Innovation in the legal industry with Prof. Bruno Mascello

Summary

In this insightful presentation, Professor Bruno Marcello from the University of San Gallen, Switzerland, delves into the concept of innovation, particularly within the legal market. He discusses the evolution of expectations, the necessity for lawyers to become strategic partners, and the importance of value addition. Marcello explores the lifecycle of ideas, the challenges of innovation adoption, and the impact of disruptive innovations. He also addresses the barriers to innovation in the legal sector, such as the billable hours system and risk aversion, while highlighting the potential of technology and other elements in fostering a culture of innovation.

Takeaways

• 😀 The speaker, Bruno Marcello, a professor of legal management, introduces the concept of innovation and its relevance to the legal market.
• 🏁 The historical perspective on innovation is provided, highlighting the transition from horse-drawn carriages to cars and the famous quote by the U.S. Commissioner of Patents, suggesting that innovation was thought to be complete at one point.
• 📈 The importance of general counsels becoming strategic partners and adding value to businesses is emphasized, indicating a shift in expectations from legal expertise to value and strategic thinking.
• 📊 Innovation is defined as an idea that provides value, satisfies a market need, and is executed successfully, leading to valuable sales.
• 💡 The process of innovation involves developing and presenting ideas, facing challenges, and potentially redesigning until the idea can be implemented.
• 📉 The success rate of ideas in the market is low, with less than one percent of 2000 ideas leading to profitable outcomes.
• 🔄 The concept of the S-curve is introduced to illustrate the adoption of new ideas in the market, showing how ideas grow and eventually reach a saturation point.
• 🔄 The 'double S-curve' concept is discussed, suggesting that successful businesses should start a new growth curve before their current one ends to ensure ongoing success.
• 🔧 Ninety percent of business model innovations are recombinations of basic models, indicating that innovation in business models is more about reconfiguration than pure creativity.
• 💥 Disruptive innovation is described as an innovation that changes the entire market, impacting all levels from the bottom to the top firms.
• 🚀 The emotional journey of change is outlined, from initial shock and denial to eventual acceptance, highlighting the human resistance to and adaptation of change.
• 🛑 Barriers to innovation in the legal market are identified, including a retrospective orientation, specialization, risk aversion, and the billable hours system which may discourage efficiency.
• 💼 Recent efforts by law firms to innovate are noted, such as the creation of innovation spaces, labs, and committees, suggesting a growing recognition of the need for innovation.
• 🌐 Technology is presented as one piece of the innovation puzzle in the legal market, but it is not the sole solution; innovation can occur in various areas including products, services, processes, and business models.

Q & A

Who is the speaker of the presentation?

The speaker is Bruno Marcello, a professor of legal management at the University of San Callan in Switzerland.

What does the speaker suggest about the hourly billing system in the context of innovation?

The speaker suggests that the hourly billing system could be considered an innovation, and he is going to explain the concept of innovation in the context of the legal market.

What historical example does the speaker use to illustrate the concept of innovation?

The speaker uses the historical example of the invention of the wheel and the transition from horsepower to cars in New York to illustrate the concept of innovation.

What famous quote from the U.S. Commissioner of Patents is mentioned in the script?

The famous quote mentioned is that 'everything that can be invented has been invented,' which the speaker uses to highlight the fallacy of such a belief in the face of ongoing innovation.

What role does the speaker say general counsels should play in business today?

The speaker says that general counsels today are supposed to add value and become strategic partners to business.

What is the significance of the 'S-curve' in the context of innovation presented by the speaker?

The 'S-curve' signifies the adoption lifecycle of an innovation in the market, showing the gradual increase in the number of adopters over time.

What does the speaker mean by 'double S-curve'?

The 'double S-curve' refers to the concept of having a successful business model (the first S-curve) and the need to start implementing a second S-curve in advance to ensure continued success and survival in the market.

What is the speaker's view on the role of technology in legal innovation?

The speaker's view is that while technology is an important piece of the puzzle, innovation in the legal market is not solely about technology. It can happen in various areas including products, services, processes, techniques, organization, and business models.

What barriers to innovation in the legal market does the speaker identify?

