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Law firms the least innovative among PSFs

Culture and risk aversion cited as key barriers to innovation  

28 May 2013

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By Manju Manglani, Editor (@ManjuManglani)

Law firms are the least innovative among professional services firms, with only 69 per cent of business leaders rating law firms as good at innovating, according to recent research.

The survey by FTI Consulting and London First found that 40 per cent of lawyers believe their firm’s culture and ethos constitute a barrier to innovation.

In addition, 45 per cent of lawyer respondents said that risk aversion is holding back innovation. However, 81 per cent agreed that risk-taking is necessary to achieve innovation and 93 per cent agreed that innovation is important in attracting and retaining clients.

Published in Innovation in Professional Services: The Innovation Index, the findings are based on a survey of 500 senior decision makers within the professional services sector in London, 87 of whom are lawyers.

“Innovation is far from institutionalised within the sector, with lawyers’ conservative tendencies prevailing,” said Anthony Danaher, chair of corporate communications at FTI Consulting.

“With a rise in competition from other financial centres and a liberalised legal market structure, innovation can no longer be seen as a luxury, but as an integral part of the operating strategy of law firms.”

Among all of the PSF leaders polled, nearly three quarters said they believe that innovation cannot be taught, while 93 per cent agreed that “you either have it or you don’t”. Less than half (43 per cent) felt that how they motivate and foster talent is key to innovation.

The study also highlighted that regulatory compliance is inhibiting PSFs from trying new ways of doing things, with just under half of respondents agreeing that it contributes to a “dangerous culture of introspection”. In particular, 54 per cent of accountancy firms and 69 per cent of firms within the financial services sector said they felt held back by regulation, citing this as their main inhibitor to innovation.

By contrast, 63 per cent of respondents in the creative sector felt a lack of funds was their biggest challenge when it comes to innovation.

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