Mitch Kowalski is a globally-recognized thought leader on legal services innovation. He is the author of two critically acclaimed books in this area – “The Great Legal Reformation” and “Avoiding Extinction: Reimagining Legal Services for the 21st Century”.
We spoke with Mitch recently about his thoughts on legal innovation in the profession at a global level, and how Australian law firms match up to their international counterparts.
You’ve had a broad and varied legal career, can you tell us how legal innovation came to be the central focus of what you do today?
It really is the result of being intensely unhappy with the places that I practiced with through the years. I was at a couple of different firms, and I also practiced in-house. Neither made me happy. I always thought it was just me; either I wasn’t cut out to be a lawyer or I didn’t have the right mind set.
My focus was always getting the job done in an efficient manner. However, in a firm environment, your key performance indicator is the number of hours billed. So if you’re getting your work done in the most efficient manner, you tend to have low hours; which lead to some very uncomfortable discussions with the managing partner. This really didn’t sit well with me. It didn’t make any sense that I should be spending more time on these files.
The way we practice now...it’s not good for lawyers and it isn’t good for clients. I feel very passionately that we should be doing things differently.
In 2009, I happened to find Richard Susskind’s book “The End of Lawyers.” It helped me to realise that I really wasn’t that crazy after all. Here’s this author in the UK saying very similar things to what I’m thinking - the way we practice now does not make a lot of sense. It’s not good for lawyers and it isn’t good for clients. I began focusing on reforming legal services because I feel very passionately that we should be doing things differently.
Legal innovation is a term that is used a lot by law firms, but it often lacks substance. In your book “The Great Legal Reformation”, you feature a number of law firms and businesses that are genuinely investing in legal innovation. How was your book received by the profession?
People liked that they could see real life examples of what others were doing globally. I think the reception was fairly good globally. However, it mostly resonates with “believers”; those who are already thinking along those lines and looking for examples of pathways they could follow. As opposed to people who aren’t following this area reading it and saying, “Wow, I never knew about that.”
In that sense it feels like preaching to the choir which is really unfortunate because we need to go beyond the legal innovation echo chamber and broaden our reach.
You recently delivered the keynote address at the FLIP conference in Sydney on the topic “Lawyering in 2050”. What do you think lawyering will look like in 2050, and what can lawyers do today to start adapting for the future?
Over the long term, I think law firms are going to be more entity-based. What I mean by that entities, rather than individual lawyers, will be seen by clients as the deliverer of services; these entities will rely upon a number of different individuals – lawyers, law clerks, paralegals, process technicians, technology people etc., - all working more collaboratively.
Lawyer time on a file will be significantly reduced as law clerks, paralegals and technologies will do much more of the work. Firms will grow, without adding lawyers or people who happened to go to law school. I use the term lawyer-less growth. If you have different ways of delivering legal services, you don’t need as many lawyers.
I use the term lawyer-less growth. If you have different ways of delivering legal services, you don’t need as many lawyers.
Notwithstanding this, we will always need lawyers – I don’t believe that this is the end of lawyers at all. However, how many do we actually need? From a business perspective, it makes more sense to deliver services in the cheapest way to protect or to increase your profit margins; continuing to hire really expensive components, such as lawyers, to do most of the work is therefore not a sound business plan.
In 2015, you stated in an interview that you believed we were “at the start of the great legal reformation, a time of disruption where changes [were] going to start rolling through the industry”. Nearly five years later, where do you think we are at - how far has the legal profession come?
Not as far as I would have liked. It has been slow and relatively steady, but certainly not earth-shattering.
The drivers of change aren’t what I thought they were back in 2015. I used to think that client pressure would be a strong motivator for change, because they are the ones holding the chequebooks. But this really hasn’t been the case. Technology has not been as much of a motivator either, because you can have all the technology you want, but it no-one is using the tools then they can’t create change. The only thing left is truly disruptive competition. Unfortunately, we’re still too early for competitors to gain a large enough foothold against traditional law firms and be truly disruptive. Until we get larger competitors disrupting the market and taking large swathes of market share, we aren’t going to see significant change. Hopefully we will see that over the next decade as these businesses grow and establish themselves!