The speaker identifies several barriers to innovation in the legal market, including a retrospective orientation on case law, specialization leading to a mechanistic view, risk aversion, the billable hours system, lack of funding, and professional conduct rules.

What advice does the speaker give for those interested in innovation in the legal field?

The speaker advises that innovation can be pursued in various aspects of the legal field, not just technology, and encourages individuals to explore new ideas and approaches to improve the legal market.

Outlines

00:00

📚 Introduction to Innovation in the Legal Market

Bruno Marcello, a professor of legal management, introduces the concept of innovation in the context of the legal market. He begins by questioning the traditional hourly billing system and its potential as an innovation. Marcello takes the audience on a historical journey, highlighting the evolution of transportation from horses to cars, and the famous statement by the U.S. Commissioner of Patents about the end of invention. He emphasizes the changing expectations of businesses towards lawyers and the need for general counsels to become strategic partners, focusing on value addition, partnerships, and strategic thinking. Marcello outlines the key trends in the legal market and the strategy development process, which includes SWOT analysis, vision, strategy, implementation measures, and annual control. He connects these trends to the external environment analysis in strategy development.

05:03

💡 Understanding the Essence of Innovation

The paragraph delves into the definition and components of innovation. Marcello explains that innovation starts with an idea, which must satisfy a market need and be executable to be considered innovative. He points out that even brilliant ideas are not enough; they must be developed, presented, and often redesigned to meet challenges and ultimately be implemented. The success rate of ideas in the market is highlighted, with less than one percent leading to profitable outcomes. Marcello discusses the importance of the s-curve in the adoption of new ideas and introduces the concept of the double s-curve, which represents the transition from a successful business model to a new one before the old one becomes obsolete. He also presents research findings on business models, suggesting that most innovations are recombination of basic models.

10:04

🚀 The Challenge of Disruptive Innovation

Marcello discusses the concept of disruptive innovation, which is an innovation that changes the entire market landscape. He emphasizes that the impact of such an innovation is not limited to specific segments but is felt across all levels of the market. Disruptive innovations are not determined by a single idea but are validated by the market's acceptance and implementation. Marcello also touches on the emotional journey associated with change, which includes shock, denial, anger, negotiation, depression, and eventual acceptance. He provides an overview of the legal market's response to innovation, noting that while the term has gained traction, there are barriers to innovation, such as specialization, risk aversion, and the billable hours system. Despite these challenges, there are positive developments, such as the establishment of innovation spaces and committees within law firms.

15:07

🌐 Innovation Beyond Technology in the Legal Sector

In the final paragraph, Marcello addresses the misconception that innovation in the legal market is solely about technology. He argues that innovation can occur in various aspects, including products, services, processes, techniques, organization, and business models. Marcello encourages the audience to consider innovation more broadly and not to limit it to technological advancements. He also highlights the importance of innovation in the legal startup activity and the role of legal tech suppliers. The paragraph concludes with Marcello's hope to inspire the audience to embark on their innovation journey and offers ways to stay in touch for further discussion.

Keywords

💡Innovation

Innovation refers to the process of translating an idea or invention into a good or service that creates value or for which customers will pay. In the context of the video, innovation is explored as a critical concept in the legal market, where it is not just about creating new ideas but also about implementing them in a way that they satisfy a market need and lead to valuable sales. The video emphasizes that innovation in the legal sector has been slow due to various barriers, such as the billable hours system and risk aversion.

💡Hourly Billing System

The hourly billing system is a method of charging for legal services based on the time spent by the lawyer on a client's case. The video script suggests that this system could be seen as an innovation in its own right, but it also implies that it might be a barrier to further innovation, as it may discourage lawyers from becoming more efficient.

💡Value

Value, in the video, is presented as a key outcome that any innovation should provide. It is not just about legal expertise but about adding strategic value to the business. The concept is used to highlight the shift in expectations from businesses towards lawyers and general counsels, who are now expected to be strategic partners and add value beyond just legal advice.

💡General Counsels

General counsels are the chief legal officers in a company, responsible for overseeing the legal affairs of an organization. The video discusses how the role of general counsels is evolving to become more strategic and to add value to the business, which is a shift from their traditional focus on legal expertise alone.

