innovation 28 Oct 2020 Embracing innovation:  the legal industry's strategic response to disruption

Calls for the legal profession to embrace innovation have garnered many headlines in recent decades. As commentators have pointed out, the industry has often been slow to embrace new technologies that could help firms to reconceptualise business models and reduce costs for clients, while also delivering services faster and more efficiently. 

Change is starting to happen at a steady pace. But when it comes to larger law firms, is that pace of change going unacknowledged or even being ignored? How widely recognised are the important steps these firms are taking to build their innovation capability, contribute to disruption in the wider ecosystem and actively transform the way legal work is done?

These are some of the questions which panel moderator Lam Chee Kin, Managing Director & Head, Legal, Compliance & Secretariat, DBS Bank put to Ben Tidswell, Chairman of Ashurst, at a recent discussion entitled The Empire Strikes Back – Law Firms’ Strategic Response to Disruption. As Tidswell put it, “innovation might not always be easy, but it would be wrong to say we can’t or won’t respond”.

Responding to evolving client needs

Tidswell was speaking at the TechLaw.Fest 2020, an annual conference organised by the Ministry of Law in Singapore and the Singapore Academy of Law to look at the evolving relationship between law and technology. More than 5,000 attendees from 80 countries took part in the September event, which was entirely virtual and included panels, webinars and even online networking opportunities.

Alongside fellow panellist Patrick Ang, Managing Partner at Rajah & Tann Singapore, Tidswell analysed the core issues compelling law firms to rethink their traditional strategies. Both agreed client pressure was a crucial factor. As they put it, clients want more value and efficiency in the legal services they’re buying. And as well as demanding more for less, they expect lawyers to use technology and a more transparent approach in the way they work.

The panel also agreed that many firms recognise the urgent need to respond to such pressure and are eager to become more client-centric. However, a host of institutional impediments block the way. Those can include the relatively closed nature of a profession rooted in centuries of tradition; conservative, risk-averse partners and management; and a business and funding model that has traditionally discouraged investment, let alone innovation. 

As an example, Tidswell pointed to what’s often seen as a mainstay of the traditional law firm: the chargeable hour. The relative inflexibility of this cost-intensive model has long fuelled client dissatisfaction, yet firms often remain reluctant to change to a different billing system. In the eyes of some critics, that may be because investing in efficiency-based technological solutions can lead to fewer billable hours and therefore less profit.

Nevertheless, progressive firms are re-engineering the way they deliver their services. This includes Ashurst, which has more than 1,600 partners and lawyers serving clients from offices in 16 countries. 

“We’ve spent millions of pounds unbundling work, establishing low-cost resourcing options and employing hundreds of people to look at ways we can offer more efficient solutions to our clients,” said Tidwell. “What’s more, over 60 percent of our billing is now carried out via alternative fee arrangements.” 

These shifts have fundamentally altered the Ashurst business model, he added. “We’re also finding the changes are necessary because of the sheer complexity of some of the major challenges our clients have faced, particularly the major regulatory interventions in the aftermath of the global financial crisis. That hasn’t stopped – the pandemic comes to mind – and I expect this adaptation in our business in response to accelerate, if anything.” 

Accommodating changing employee expectations

As Lam pointed out, another macro factor accelerating change in the legal industry is demography. Waves of millennials and Generation Zedders are moving into the workforce and bringing with them new expectations, such as the importance of agile working, balancing career and family, and making a difference to society. As a result, there is pressure on every sector, including the legal industry, to quickly figure out how to reconfigure itself around the best and brightest young talent.

The panellists agreed that these are complex problems for traditional law firm leaders. But in Tidswell’s view, any changes in this direction are to be embraced rather than feared. 

“For us, it’s meant having to change to become more open and transparent, less hierarchical and more diverse. It’s also involved clearly demonstrating that we have what I call ‘a social licence’ to operate – that what drives us as a firm is not just profit motivation. It’s more about how we can help achieve positive social impacts in our broader communities,” he said.

Tidswell described how Ashurst is giving its people opportunities to share their time and professional skills through a social impact programme, where they can support community partners focused on social mobility in disadvantaged communities. That complements a diversity and inclusion programme, a sustainability initiative and a significant global pro bono legal practice focused on supporting disadvantaged people who lack access to justice.

“For example, we’ve been working in the Greek islands to help asylum seekers fill out their applications for asylum in the European Union,” he said. “And while these initiatives have long been in place, I think they’re becoming the central aspects of life at the firm. The impact on employee engagement has been striking and we’re seeing the fruits now, during the pandemic.” 

