Canadian Lawyer

18 F E B R U A R Y 2 0 1 9 w w w . c a n a d i a n l a w y e r m a g . c o m L aw firms are failing. They are failing society and clients by not provid- ing accessible and affordable legal services and by offering the wrong services. They are failing their internal stakeholders by assuming only senior lawyers contribute to law firm success. These shortcomings can't be easily fixed with the latest technol- ogy or management practice trend. Instead, the future success of law firms requires a shift from short-term thinking to long-term thinking. This means rewiring two key components of law firm DNA — the partnership structure and law firm regulation — and adopting an employee-owned corporate structure that allows non-lawyer employees an ownership stake. This type of innovation is profoundly more important than any app, open office design or project management tool, and requires us to come together as a profession to effect change. We know the problem: better and more affordable services are being developed by non-traditional providers. As a profession, we spend a lot of time wringing our hands (and writing) about the rise of our competitors, the growth of in-house capacity, the threat of automation, the success of big accounting firms and the rise of artificial intelligence. Yet we are not responding because, as many legal futurists (like Jordan Furlong) and academics (like Jonathan Molot) have pointed out, to do so requires long-term thinking — but law firms are driven to pursue short-term rewards. L E G A L I N N O VA T I O N N O W WHY LAW FIRMS CAN'T COMPETE By Rob Miller The roots of law firm short-termism are clear. Very few retiring lawyers are "bought out" in a meaningful way; they simply withdraw their capital. Because they have little financial stake in the future of the firm, they are moti- vated to pull as much money as possible out of the firm while they are practising. These senior partners often control the firm, leaving the people with the least interest in long-term results responsible for major decisions. The out- come is a misalignment between what motivates decision-makers (short-term profit-taking) and what is best for the enterprise (long-term stra- tegic investment), with a resulting bias toward decisions that increase current annual partner compensation at the expense of accessibility, cli- ent service, employee well-being and long-term profitability. The implication of this deeply ingrained short-termism is that law firms are failing their stakeholders. Law firms are failing society. We are man- dated by the self-regulatory social contract and our canon of professional ethics to promote accessibility and affordability of legal services. Technology and process improvement are the most direct paths to delivering these, yet firms are neither investing in nor hiring the right people to do them. We are not delivering on our societal commitments. Law firms are failing clients. In general, we have not embraced better business pro- cesses and technology, trained the "technolo- gy-enabled lawyer" that the future demands, embraced fee structures that better align our interests with those of our clients, or adopted lean processes and project management. We are not producing what our clients want. Structural and regulatory changes are needed to get to the root of why law firms fail @MillerTiterle O P I N I O N

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