‘Culture eats strategy for breakfast,’ the iconic management consultant Peter Drucker once said. The same is true for legal tech implementation, and for the same reasons.
Over the years there’s been plenty of debate about what ‘culture eats strategy for breakfast’ means. For me, it simply means that no matter what an organisation may build a plan for, i.e. a strategy, their culture as a business is what will really shape what actually gets done.
Having worked in various roles in management consulting, and particularly on the strategic advice side since 2008, I can personally vouch for the reality of this situation. The ever-present reality for all strategy developers is whether the nice, shiny plan will ever be activated and turned into reality, rather than sit in a desk drawer, with some of the easier and perhaps less significant elements cherry picked by management to show that ‘at least we’ve done something’.
But, you may well ask, why on Earth do organisations hire consultants, work hand-in-hand with them to build a new strategy, approve that strategy, and then largely ignore it once the consultant is out of the door? The answer is culture and the same drama plays out for legal tech as well.
Why Are We Changing Anything?
Why does an organisation change anything that it does? As explored in last week’s ‘The Economics of Legal Tech‘, there are two main drivers:
- The opportunistic response – the business sees a changing landscape, and if change is coming it’s better to be a leader there. They see the advantages in grappling with a significant change management challenge and commit to it for real.
- The defensive response – the business would prefer not to change the status quo. But, there is now an overwhelming need to change and despite the misgivings they eventually move in the direction others have set. This is primarily to meet the market norms, rather than because they actually believe this should be done. (And, if half-measures and cosmetic changes will suffice, they’ll take that option.)
Between these two poles strategy is born….or dies. And it’s a very human thing, because it’s all about people. It’s about latent as well as explicit power structures, organisational habits, and in some cases it can boil down to the personal interests of just one or two powerful individuals who either support or reject change. For want of another term, it’s politics, but at a business level.
What has this got to do with technology? The answer is that technology changes how a business works, how it operates, and ultimately how it makes money, (or in the case of an internal business unit such as an inhouse legal team, how it saves money).
Anyone in an organisation who starts to play with its profits is, by the nature of the subject, taking a risk. Which is one good reason why many businesses tend to leave things alone once the current system has been shown to work.
One can add on a little business unit here or there, maybe even invest a couple of million dollars, if you are a very large business, on something that wins lots of marketing buzz and builds client good will, but to really get into the machine, to put your hand into the mechanism and change things around….that is something few managers really want to do.
This is where we get to legal tech, where the majority of applications in isolation will not radically change much about a legal services business (LSB), although it may make it incrementally more efficient – which is either a profit-earning, or profit-destroying move, depending on how much of your income is based on selling your organisation’s inefficiency to the clients.
[ Note: if you sell the billable hour, then you can still package up that inefficiency and make a lot of money on it. Many clients – even in 2020 – still accept this archaic form of exchange, as often they come from the sell-side i.e. law firms, and have never shaken the culture they grew up in. Which is another great example of how culture always comes first in business.]
So, where does legal tech really change things? Where does it become a strategic issue?
In most cases no single application will change things enough to totally upend the economic model of a law firm, or radically reduce costs for an inhouse team. However, if you genuinely build a strategy to redesign your productive legal processes, i.e. all the many workflows that result in a legal product for your external or internal client, then real change can happen.
It Takes A Village
It takes more than one application to change a business, as is self-evident you need an integrated collection of tech, new processes and the right deployment of people, to change things on a scale that really matters and is fully transformative.
From doc automation and clause banks, to better tools to improve KM, to deal flow automation tools, to litigation tools from prediction to basic research to auto-generation of documents to ediscovery, to contract review and analysis and redlining tools, to improved CLM systems and more….there is much to do with tech of all kinds.
And then there is the right processes and people. Why is X made in London and not in Newcastle or Belfast? Why do mid-level associates do this, not paralegals? Why don’t all the practice groups share the same KM system? And so on.
All of this can be ‘nibbled’ at, application by application, year by year, with an incrementalist, operational improvement approach which largely avoids any strategic decisions. The defensive culture firms eventually make small changes and then manage to improve some aspects of the above as they move slowly forward. No big decisions ever need to be made, the norm is adhered to, no risks are taken. Nothing strategic ever comes into play.
And the reason we don’t call incremental moves strategic is because there is nothing at stake, there is no plan as such. You’re just ‘keeping up with the Joneses’ as it were, rather than plotting a course and making comprehensive changes. And that goes for legal tech implementation as well.
Culture Is Expressed Through Leadership
Whatever a business’s (or business unit’s) culture, it is expressed through its leadership. Generally leaders set the tone for an organisation and this filters all the way through, right to the receptionists.
[Note: I’ve always believed that you can get a very good sense of a business by how the receptionists treat you. Because their behaviour is set, quite often unconsciously, by the management and how they behave and treat people in the business. Moreover, as management hires junior staff, so their values get doubly reinforced by hiring people who either behave the same way, or think that kind of behaviour is ‘normal’, for good or ill.]
And, this is the culminating point: legal tech implementation is all about leadership. It is dependent upon how much the leadership wishes to actually change how things are done, with all the risks and opportunities that brings.
As said, small operational changes don’t require leadership. There is no great risk in tweaking a service workflow that already operates in a certain way. Unpicking that workflow and redesigning it, then doing that to every major workflow in the business/business unit…. now that takes real leadership. Not just leadership in terms of someone taking a decision and driving change, but also carrying the rest of the organisation with them – and that is not easy in a partnership, or for that matter in an inhouse team where the company may not wish to give resources for such change.
[Note: one of the ironies of inhouse change is that when you do have a GC who really wants to drive things in a new direction – which will only help the company to reduce costs in the long-term – that business may not always support such projects as they’re so used to investing in other parts of the organisation. Which is another example of culture overriding business planning.]
Change sometimes comes reluctantly to an organisation, and thereafter further alterations to business processes remain incremental and operational. Or, change is created by leaders who make broad, strategic decisions that carry risk, but that also open up new opportunities for the business as a whole.
These leaders are able to succeed because their organisation has a culture of supporting bold strategic steps, probably because its history is marked by similar important moves that reshaped how it worked and the owners of the business know this is why they have been successful.
Legal tech, as much as any other aspect of business change, remains caught between these two poles: the leaders and the laggards. And the key deciding factor remains, as it does for all strategic decisions: culture.
By Richard Tromans, Founder, Artificial Lawyer + Tromans Consulting (May 2020).
Legal Innovators Online – starts Tuesday 19, 3.30PM (UK time)
If you found this topic of interest, then please come along to Legal Innovators Online – the three-afternoon conference starting this Tuesday 19 May – at 3.30PM UK time, and also taking place on 20 and 21 May.
For tickets follow this link.