💡Strategic Partner

A strategic partner is someone who contributes to the long-term goals and strategic direction of a business. In the video, the term is used to describe the new expectations placed on general counsels, who are now expected to move beyond their traditional legal roles and become integral to the strategic planning and execution of the business.

💡SWOT Analysis

SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. It is a strategic planning tool used in business and education as a method of evaluating the business environment. In the video, SWOT analysis is mentioned as the starting point of the strategy development process in the legal market, emphasizing the importance of understanding the external environment when considering innovation.

💡Disruptive Innovation

Disruptive innovation is a term used to describe innovations that create a new market and value network, eventually disrupting an existing market and displacing established market leaders. The video discusses this concept in the context of the legal market, suggesting that true innovation should have a widespread impact and not just be incremental improvements.

💡S-Curve

The S-curve is a graphical representation of the life cycle of a product or process, showing slow initial growth, rapid growth, and then a plateau as maturity is reached. In the video, the concept of the double S-curve is introduced to illustrate the idea that businesses should start working on a new growth curve before the current one peaks to ensure continued success.

💡Business Models

A business model describes the rationale of how an organization creates, delivers, and captures value. The video mentions that 90 percent of innovations in business models are recombinations of basic models, suggesting that innovation in business models is more about reconfiguring existing elements than creating entirely new ones.

💡Legal Tech

Legal tech refers to the use of technology in the legal industry to improve efficiency, access to justice, and other aspects of the legal process. The video touches on the rise of legal tech startups and the role of technology in driving innovation within the legal market, although it also emphasizes that innovation is not limited to technology alone.

💡Change Management

Change management is the process of transitioning individuals, teams, and organizations from a current state to a desired future state. The video script discusses the emotional journey that individuals go through when faced with change, which is a critical aspect of innovation as it often involves significant shifts in how things are done.

Highlights

Introduction to the concept of innovation and its relevance to the legal market by Professor Bruno Marcello.

The historical perspective on innovation, from the invention of the wheel to the transition from horsepower to cars in New York.

The famous statement by the U.S. Commissioner of Patents and the subsequent realization of the continuous nature of innovation.

The changing expectations of businesses towards lawyers and general counsels to add value and become strategic partners.

The importance of strategy in the legal market, including SWOT analysis and the development process.

The definition of innovation as starting with an idea that provides value and satisfies a market need.

The execution of ideas and the necessity of demand and valuable sales for an innovation to be successful.

The process of developing and presenting ideas, facing challenges, and the potential for redesign.

The low success rate of ideas in the market, with less than one percent leading to profitable outcomes.

The S-curve model illustrating the adoption of new ideas in the market and the potential for early or late adoption.

The concept of the double S-curve and the importance of starting a new business model before the current one ends.

Research findings on middle business models and the recombinations of basic models in innovation.

The characteristics of disruptive innovation and its impact on the entire market, not just specific segments.

The emotional journey of change management associated with innovation and its challenges.

Barriers to innovation in the legal market, including specialization, risk aversion, and the billable hours system.

Recent efforts by law firms to embrace innovation, such as innovation spaces, labs, and crowdsourcing platforms.

The misconception that innovation is solely about technology, when in fact it encompasses a broader range of elements.

The call to action for more innovation in the legal market and the encouragement to think beyond traditional boundaries.

Closing remarks and an invitation for further engagement with Professor Marcello through LinkedIn or email.

