists, pricing specialists and digital marketing experts to better equip the firm to pitch and retain client business. And he said the firm opened a due diligence center in Atlanta where the firm is staffing nothing but lawyers to conduct due diligence in corporate transactions and is partnering with an external vendor to provide the appropriate software and tools.

At Reed Smith, it’s a similar story. Last year, the firm made two London hires: Lucy Dillon as chief knowledge officer and Steven Agnoli as chief information officer, who will both oversee its innovation initiative alongside Ed Estrada, the chair of the firm’s financial industry group who joined the firm in 2007. Even Fawcett of NetApp acknowledged the industry trend toward expanding the C-suite: “Years ago, I don’t think many law firms had CIOs, and now I don’t think you’ll meet an AmLaw 100 or 200 firm that doesn’t,” he said.

But what kinds of innovations will this new staff produce?

Whatever happens, Melodia said that the firm aims to highlight its failures and learn from them — something that could be considered innovative in itself in the promotional world of lawyers.

“Most people don’t get to big law firms, and certainly to senior positions in big law firms, by talking about failures a lot,” he said. “I’ve often thought that we should have, on our intranet, a box for ‘Biggest Failure of the Week.’ — and what did that teach us?”

recently published at BloombergLaw authored by Casey Sullivan
Compliments of Reed Smith – a member of the EACCNY