Blockbuster_cinema

Legal commentators applaud the emergence of publicly traded law firms. They speculate that the increased cash flow will encourage firms to invest in research and development.

Although, I agree that the partnership model prevents adequate investment in new technologies and innovative approaches to legal services, it is incorrect to blame the business structure for a shortage of innovation in the legal profession. A lack of capital is not the barrier to innovation. If it were so, we would still be renting from Blockbusters instead of streaming from Netflix.

In fact sometimes a lack of resources is a distinct advantage. Malcolm Gladwell asserts in the book David and Goliath that often times what we perceive as disadvantages are really advantages. “We don’t spend enough time thinking about ways material advantages limit our options… When we see a giant, why do we assume the battle is his for the winning?”.

Clayton Christensen states in the Innovators’ Dilemma that it’s the processes within established companies that make it extremely difficult to develop disruptive technologies. The processes within established, large firms hinder the development of new technologies and new approaches to services.

The compensation structure, the strict hierarchies, and the culture of deference to seniority leaves established firms vulnerable to attack from below. New start-ups will likely sprout new and cheaper ways of providing services to clients.