Transcripts

ladies and gentlemen

hello from switzerland have you ever

considered that the hourly billing

system could be qualified

as an innovation and what is this term

innovation all about i would like to

take you on a short journey

on innovation and explain a little bit

on a general term what it means and then

adapt it

to the legal market i am bruno marcello

i am a professor of legal management at

the university

of san callan in switzerland and now i

will

share the presentation i will go through

with you in a second

let's have a look and go back many years

when the wheel

was invented well maybe not everybody

was surprised

or saw the value in this invention

when we go back only 100 years more or

less

you see in this picture which was taken

in new york

that horsepower was changed how you move

on the road you had the classic

horses still here circled in red

but the majority now was driving with

cars

and at that time the u.s commissioner of

patents

also said this famous sentence that

everything that can be invented has been

invented well we know it better

and when we take for example this only

we realize

that something has changed in the market

of inventions

and keep that in mind because i would

like to remind you on the smartphone

a little bit later again

now why do i want to show you this

with these inventions because also in

the legal market

there has been a change expectations

have changed of business

when they look to lawyers and in

particular when they also look to

general counsels

because general accountants today are

supposed to add value

they have actually to become strategic

partner to business

and only with this short title you

realize that there are three terms in it

which didn't look familiar in the past

like

value not legal expertise it's value

then we talk about partnerships and we

talk about strategy

but what is strategy all about and i

would like to give you

a short overview on one slide which we

won't go through in detail you can have

a look into that a little bit later

now you have on the left hand side the

yellow pyramid

which shows you the key trends in the

legal market

on the right hand side you have the

green

strategy development process which

starts with a swot analysis

on top goes into a vision

from there into strategy and then you

decide

only then on the measures to take to

implement the strategy

and of course you control it every year

and how

are these two connected well the

trends are actually the ones which need

to be considered

when you analyze the external

environment now coming back to

innovation

let's put it a little bit into context

with all the key terms you hear

sometimes in this regard let's start

with risk management

risk is actually an umbrella term and it

stands for opportunities on the one hand

side

but also for threats

then we have the term of idea sometimes

also in connection with invention

we have the term improvement

which is still not considered an

innovation and when we talk about

innovation

it has become well actually standard

not to talk about normal innovations

anymore everything

has become a disruptive innovation today

all together with them you need to keep

in mind that once

you do something you want to move the

needle

somewhere it will always have to do with

change management

and we will look into that and the

consequences also

a little bit later but let's stay now

for a moment with the term

innovation what does innovation mean

innovation of course starts with an idea

maybe even a brilliant

idea and i'm sure you have every day

hundreds of ideas when you drive in the

car

when you have a cup of coffee maybe even

on the shower

now but this is not sufficient yet

it does not lead to an innovation

already

because this idea

needs to provide a value that means

it needs to satisfy a need

in the market maybe you have been

on an inventor um place already where

you have

all these kind of nice in

inventions i'm sorry

and where you think this is really cool

but at the end they don't satisfy really

a need in the market so what comes on

top

is point number three it means

you need to execute on the idea

and the need you have that means

the demand must be there and with a

little bit

of success also a big demand which leads

to valuable sales now all these three

elements

need to be in place to complete this

term

of innovation and let's go back again

to the first element the idea

i said that even you have a brilliant

idea

it won't be the end state of the

innovation you implement in the market

because an idea is often just simply

the starting point only and you have to

continue to

develop this idea you have to present it

maybe to a steering committee

or to your manager or to whomever to

to get through and you will for sure be

challenged

which you won't find very attractive

maybe

but it will motivate you to go into a

redesign and go on and go on

and only at the very end you will

hopefully

finally be able to implement this very

first idea

you had well how many ideas are

successful

in the market unfortunately

only a few let's look into this idea

further

you will see that from approximately

2000 ideas

only 11 are a success which means they

have

created some profit it's

less than one percent of success

and why is this the case because maybe

over time

even brilliant ideas may die too early

and i promise you that i come back to

the example

of the smartphone and i would like to

ask you one question

when did you buy your first

smartphone do you recall have you been

one of these

early adopters because you are a kind of

nerd taking nerd and you would like to

have the tools always at the very

beginning

or were you hesitant even suspicious i

said yeah

i will wait to see what happens here so

you were

maybe even a laggard in this regard

well combining all this demand here you

will get

this s-shape in the market where you

have

more and more and more which adopt

this new idea which has been implemented

in the market

and i would like to stay with this

s-curve because

it helps me to lead ideally to the next

idea

and the next idea is about this double

s-curve

what does it mean you may have today a

successful business model

here is red s and you know

