The innovation-focused firm
An innovation-focused firm is trying to make the existing business work better. The core business model stays the same: the billable hour remains dominant, the traditional partnership structure remains intact, and lawyers remain the primary producers of work.
Innovation efforts typically focus on
- Deploying AI tools
- Automating repetitive tasks
- Improving knowledge management
- Better workflows
- Client-facing technology
- Incremental productivity gains
Typical investments
- Chief Innovation Officer
- Innovation team
- Knowledge Management
- Legal engineers
- AI governance
- Pilot programs
The question they’re asking: “How can we improve the way we practice law?”
The transformation-focused firm
Transformation is about changing how legal services are delivered and how the firm creates value — not just making existing processes more efficient. These firms are often rethinking:
- Revenue models
- Staffing models
- Service delivery
- Technology ownership
- Organizational structure
- Client relationships
They’re asking questions like
- Should we build AI products?
- Should lawyers always perform this work?
- Should this be a managed service?
- Can we price outcomes instead of hours?
- Should engineers and product managers become core professionals alongside lawyers?
Typical investments
- AI product teams
- Captive ALSPs
- Legal engineers
- Data science teams
- Product managers
- Client technology platforms
- Software development
- Managed services
- Consulting businesses
The question they’re asking: “What business should we become over the next decade?”
A simple analogy
Innovation
Better cars.
Transformation
Building Uber.
Innovation improves the product you already have. Transformation changes the business model.
What it looks like in practice
Innovation
- Deploy Harvey or Microsoft Copilot
- Build a better knowledge search system
- Automate document drafting
- Use AI to summarize cases
The lawyer still performs the work.
Transformation
- Launch an AI-native managed services business
- Build proprietary client-facing AI applications
- Offer subscription-based legal services
- Create a legal operations consulting practice
- Build a captive ALSP
- Hire software engineers, data scientists, and product managers as core delivery professionals
The firm changes how it creates and delivers value.
Organizational differences
Where the market is heading
Many firms today say they’re “innovating,” but relatively few are pursuing true transformation. Signs that a firm is moving toward transformation include:
- Building proprietary AI products for clients
- Creating captive ALSPs or managed services businesses
- Hiring legal engineers, product managers, and software engineers at scale
- Experimenting with fixed-fee or outcome-based pricing
- Treating AI as a strategic capability rather than a standalone technology initiative
- Elevating AI and business transformation to the executive committee
Innovation asks, “How do we do today’s work better?”
Transformation asks, “What should tomorrow’s law firm look like?”