In some cases, innovation can be about refining processes, becoming more efficient or simply generating new ideas about how something is done.
In the purest terms, innovation is about curiosity and improvement. It’s a way of thinking and acting – a philosophy that, when embedded in a team, can bring benefits far beyond any particular project or system to which it may be applied. However, people and organisations will often resist innovation. So, planning the introduction of an innovation and managing the change to ensure people adapt is an essential part of the process.
A helpful shorthand description of innovation in a commercial context might be ‘doing something new – or doing something differently – in a way that results in gains for an organisation’. That admittedly sets the bar low, and is far from covering all the bases. There are times when something that might reasonably be called innovative doesn’t result in the expected gains (perhaps because of corporate culture or changing circumstances). And the gains may not always be tangible – for example, innovation may not have a direct impact on the bottom line but could result in better compliance or risk management. Nevertheless, it may be a useful approach to thinking about the subject.
This chart reinforces a finding we have made elsewhere: about half the GCs we survey regard themselves as being ‘a little’ innovative. The rest are split between being very innovative and not innovative. Here that split breaks significantly in favour of those who are not innovative. In some other regions we have seen a more even split.
The charts on this page relate to innovation in the purchase and provision of legal services. They show that most GCs have taken at least some steps to reconfiguring the way they source and resource legal services, typically in response to changing market conditions, or to improve efficiency or effectiveness. But absolutely every aspect of a GC‘s role is capable of supporting an innovative approach.
GCs moving up the Value Pyramid – or aiming to stay at the top – need a substantial support network beneath them, and many GCs have found that one way of pushing themselves up the pyramid is to become better at managing external providers of legal services.
Even in some less pioneering organisations, it’s clear that GCs have become smarter in recent years about the different ways in which they can buy legal services, with the most basic work being highly price-sensitive and the purchase of more strategic advice open to a wider range of factors.
Life as a GC at the top of the pyramid is partly about having this sort of coherent and sophisticated approach to procurement, with the adept handling of a variety of law firms and other service providers being the key to success. GCs may come under more pressure (particularly budgetary pressure) to use ‘NewLaw’ solutions. Some will take the initiative in doing so, which may help their image as genuinely commercial and innovative players. But NewLaw is still evolving, and not all GCs are enthusiastic about what it currently offers. We have spoken to some GCs who have worked with external providers, and used off-the-shelf systems for commoditised work, but who have also seen weaknesses in some available systems and developed their own solutions – different innovative behaviour, which may serve to give them an advantage.
Whatever approach they take, GCs should be using their procurement of legal services – and other services, such as technology – as an opportunity both to improve the support they receive and to show how well they can deliver value.
How should innovation be measured? There’s no shortage of ways (as you’ll see if you type innovation measurement into an internet search engine). Some indices use systems designed to track innovation across an entire economy. Many companies – especially in sectors such as technology and life sciences – have also found ways of measuring their innovation against their competitors. But for in-house lawyers, many of the metrics that have been developed for use by manufacturers, such as R & D spend or patents filed, will not be relevant.
Benchmarking against other in-house legal teams may be a good idea – provided there is recognition that a GC starting from a low base in, for example, a relatively small local company may be highly innovative and yet not ‘catch up’, in objective terms, with a GC in, say, a large international tech company. Sometimes it will be enough to benchmark against yourself: measure where you are now and see how far you can travel in a year. A really innovative GC will set themselves a realistic target, agreed with their CEO, and then strive for ways to exceed it.
What will the in-house profession look like in 20 years? Will we see, as we are starting to elsewhere, senior people in the larger in-house legal teams who are not themselves lawyers but who are there because of their managerial or technical skills and experience?
Many in-house legal departments already use nonlegally qualified contract managers, paralegals and other non-lawyer staff. Our fourth GC report (which was UK-based) found many in-house legal teams making more use of non-lawyers, including some people who are skilled professionals and occupy senior managerial roles. Some organisations with large in-house legal teams – including several banks – have appointed legal department COOs.
The US is even more advanced, as demonstrated by the existence of the Corporate Legal Operations Consortium, an association for legal operations professionals that has been running for some years. We wonder: will Latin America also see the creation of a class of senior in-house legal staff who are not lawyers? And if it does, what will that mean for the profession?