You’ve previously spoken about the importance of processes, and using technology to solve problems. Do you believe that law firms are successfully focusing on these things? Or are we still seeing a lot of firms adopting technology for the sake of appearing to be up to date?
It’s a real mixed bag. The majority of firms are using technology or innovation for the public relations bump. You have to say you’re innovative now, otherwise you look like you’re a laggard; the fact that you’re not really innovative, or not using technology, is irrelevant. That being said, there are a very small number of firms investing in building teams to create client solutions.
And among firms who are winning innovation awards or trumpeting their innovations, the progress is truly fragmented and random. You could take five different firms from Perth, Sydney or Adelaide and get five different answers as to what legal innovation means to them. It’s quite rare for innovation to be part of the firm’s business strategy, and even rarer of firms to celebrate, incentivize, reward and track those innovations. Most innovations are ad-hoc – specific to a particular client, lawyer or team – and don’t cut across the whole firm. There’s no systemic or structural change, and no strategic goal to be more innovative. All of which is unfortunate, because a strategic approach is really where the magic happens and gains are made.
There is no systemic or structural change, and no strategic goal to be more innovative…[that] is really where the magic happens and gains are made.
Can you give a few examples of firms that are doing legal innovation well in Australia?
The first is Claimify, which is an off-shoot of Shine Legal. I met them late last year, when they were kicking off this project in a new skunkworks – that is, a small team of people taken from the wider organisation who are given a lot of scope to come up with new ideas and disrupt the existing business model. That team created Claimify, which, among other things, substantially automates the intake documentation for a personal injury claim. Everything can be done from your phone; you can take photos and upload them to your claim. This allows the firm to do personal injury claims work at a cheaper price and still make a profit. I’m really interested to see what they do over the coming years.
HBA legal are also doing very interesting things. It benefits from two founders who are completely focused on creating a business model that disrupts as well as providing excellent service for their clients - and a wonderful lifestyle for their internal teams. They’re highly focused on technology and are really looking at how they can leverage the data they have within their firm, and from their clients, to create better outcomes.
Minter Ellison is doing some really interesting technology focused projects. They’re pretty quiet which is unusual for a large firm; big firms tend to make a bigger deal of innovation for public relations sake. I think that indicates a level of seriousness about building something very ground-breaking.
I am also keen on Gilbert & Tobin’s efforts and those of Free Range Lawyers. However, they’re not the only ones!
Do you believe that the new generation of lawyers joining the workforce will help increase the pace of change within law firms? Or do you think this kind of change can only come from the top?
I put a lot of faith in millennials, because they think differently from Generation X about work, life and technology. I think they’ll be a factor in driving change because they’ll eventually be running firms. The oldest millennials are hitting forty, and this means they’re already coming into leadership positions where they can push firms in a certain direction, or leave the firm and create a new competitor. I think this generation has a great deal of potential to increase the pace of change.
But pressure must also come from the top. If senior management does not consider innovation to be important, and does not provide incentives for innovative thinking, then the entire firm is much more likely to ignore innovation.
Part of the problem with change is that it becomes a Rubik’s cube dilemma for law firms. You turn the square once and everything on the other sides move out of line, then you have to move it again (and again and again!) until all the colours on each side line up. If lawyers become more efficient, for example they do a file that used to take 5 hours, in 2.5 hours then billing by the hour is no longer as profitable; so firms have to move to a new pricing method. And if firms have to price differently, they then have to create a new metric to advance lawyers and others through their careers. And so on, and so on. Law firms aren’t interested in doing that.
Part of the problem with change is that it becomes a Rubik’s cube dilemma for law firms… Once you change one thing, it forces you to change a number of things across your model.
Once you change one thing, it forces you to change a number of things across your model. It’s easier to play around the edges and merely change things here and there - but not change too much.
To finish up, we’ve got three quick questions for you which we ask all of our leaders in law interviewees:
1. What’s your favourite way to wind down?
Netflix, or just reading. I really like Graham Green.
2. What’s one thing you would tell your 15-year-old self
Be super adaptable and open to all possibilities. Don’t just set yourself one course, because your life will take you down lots of different paths. Be open to those, and don’t get bent out of shape when things don’t go your way.
3. And last but not least, are you a cat person or a dog person?
I’m more a dog person. I tend to antagonise cats!