Solicitors take the prize for industry innovation
Regulatory and legislative changes emerge as both a barrier to and driver of innovation
Findings from the largest ever study of innovation in the legal sector, commissioned by the Solicitors Regulation Authority (SRA) and the Legal Services Board (LSB), suggests that solicitors, barristers, and other legal professionals are becoming more innovative in the organisation and management of their business.
The report received responses from 1,500 organisations, including over 900 law firms, 156 barristers' chambers, as well as other legal service providers (OLSPs), which cover businesses regulated under the Legal Services Act 2007 and those not covered by the Act.
The major effect of innovation in legal services has been to extend service range, improve quality, and attract new clients.
LSB chief executive, Richard Moriarty, welcomed the findings: 'This is key to growing the market and providing services that consumers and businesses want. The results, however, suggest that there is room for further improvement.
'Innovation and striving to improve services should not be viewed as a choice for providers - rather they should be viewed as a requirement to meet the public's expectations for legal services.'
Innovative solicitors
Solicitors were found, on average, to be more innovative than other regulated legal service organisations in terms of both managerial and organisational changes. They were also found to engage the most actively with their customers.
Among solicitors the predominant change was in the use of electronic communication with clients, including the use of electronic forms and improved case management systems.
OLSPs also frequently mentioned the use of online communication with clients. Among barristers' chambers innovation was more client-focused approach, such as direct access.
Some 80 per cent of organisations felt they have a leadership and culture which supports the development of new ideas. Around 40 per cent have put in place the practical steps to promote the development of new ideas; over one quarter have introduced a new or improved service in the last three years.
On average, such businesses obtain 6.3 per cent of their revenue from these services. This rises to 10.3 per cent among OLSPs in unregulated activities.
Paul Philip, chief executive of the SRA, said: 'Innovation drives growth in the legal sector as in any other. Our research shows that law firms and solicitors are capitalising on how the market is opening up by developing new ways to do business and offer more services. A wider range of services in a competitive market can only be good news for the public.'
Service providers of all types and sizes have been making substantial use of social media. Some 73 per cent of such providers use social media in advertising their services to clients and providing legal updates or free information.
By contrast, the direct provision of legal services via social media was found to be relatively uncommon, although it was more likely to be done by chambers than other providers.
ABS impact
The introduction of alternative business structures (ABS) was intended to promote innovation and diversity in the provision of legal services, an aim the research suggests has been achieved.
Having collected data from one third of SRA-regulated firms with ABS status, the report found that ABS solicitors are 13 to 15 per cent more likely to introduce new legal services. The implication is that the wider adoption of ABS status would be likely to increase the range of legal services on offer.
The report also found that ABS solicitors have higher levels of innovative activity of all providers with the exception of other solicitors. This is consistent with ABS solicitors' higher level of investment, staff engagement, and external involvement in innovation.
Barriers to innovation
Paradoxically, regulatory and legislative changes emerged as both a barrier to and driver of innovation in the report.
Regulatory and legislative issues were seen as being a significant impediment to innovation by only one fifth and one quarter of respondents respectively. This implies that up to 80 percent of respondents did not consider regulation or legislation to be a major constraint on innovation.
Most organisations saw regulation and legislation as having a neutral effect on innovation, with solicitors taking a more positive view than OLSPs. This is especially true for changes in legislation relating to legal services, professional indemnity insurance requirements, and new regulations.
By contrast, particular issues exist with the requirements for professional indemnity insurance (PII) for barristers. While for OLSPs in unregulated activities the key issues relate to legislation on client confidentiality and complaints.
A lack of the necessary finance, limited market opportunities, and lack of expertise in the business, each mentioned by under 20 per cent of respondents, was also seen as a barrier to innovation.
John van der Luit-Drummond is deputy editor for Solicitors Journal
john.vanderluit@solicitorsjournal.co.uk | @JvdLD