Risk Averse Lawyers Lose Out on Innovation
22 May, 2013
FTI Consulting, Inc. (NYSE: FCN), the global business advisory firm dedicated to helping organisations protect and enhance their enterprise value, today announced the launch of its new report on Innovation in Professional Services: The Innovation Index. In conjunction with the business membership organisation London First, FTI Consulting has undertaken a series of in-depth interviews and conducted a poll of over 500 senior decision makers within the professional services industry, 87 of which were lawyers.
The study shows that the legal sector is seen to be the least innovative of all the sectors which comprise the professional services industry (legal, accountancy, financial services, property and creative), with only 69% of the 500 business leaders rating it as good at innovating. Furthermore, there is a danger that the culture and ethos of the UK’s law firms inhibit innovation with 40% of lawyers citing this as a barrier to innovation. Adversity to taking risks is also a concern raised by 45% of lawyers.
These admissions come in spite of the fact that lawyers openly acknowledge that innovation is vital to attracting and retaining clients (93%) and that risk taking is a necessary aspect of achieving it (81%).
However, the legal sector is not alone when it comes to challenges around innovating. All of the leaders in the professions polled felt that there are significant barriers to innovation within their sector, and indeed their own firms. Accountants and those within the financial services industry feel held back by regulation with 54% and 69% citing this as the main block to innovation, whilst the creative sector felt a lack of funds was their main challenge (63%).
Commenting specifically on the Innovation Index findings for the legal sector, Anthony Danaher (pictured), Chairman of Corporate Communications at FTI Consulting, said: “It would be all too easy to overlook the significant pockets of innovation within the legal sector as well as some of the innovative individuals who have driven change. But our research highlights that innovation is far from institutionalised within the sector, with lawyers’ conservative tendencies prevailing.
“With a rise competition from other financial centres and a liberalised legal market structure, innovation can no longer be seen as a luxury, but as an integral part of the operating strategy of law firms. In our experience lawyers are recognising this to be the case and are seeking new approaches in order to meet evolving client need. Whilst at times this may go against the grain of those more comfortable with a conservative approach, the competitive nature of London’s legal environment means that it is necessary for their survival in these challenging economic times.”
Access to top talent was identified as a key ingredient for innovation by all of the sectors polled. The study showed that there is a shared fear amongst the business community of a growing nationalistic perspective towards immigration which runs counter to what the City needs to stimulate the economy – maintaining its status as a vibrant, outward-looking destination for global talent. 90% of leaders within professional services note that London’s ecosystem thrives on the diversity of its talent pool; with 85% highlighting London’s lifestyle as a key pull. The need for access to top talent is reinforced by the widely-held view among decision makers that innovation is in a person’s DNA – you either have it or you don’t (93%). Innovation cannot be taught (73%). How you motivate and foster talent was also cited as key to innovation by 43%. The study also highlights that regulation is inhibiting firms from trying new ways of doing things, contributing to a dangerous culture of introspection (49% believe this).