A 2017 Altman Weil survey found that half of law firms say they are actively engaged in creating special projects and experiments to test innovative ideas and methods. But a newly released survey finds that the corporate clients of those law firms are seeing little or no actual change in how law firms deliver services.

Conducted by the law firm Thompson Hine, the survey, Closing the Innovation Gap, interviewed in-house counsel and senior executives at 176 companies and financial institutions. The survey found:

  • Corporate counsel have not seen much actual change. Just 4 percent said they had seen “a lot” of innovation from law firms.
  • Just 29 percent reported that their firms provided them with any “significant” changes to help alleviate the pressures they faced.
  • In-house counsel were not reluctant to acknowledge improvements, they just had little to report. Just 38 percent said they had received better budgets or plans from outside firms. Just 34 percent had seen firms produce better work processes.

Notably, the survey found that legal departments are not waiting for their outside firms to change, but instead are changing by themselves. Forty-seven percent have instituted their own process reforms, adopting a variety of knowledge management and preventive law tools.

Our findings highlight what we call the Innovation Gap, a discrepancy between promises and delivery. According to the clients, the Gap exists across the board. Law firms—and some vendors—boast about their new technology, but apart from e-discovery and contract management, clients see little impact on their matters.

But the survey also found that clients hold themselves partly accountable for the lack of innovation. While 64 percent of respondents blamed firms for having been slow to change, 45 percent said they were culpable for not demanding more change.

The legal market now sits in an awkward and unsustainable position. Most law firms remain mired in the practices of the past even though at least half promise and promote innovation. Corporate counsel hear all those well-intentioned promotions, but they don’t see much action. As one client noted: “Throwing around concepts such as artificial intelligence or blockchain without really understanding them is of marginal utility.”

So what is to be done? Corporate counsel largely agree that they want to use new technologies and business models to enhance legal services and make costs more predictable. But they do not agree on how to get there, the survey found. Some believed the answer lies in technology, others focused on managing costs, and still others wanted to see new service models.

But one conclusion is clear, Thompson Hine said: The doors are wide open for innovation, and smart law firms and their clients will come together to design the future.

(Coincidentally, I recently presented a keynote on “The Innovation Gap” at the Legal Service’s Corporation’s Innovation in Technology Conference (video of which I posted here) and I will be speaking on the law firm innovation gap at the Lexpo innovation conference in Amsterdam April 16.)

Photo of Bob Ambrogi Bob Ambrogi

Bob is a lawyer, veteran legal journalist, and award-winning blogger and podcaster. In 2011, he was named to the inaugural Fastcase 50, honoring “the law’s smartest, most courageous innovators, techies, visionaries and leaders.” Earlier in his career, he was editor-in-chief of several legal publications, including The National Law Journal, and editorial director of ALM’s Litigation Services Division.