Somewhere between $100 billion and $300 billion change hands in legal every year, though estimates vary, depending on what’s being counted. Still, at either end of the spectrum, it’s a sizable volume of money for important work.
In light of those estimates, it’s not especially revealing to suggest the legal market is mature, but the choice of profitability levers to pull could be instructive.
“In mature markets efficiency trumps growth,” according to Daniel Katz who is an associate professor at the Chicago-Kent College of Law. His ideas are offered in 366 slide presentation the covers a dozen or so Observations Regarding Innovation in the Legal Industry.
The full presentation, which is embedded nearby is this week’s Friday Share. It’s a quick read despite its seemingly ominous length.
Great lawyers design systems that balance risk and improve transparency, helping clients price risk internally. – Daniel Katz
The 4 Pillars of Innovation in Law
The legal industry has traditionally applied “human experts” in greater numbers to solve complex legal problems, according to Professor Kat. He cites the Cobb-Douglas economics model where production = capital + labor.
“For greater returns,” the legal community should seek to substitute capital for labor.” That capital, according to the presentation, should flow into the four pillars of innovation in law, which he defines as:
He breaks each segment down accordingly:
- Law manifested in “substantive legal expertise.”
- Technology rooted in analytics, platforms, AI and knowledge management
- Design focused on “design thinking, UX, process improvement and project management
- Delivery mechanics such as the business model and marketing
Also see these related posts on legal innovation:
Tech Savvy as a Source of Law Firm Innovation
Law Firm R&D: Stories of Innovation
3 Notable Examples of Big Law IT Innovation
Legal Innovation and Great Lawyers
The amount of investment being made in legal startups has grown substantially in the last several years. For example, the presentation says in 2009, there were just 15 legal startups whereas today, there are more than 500.
Even as this startup community, which Professor Katz likens to an R&D function for the legal community, it’s not a question of lawyers versus the machines, but rather what lawyers and machines can achieve together.
The “data driven law practice is gaining steam,” but its utility is aligned with the good practice. “Great lawyers,” he writes, “design systems that balance risk and improve transparency, helping clients price risk internally.”
Here is the full presentation:
If you enjoyed this post, you might also like:
SlideShare Friday: An Introduction to Legal Analytics
Photo credit: Flickr, PopTech, Ecomaterials Innovation Lab…(CC BY-SA 2.0)