When legal innovation is mentioned, we typically think of legal technology and process automation, etc. Most articles on the Internet focus on how the practice of law can be further automated, which then leads to increased productivity and profitability. As such they focus on legal technology and on the legal market. Some articles take a wider view and talk about innovation in law enforcement and in the judiciary. There too, however, the emphasis is on technology, automation and productivity.
But legal innovation is more than that. In an interesting synchronicity, two authors, Carolyn Elefant and Bill Henderson, each published an article on the two types – or faces – of legal innovation, within days of one another. The examples mentioned above all fall in the category of what Elefant calls ‘Innovation of Form’, and what Henderson refers to as ‘Service Delivery Innovation’. There is a different, and equally important, type of legal innovation, which the authors call ‘Innovation of Substance’ and ‘Substantive Law Innovation’ respectively. This type of legal innovation focuses on finding new legal solutions.
Elefant uses the example of Henry Ford to explain the difference. On the one hand, he invented the Model T. On the other hand, he came up with the design for the assembly line. The invention of the Model T is an innovation of substance. The design of the assembly line is an innovation of form. The emphasis in Legal Innovation tends to be on the innovation of form, which probably explains why lawyers often struggle with legal innovation. As Elefant puts it, “‘I went to law school to build a more efficient client intake process….’ said no lawyer ever.” Lawyers are more interested in innovation in substance.
So, how do we define these two types of innovation? Henderson gives the following definitions:
- Substantive Law Innovation (which he calls Type 0 Innovation) deals with adapting law to fit changing social, political, economic and technological conditions.
- Service Delivery Innovation (which he calls Type 1 innovation) deals with improving the quality, cost and delivery of existing legal solutions.
Everybody is familiar with Service Delivery (Type 1) Innovation. As Henderson points out, the vast majority of Legal Evolution content is focused on service delivery improvements (data, process, technology, etc.) that aim to increase legal productivity. Let us have a closer look at its counterpart, Substantive Law (Type 0) Innovation.
Society is changing fast, and the law needs to adapt to be able to handle these new conditions. The rise of Artificial Intelligence and the emergence of different new technologies are clear examples that demand an innovation in substantive law. Think, e.g., of cyberbullying, or of Robot Law. Henderson gives the example of synthetic biology, which impacts intellectual property, regulatory law, consumer safety. There are many more such areas: Carolyn Elefant wrote a book on 41 Practice Areas that didn’t exist 15 years ago. (You can find the table of contents here: myshingle.com/wp-content/uploads/2018/08/TOC-from-41PracticeAreas.pdf). She compiled the list to prove the point that new practice niches are growing at an accelerating rate.
In such periods of disruption, “we also need lawyers who can take on the hard work of substantive innovation — devising the kinds of new case theories and arguments and perspectives — that will allow technology to progress while preserving our democracy and our freedom.” (Elefant).
Henderson explains that Substantive Law Innovation “happens organically when a lawyer has the opportunity to immerse herself in the business and legal complexities of a new or changing industry. Although it often produces the same economic benefits as a major R&D initiative, lawyers and law firms seldom frame it that way. (…) Virtually any lawyer has the intellectual tools to do it. It requires zero additional training. Yet it’s undertheorized almost to the point of being invisible to practicing lawyers.”
In his article, Henderson refers to a presentation by Patrick McKenna that connected the lifecycle of law firms to the different types of innovation. McKenna explained that successful new law firms typically find the source of their growth in type 0 innovation, i.e. in finding new legal solutions in niche markets. As the law firm matures it starts paying more attention to type 1 innovation. It is however important to continue focusing on type 0 innovation: if the firm doesn’t, it loses its edge because the market it was active in becomes saturated. Henderson gives the examples of securities or debt collection as market segments that are saturated.
Henderson concludes that it is obvious that Type 0 and Type 1 innovation are both distinct and interdependent, and that the legal profession’s tool box needs to include both types of innovation. He advises lawyers and legal professionals to specialize in one or the other, while retaining the ability to effectively collaborative across the two types.
Henderson: “Neither Type 0 nor Type 1 innovation are easy or costless. Both require continuous learning and an investment of time and resources without a guaranteed financial return. Yet both add immense value to clients and form the basis for challenging and rewarding careers. Thus, for both lawyers and legal professionals, the future is bright.”