The best law firm innovators alter their culture first

One law firm dominates this year’s rankings for the FT Asia-Pacific Innovative Lawyers report. Gilbert + Tobin of Australia has achieved five top rankings and awards, including the “special achievement” prize for Danny Gilbert, its co-founder and senior partner.

Started in 1988, G+T has made change an imperative, which is unusual for many businesses but particularly so for law firms. What lessons can be learnt from the G+T story?

The firm’s capacity for innovation is helped by being a first-generation law firm still run by a charismatic founder. This enables it to sidestep the clumsy decision-making processes that bedevil many more established law firms, where committees prevail.

More importantly, being managed by one of its founders allows the firm to maintain an experimental culture. Asked if he has experienced resistance to the strong embrace of technology at the firm, Mr Gilbert says this did not matter: “They [the partners] just had to come along”. He feels the requirement for lawyers to change is so obvious that it cannot be a fad.

The requirement may be obvious, as the FT’s Innovative Lawyers reports try to show, but law firm leaders worldwide do not find it as easy to convince staff to buy into the changes. Many of these involve automation, different skills and new ways of working. As Mr Gilbert puts it: “We are trying to take hours out of the work in an industry that embraces [them].”

Most lawyers are terrified to see their expertise — which they have worked so hard to accrue — being devalued and apparently easily replaced by software. To accept this change means understanding how technology is transforming business.

The importance of culture in driving change and innovation is revealed in the initiatives of other Asian law firms profiled in this report. Another relative newcomer, Yulchon in South Korea, appears in the FT’s top five most innovative law firms in the region this year.

Founded in 1997 by entrepreneurial partners from the top three incumbent South Korean firms, Yulchon has grown from a “law village” to a company with 400 professionals. One of these is Carl Im, who has a PhD in physics from Stanford University in the US and is leading the firm’s digital transformation.

Many elite law firms fail to use the talents of their business professionals, often referred to pejoratively as “the non-lawyers”. Not so the team at Yulchon, which ensured that Mr Im was involved in important transactions in order for him to make informed recommendations. Out of this came eYulchon, which lets the firm’s lawyers have a lead role in automating their work: they can develop apps to streamline processes, look at scenarios and outcomes and “augment” their legal expertise. “Yulchon is trying to combine legal and non-legal components to create value for clients,” says Mr Im.

Convincing lawyers to adopt disruptive technologies may be challenging but asking them to accept a different remuneration system is harder still. Pay structures in law firms underpin behaviour and attitudes. For law firm leaders, they are the levers by which they manage the partnership.

Lawyers are in the habit of not changing something they are used to

Xiao Wei, managing partner of Chinese law firm JunHe, realised that for the firm to prosper, partners had to collaborate more. Under its performance-based remuneration system, partners were working like sole operators. He moved the firm to a modified lockstep system, as favoured by many western law firms, where partners at the same level of experience earn the same but there is scope for bonuses for exceptional performance. The benefits of this system are that it encourages partners to refer work to the most appropriate person and to share clients; both of these are critical to providing a quality legal service.

Mr Xiao, who recognises that “lawyers are in the habit of not changing something they are used to”, decided not to impose change but to allow partners a choice. He presented it as an experiment they could opt into. Ultimately, more than 80 per cent of partners decided to pool their earnings and redistribute them in the new system.

Besides letting lawyers experiment, changing attitudes often involves devising clever ways to bring the outside world into the law firm. Link­laters, the winning international law firm in the region, has also taken the most innovative individual award — the winner is its Singaporean partner Sophie Mathur. At the firm’s global partnership meeting in March, Ms Mathur laid down a challenge: “Do we want to wait for disruption to come to us or do we want to shape the future of our profession?”

Ms Mathur had realised that innovation was not just about technology but about creating an innovative environment. To change her colleagues’ mindsets, she decided to support start-ups. In a break from the firm’s focus on blue-chip clients, she brought in blockchain technology groups such as Otonomos and Ethereum as clients and encouraged the firm to work differently to support them.

One of the benefits of bringing in radically new clients was to convince lawyers, whom she dubs a cynical breed, that the world is changing. At the partners’ March meeting, it voted for a multimillion dollar budget for innovation.

Methodology for rankings

FT Asia-Pacific Innovative Lawyers is an annual rankings report and awards for lawyers working in the Asia-Pacific region. Shortlists for the awards comprise the top scoring submissions in each ranking.

The FT and its research partner RSG Consulting have devised a unique methodology to rank lawyers on innovation. Law firms, in-house legal teams and other legal service organisations are invited to make submissions. This year, we invited law firms to submit work in three broad areas: legal expertise, the business of law and social responsibility. We looked at lawyers’ work from the perspective of the business challenges they were trying to solve, rather than their own legal practice areas.

For the FT Asia-Pacific Innovative Lawyers Report 2017, we received 502 submissions and nominations from 71 law firms and 90 in-house legal teams. Research was conducted by a team of RSG researchers between February and May 2017. RSG conducted interviews with and received feedback from 290 clients, senior lawyers and executives to arrive at the final rankings.

Each entry is scored out of 10 points for originality, leadership and impact. They are benchmarked against each other to arrive at the final rankings. The in-house lawyers rankings are drawn from nominations as well as submissions, but all entries require third-party validation and commendation, usually from other senior colleagues in the organisation.

FT Law 25

The FT Law 25 rankings are a pure aggregate of each law firm’s scores for ranked submissions across the private practice categories of the report. Separate rankings cover Asia-Pacific law firms and international law firms, headquartered outside the region.

Innovative Individuals

The Top 10 Innovative Individuals are selected from nominations and submissions to all categories of the report. The 10 individuals are selected on the basis of particularly strong client reviews, interviews, additional written responses and a history of professional achievement. A panel of judges selects the award winner from the shortlist. This year, the judges were: Michael Skapinker, associate editor, FT; Barney Thompson, FT legal correspondent; Harriet Arnold, FT Special Reports assistant editor; Reena SenGupta, chief executive, RSG Consulting; Liam Brown, founder and executive chairman, Elevate; and James Odell, vice-president and managing director of Australia and Asia Pacific, Elevate.

Research Partner RSG Consulting

The RSG Consulting research team has more than 20 years’ experience analysing the legal profession. The RSG research team members were: Reena SenGupta, Yasmin Lambert, Lucy Pearson, Patrick Heardman, Emilia Yau and Victoria Parkey.