Legal industry ‘cancer’ kills innovation

by Peter Godfrey31 Mar 2014
Firms must fight the 'cancer' of time-based pricing if they are genuine about innovating and being different, a leading legal industry adviser has told NZ Lawyer sister publication, Australasian Lawyer.

“I don’t think the law profession is so much saturated with lawyers than it is saturated with sameness,” consultant John Chisholm said.  
“Firms say they want to be different, but they really only want to be a tiny bit different.”
Chisholm, who advises law firms on issues that include value pricing, did not mince his words when it came to discussing time-based pricing, which he sees as the key obstacle firms need to overcome before innovation can occur. 

“Timesheets are the real cancer of the legal profession. Measuring and rewarding by time is a real innovation killer,” Chisholm said.

Chisholm believes firms should shift to value-based pricing, constructing an agreed up-front price that ultimately takes the client’s best needs into consideration. Fixed fees also remove the element of bill shock, giving clients more certainty and predictability when they engage with firms. 

Chisholm argued that while new legal start-ups can adapt alternative models of pricing and partnerships, incumbent firms are often resistant and lack the flexibility to adopt new innovations.
He also believes firms can’t afford to wait until client demand forces them into adopting changes that are already ubiquitous amongst new legal start-ups.

“The start-ups and external disruptors aren’t waiting around for clients to demand changes.  This means we need to be more innovative as a profession,” Chisholm said.
He also took aim at the traditional partnership model which he considers another innovation blocker.

“The partnership model has real problems partly because it’s a 19th century model of management.  When you have to get 50 people to run a business, decision making is slowed down,” Chisholm said.  

“Bizarrely, if you’re a lawyer the last thing you would advise clients to do would be for them to enter into partnerships,” Chisholm added.