this will come to an end somewhere and

it will come to an

end even though you do improvements

all the time however

to survive and to be successful in the

market as a company

you should start early in advance to

implement the second s-curve

which maybe in this green middle part

you see it cause also some tension

maybe you cannibalize each other even

and i would like to refer you to these

famous example which everybody of us

knows already with kodak

where it was about deciding should we

stay with analog cameras

and or move to digital cameras

already history has proven

already what would have been the right

approach

now talking about these business models

let me show you

here a little bit of research we have

done in some calendar

in sangalan we have drawn this map which

shows you all the middle business models

we have found

and indeed it is about 55

business models not more or less

and we have found out that

90 percent of all the innovations we

find

with regard to business models are

simple

recombinations of these basic

business models that means

at the end when you talk about

innovating

some business model it's not about art

but it's more about handicraft

and yes this applies even

to these famous examples we know in the

market

here which we consider

a brilliant idea but nevertheless it has

been

actually built on these basic models

as well

now next point innovation

so far you are set but what is a

disruptive innovation

we talk about an innovation which is

already a challenge enough as we have

seen

to achieve we talk about disruptive

innovations

when an innovation changes the entire

market that means for the legal market

here for example

that you have an impact on all the

levels

so you have the entrance

not only working on the lower level

with high commas in the legal market but

they go

also to the top law firms and they have

changes and impacts there as well so

a disruptive innovation will always

apply to the

entire market and not just to be bitter

pieces only

how do you do a disruptive innovation

well i would say

this you can't decide with your idea

because the market will have decided

only afterwards

whether to implement it throughout all

the levels only

well and now we come to this last

point which we discussed and addressed

already it's about change

every thing you change be it by

improvement be it by an innovation

it will lead you all through

this journey here of emotions

we are all human beings we don't as a

principal don't like

so much changes and as we see

and we are actually actually exposed to

change

we go through these emotional

valley and mountain uh journey here so

you start

you are shocked maybe you deny and say

this is all

nonsense you shouldn't do it you get

angry because they continue

you start to negotiate you fall into

depression and then you approach

again and accept it finally the good

news is

if you meet somebody who is really

denying a good idea

he's or she is even angry and starts to

negotiate

it's a good sign because this person is

already on the journey

let's have a look now quickly into the

legal market

and what innovation means we have

realized that some five to ten years ago

the term innovation got tracked into the

market

we have seen indices and rankings we

have even

talked about top 50 innovators in the

legal market

and we have started to list all these

innovations so innovation

became important

also for lawyers and in the legal market

when we look now in a recent survey

which has been done in the u.s

we see however that compared for example

to

corporate legal departments law firms

seem to have more barriers

to innovation it's about the idea that

they provide services

and not um it's not an industry that

there are other profession

and not the business even though they

are called the firm

they are retrospectively oriented on

case law

they look into specialization which move

them

into a corner of becoming a mechanic and

less

a strategic person maybe combined with a

little bit

of risk aversion this leads

that you get into a view of a tunnel

unless

on a broad generalized area the billable

hours

system which actually punishes you to

become

more efficient

investments funding we see it also here

in this chart

that there is no funding available

because everything is distributed at the

end of the year

so partners today need to decide whether

they would like to invest today

so that partners tomorrow can benefit of

it

then we have terms about independence

rules of professional conduct

and also self-regulation in the market

which may

hinder innovation in the legal market

now there is also

a flip side to it because in the last

years

i have read headlines where law firms

talk about

an innovation space they launch legal

innovation labs

they launch innovation crowdsourcing

platforms

across the entire firm they even claim

to spend 20 of the billable hours on

innovation

and they set up global innovation

committees to act as a focal point

for legal tank now is innovation

is it all about technology is this

actually the result and the solution

for innovation in the legal market well

we could look

for example into

the legal startup activity and see how

many new

startup companies have been funded and

entered into the market could be one

view

here in particular often you see these

legal tech

suppliers or you could go into

this chart which i love very much

actually of clock

and you will see that technology also is

one of the pieces of these core 12

elements they address but it's not

all about technology

you can do innovation in all

these places so that means

innovations happens everywhere on

products and services on processes

and techniques in organization business

models you name it

you can innovate everywhere

said that i hope i have provided some

new food for thought for you

maybe you are even a little bit

incentivized now

to try to do a little bit more of

innovation then

i would have achieved my goal with you

and i would like to wish you now

good luck on your innovation journey if

you if you would like to stay in touch

with me

please connect with me over linkedin

send me an email

or maybe we meet someone in the future

in person thanks for watching this video

and bye bye from switzerland