Startup Law

Legal industry's natural aversion to risk stifles innovation

Innovation in the legal industry is stifled by the very different way lawyers and entrepreneurs do business, according to LexisNexis’ Jim May.

“Lawyers are deeply trained to think about risk, which is almost the opposite of entrepreneurialism,” he says.

“This risk orientated view makes lawyers conservative in how they think about their service and how they communicate to clients.”

May is the rare person that understands the mindset of both. Before joining LexisNexis, where he leads the publishing powerhouse’s efforts to discover legal software solutions as a Head of Product Management, Legal Software Solutions, he founded his own startup.

It’s no secret when it comes to technology the legal industry is a slow mover. It’s not just because lawyers tend to be conservative, but also quite simply because there hasn’t been a need to innovate.

But that doesn’t mean there aren’t benefits to be had for those that do, May says.

“It’s true to say that the legal industry is a late adopter of technology, there are exceptions, some progressive firms that are innovating their business models, their structure, and getting competitive advantages,” he says.

“Historically high profit levels delay or reduce the urgency to change. The legal industry has got away with the old methods for longer.

“Where as other industries were forced to innovate because they weren’t sustainable without making changes.”

Often we think of innovation by law firms as just being when they develop and implement new technology. But firms also innovate when they use existing technology for new and improved ways of doing business. The firms using LawAdvisor’s new legal marketplace are a prime example. Law firms are adapting their business practices to take advantage of the opportunities in the marketplace. It is now simpler than ever to create and sell fixed fee packages to clients, and then manage those new relationships online. These firms have easy access to the leading technology, and focus on what they do best: which is provide legal help.

That’s important particularly as the pace of change in the legal industry quickens.

“The relatively small size, versus sectors like financial services, means the legal industry hasn’t been in the spotlight, is less of a target for technologists to make disruptive changes,” May says.

“Clients are looking for lawyers to give them business advice where as lawyers often advise in a more abstract way. They want to present the legal framework and let the client make the decision.

“That’s changing, there are already plenty of exceptions to that, and their services get snapped up. People love lawyers that will reach them and understand their business, and take more of a risk, or what lawyers perceive to be a risk, and advise them on their business.

“I think there is a built up wave of pressure that is going to push them over that hump soon.”

Jim May is speaking at LawHack Melbourne on Wednesday May 25. Tickets are free, but limited, click here for details.