Along with many businesses everywhere, Ashurst was forced to close its offices when COVID-19 struck. “We then sent our global workforce of over 3,000 people home, pretty much overnight,” Tidswell said. “And I can tell you it was completely seamless and has been every day since. We also asked almost our entire workforce to work a four-day week for several months, and 99 percent agreed straight away. I think the way our people view the firm played a really big part in those responses.” 

Adopting alternative business models

The panellists also agreed that fostering an environment that supports flexible working and collaboration doesn’t just help firms address engagement and retention challenges. It also better serves client needs. Enlisting digitally savvy young minds in the service of efficient project management and technological solutions supports the other vital task at hand: continuous and disruptive improvement in the way legal services are delivered.

“That’s why I think our people at Ashurst are a more powerful agent for change than technology and perhaps even more powerful than the client pressure I spoke about,” Tidswell said. 

But as Lam asked, has adopting these kinds of changes really led to any major restructuring within well-established law firms? How much has really changed?

“At Ashurst, quite a lot,” said Tidswell, listing the ancillary services and new businesses that the firm now operates. These include Ashurst Advance, a ‘new law’ division that focuses on innovative alternative methods of delivering legal services. 

“We’ve hired dedicated client account managers within Ashurst Advance to make sure that the client’s need is central to what we do,” he said. “We’re building a legal operations community to stay in touch with clients about their challenges around the delivery and procurement of legal services and the value we can deliver to them beyond the purely commercial aspects of the relationship. And we have added technology, project management and consulting capability to provide additional services for end-to-end solutions.” 

It’s an approach that has seen Ashurst Advance almost double in size in three years, with revenue growing by 40 percent over the 2020 financial year.

At the same time, the firm has created a consulting arm, which includes a Risk Advisory practice and a Board consultancy. It is also partnering with firms from outside the traditional law sector to provide bespoke solutions to meet clients’ needs. 

As Tidswell emphasised, all these changes require different workforces, processes, technology platforms, organisational structures and capabilities from traditional law firms. “And they are examples of a client-centricity that would have been unthinkable for Ashurst even a decade ago,” he said. “Our role today is so much more than just providing answers to legal questions.” 

Embracing technology as a collaborative tool

The panellists also focused on the role technology is playing in driving change within the legal sector. Among the aspects they discussed was the fact that many firms are digitalising operations and developing their own digital products (for example, smart document assembly software) to help them become more efficient and save clients time and money. 

“I know we’re here at TechLaw.Fest, but let me be controversial for a moment – I don’t believe that technology is the real driver of the changes we’ve been talking about,” Tidswell said. “Sure, it’s important. At Ashurst, where we can deliver something faster, cheaper or more accurately through the use of technology, then we’ll do that. But in my view, our technological capabilities are more a function of the calibre of the people we hire and the environment we create for them to operate within.”

Lam pointed out that law firms are also now becoming much more diverse places in terms of the roles available within them. Tidswell agreed. “Lawyers will continue to be sought out for their judgment, their analytical skills and their deep legal knowledge in the decades to come, yet many of our people talking to our clients about important projects are now more than legal advisors,” he said. “They’re drawing on diverse competencies, enabled by cutting-edge technology, to collaborate with clients and solve complex business challenges.”

With these issues in mind, Ashurst is building innovation hubs within leading universities in cities such as Glasgow and Brisbane to help arm law students with the kinds of skillsets that the legal firms of the future will need. Those include certain business and technological competencies, from project management to data analytics and process design. 

“As a result, we are starting to see talent come to us early in their careers with an appetite for an alternative career in a law firm that has the right progressive culture and values,” Tidswell said.

At the forefront of legal culture innovation

In conclusion, the panellists agreed that the legal industry is entering a new era and the old one isn’t coming back. But as Lam asked, does that leave Big Law sidelined and poised for imminent self-destruction, Dark Star-like – or can ‘The Empire’ truly strike back?

“There is always a spectrum of views on whether or at what speed changes should be made, and the institutional impediments I mentioned earlier remain very real. I don’t believe we’re getting everything right. Yet I do believe that at Ashurst we have achieved a fundamental shift in how our people think – and are empowered to think – about the delivery of legal services,” Tidswell said. 

“The combination of responding to client pressure, and the expectations of our people has turned us into a very different organisation than we were even a few years ago. We are much more open, innovative and willing for change than many might think. So, I do feel very confident about our continued ability to adapt, evolve, and along the way make the legal profession – and the galaxy – a better place.”