“Most of the times when I speak with law firms about innovation, they don’t know what innovation is for them,” observes Marco Imperiale, founder and managing director of Better Ipsum and former head of innovation at a leading Italian law firm, during a recent Platforum9 session. As law firms globally grapple with artificial intelligence, changing client demands, and evolving business models, Imperiale, joined by legal innovation expert Scott Mitchell, explores what meaningful innovation truly means for the legal profession.

Beyond the Technology Hype

While AI and technological advancement dominate headlines—from Argentine judges using ChatGPT for rulings to Italian lawyers debating artificial intelligence—Imperiale argues that true innovation in law firms extends far beyond technology. “Innovation is a multi-faceted complex concept,” he explains. “Most of the times we are focusing too much on tech, but in law firms, the two big ways of seeing innovation are not related to tech.”

Instead, he identifies two crucial areas: values and purpose of the firm, including client treatment and collaboration principles; and financial structures, including revenue splitting, billing methods, and pricing models.

The Cultural Challenge

One significant barrier to innovation is the partnership structure itself. “All equity partners are CEOs,” Imperiale notes, highlighting how having multiple decision-makers with different perspectives can complicate innovation initiatives. This challenge is compounded by what he describes as “VUCA times”—volatile, uncertain, complex, and ambiguous—where firms must navigate technological, geopolitical, and post-pandemic challenges.

Generational Bridge-Building

Imperiale shares a compelling example of innovation from his experience: establishing a committee of young lawyers who could speak directly to the firm’s executive committee, bypassing traditional hierarchical structures. “It was such a big move,” he reflects. “It was way more important than any AI tool on the market.” This initiative acknowledged that Generation Z brings different perspectives and new paradigms for solving future challenges.

The Billable Hour Dilemma

Mitchell points to a fundamental obstacle to innovation: the billable hour model. “There’s no real innovation that’s going to go on in the legal profession so long as the billable hour sticks around,” he argues, noting how it disincentivizes efficiency improvements. He cites recent analyses suggesting AI could reduce billable hours by 57% in the next five years, forcing firms to reconsider their business models.

Beyond Time-Based Services

Imperiale expands on this critique, suggesting the issue extends beyond billable hours to the profession’s broader obsession with time. “Law firms are obsessed with time because it’s the only thing that you can scale,” he observes. “The real shift regarding innovation is not regarding time, it’s regarding the service that you are providing and the relationships that you have internally with your users.”

Data-Driven Decision Making

While firms increasingly have access to data that could drive innovation, Imperiale remains skeptical about their ability to leverage it effectively. “We are living in a data-driven culture, but I’m very skeptical about most law firms being able to leverage this data to make decisions,” he notes, adding that successful firms might be reluctant to share their data strategies with competitors.

Looking Ahead

The path forward requires firms to move beyond surface-level innovation initiatives and address fundamental questions about their purpose, values, and business model. As Mitchell emphasizes, “Real innovation is going to come about when we really start to look and think about customer service, customer experience.”

The message is clear: while technological advancement is important, true innovation in legal practice requires a more comprehensive transformation—one that encompasses firm culture, client relationships, and business models. As Imperiale concludes, the profession needs to “rediscover and create a different relationship with time as lawyers… based on products and services and relationships, not on money.”