DWF is about as far from most people’s idea of a ‘traditional law firm’ as you can get, and that has also changed how it approaches innovation.
First, it’s no longer a partnership, it’s now a company that listed on the stock market in 2019. Secondly, as Jonathan Patterson, Managing Director, Innovation & Ventures, told Artificial Lawyer: ‘Legal advisory work is just one part of the firm. DWF today is a mix of services, including the Mindcrest volume group in the US, and non-legal, non-regulated professionals.’
‘That has widened our innovation perspective,’ he added.
The firm organises itself now into three divisions: the law firm – in effect what was there before, and the part most people would recognise; the Mindcrest group – an ALSP business, which does contract management and litigation support, as well as data-led legal analytics; and then Connected Services – which ranges from risk management, to digital learning, to corporate governance, to forensic accounting, to claims management, and that’s just half of what the Connected Services division does.
As you can appreciate, when your job is to focus on innovation inside such a broad, multi-faceted business, it stretches one’s outlook. You cannot really think just in terms of ‘legal tech’.
As Patterson explained: ‘In the old days we started with the idea of innovation embedded in the law firm practice areas. Then we launched DWF Ventures (a separate entity), which was for big ticket legal tech projects.’
‘Now, in 2021, it’s all about having a corporate innovation function,’ Patterson added. ‘We take our inspiration from other corporates and look at how they do things. Our mission statement is to create commercial value.’
And this comment from Patterson really sums up their approach to innovation: ‘We need not just bright ideas, we need material value.’
In short, it’s time to stop thinking that ‘innovation’ can be anything other than an input that makes the business more successful, and that this improved status can be seen in financial terms.
Last week this site considered how we can measure the ROI of legal tech tools. But, for Patterson, part of his role is understanding the real world ROI for innovation as a whole.
Of course, part of this focus on proving value comes from the fact that it is publicly listed. Many people dream of taking their company to the IPO stage, but what they may not consider is the incredible scrutiny your business then experiences.
From employee shareholders, to big institutional investors, to shareholder activists and influential stock market bloggers; many people are looking at the share price, observing your performance, and wondering out loud how you could be doing better. It’s the most public form of market feedback any business can ever witness.
And for the record, here is DWF’s share performance:
As you can see, the firm was chugging along nicely until the pandemic, and then the share price dropped from a peak of 140, to a low of 53. That must have been a scary few months.
But, also as is clear from the top table, the share price has been motoring back up again, and now is around 106, which is not too far off where it was back in 2019.
Everyone inside a law firm with the word ‘innovation’ in their job title is under a degree of pressure. Try adding the fact that your output could be seen as contributing directly to the share price.
Of course, in this case the dip was driven by macro-economic factors far beyond what the firm could do to change things. But, in ‘normal times’, the innovation input will trickle through to having an impact on investors – not just clients and the staff of the firm.
Again, that’s one of those things that seems a bit strange for the world of law, but in most corporates it would be totally normal. After all, if a bank came up with innovations that improved the business we’d all expect to see a material impact there. But back to Patterson.
The Bigger Picture
As Patterson noted, his job now means looking at a very wide range of needs and opportunities. They do still have a dedicated legal innovation head in Jamie Whalebone, Director of Legal Consultancy & Transformation, but, ‘legal is just part of a much broader recipe and we [the innovation team] sit across all three divisions’.
This, Patterson added, means ‘having an enterprise mindset‘. They also work closely with inhouse legal teams to really understand what the clients want. And, one especially noteworthy thing about DWF is that they don’t feel tied down by a traditional structure. They’re not trapped in the fixed model of the pyramidal law firm partnership. If they see a business case for a new service line, they can just spin it up and add it to the overall offering.
Another thing Patterson spends more time on now is horizon scanning. ‘We focus on short, medium and long-term trends that may drive things in our business,’ he explained. ‘We have formed partnerships with universities, built a client research network, we have a dedicated R&D budget, and we also have a lab in Pune, India that has a special focus on building and testing emerging technology.’
‘We get to look at new tech and figure out the use cases for it, or test out new versions and features of existing technology,’ he said.
So, what is exciting Patterson and DWF? He mentioned that smart contracts are especially interesting to them at present – and it would be great to see more firms really pick this idea up, especially now that Clause has become part of DocuSign.
One other aspect that Patterson underlined – and which is often highlighted when it comes to law firm innovation – is that as they are a company with long-term shareholders they can also take a longer term view.
Partnerships (not all….but many) tend to take a fairly short-term view of R&D spending. The equity partners get paid out over a year, and then the firm is back to zero in effect, and it all starts again. The focus is on working very hard and then getting the bills sent out to the clients. This always ‘in the thick of it’ culture tends to undermine long-term investments.
Also, as partners move to retirement, money invested from profits is money they won’t see paid into their pockets. And as most law firm management teams are stacked with older partners, there is a big barrier to really investing heavily in change that won’t make you more money before you leave.
In a listed law firm, where the partners own shares that they can take with them, it’s a different story. Also, it’s worth noting that Patterson also owns part of the firm – as do all the staff who were there in 2019. A small part of the firm, it is true, but part of it, nonetheless.
Artificial Lawyer and Patterson covered a lot more than the above, but we have to stop there. What strikes this site the most is how much your corporate structure changes your approach to innovation.
Patterson was also focused on innovation five years ago, but today that focus has a very different character. It’s broader, more radical in places, and truly tied back into the very sensible idea that innovation should result in tangible and financially visible benefits for the firm.
And although DWF is not like most other law firms, many legal businesses would no doubt also benefit from the same way of thinking.