Why Legal Innovation Won’t Come From Inside The Industry

Farewill Dan Garrett

Dan Garrett is one of the co-founders of Farewill, the will writing start-up that has cornered the market in just 4 years. Now responsible for one in twenty wills written in the UK, Farewill have demonstrated what true innovation means in an often unimaginative marketplace.

Dan Farewill

In this interview, Dan shares his thoughts on:

  • Why traditional law firms are incapable of real innovation
  • The power of brand for consumer legal services
  • What the legal market could learn from tech start-ups
  • How the Managing Partner role will have to evolve if law firms are to compete in the consumer space

 

 

You have managed to disrupt one very specific part of the legal sector. Do you anticipate other companies emerging with a similar ambition?

Yes, but it won’t necessarily come from law firms. It’ll come from entrepreneurs looking to build something special and they’ll just happen to spot an opportunity in legal.

Besides, why would a customer even care if you were a law firm? It’s just an antiquated organisational design built to maximise the billable hour. That can make sense for really high value, corporate work, but I’m not sure that will writing is suited to that structure, and I could be wrong but I think the same can probably be said for a lot of consumer legal services.

The real innovation will come from outside the industry. Companies that don’t even exist today will develop customer facing propositions that are an order of magnitude better than the status quo. Sure, they’ll make ABS’s where they need to comply with regulation, but I don’t think many customer centric leaders are thinking “I’m going to create a law firm”, they’re thinking “I’m going to solve this problem”, and that may just happen to be in law.

There’s going to come a time where lawyers are going to have to think really seriously about how they structure their firms. Until then, it’s up to companies like ours to take legal services that have been made to seem complicated and turn them into something accessible.

Farewill website

 

Why is the traditional firm structure not suitable to this kind of consumer product?

Lawyers can be cautious perfectionists with limited appetite for risk. That does not always lend itself to innovation and firms need to innovate if they’re to stay relevant to consumer markets. Furthermore, the time it takes to progress to partner level doesn’t reflect how the consumer space is changing. It might take you 20-30 years and by that point you’re largely disconnected from the customer’s world. Besides, if it’s taken you that long to make partner, are you really going to be focusing on where technology will be in 5-10 years, or are you going to be focusing on making a profit today?

“In short, if firms are to ever truly innovate they will have to question their most deeply held organisational beliefs – and at the top of that list is the need to be profitable”

Whereas in a company like ours, things just move so much faster. We had somebody join us 6 weeks ago who is completely exceptional so we’ve already got her playing a senior role in the team and there is no limit on how her position could develop in the months ahead. Law firms don’t work like that. No matter how talented you are there is a certain journey you have to go through and that typically includes an awful lot of low level menial work in the early years.

In some cases law firms are right not to prioritise innovation. If you’re a partner at Freshfields, managing a £30 billion corporate merger, how innovative do you really want to be? In that context then perhaps the conventional hierarchical structure still make sense. If you brought in a CEO who was super tech and innovation focused, perhaps it would do more harm than good..? In consumer markets, however, you need to move quickly and you need to take risks.

Ultimately, firms will need to decide what their main purpose is – is it maximising profitability per partner, because if it is then that’s probably never going to encourage partners to prioritise future growth and success over immediate profit. They are averse to raising money externally or issuing debt, and they’re not going to take decisions that inhibit their ability to generate revenue today, even if that would set them apart from the competition in five years from now. Automation, for example, would significantly reduce billable hours in the short term, so where is the motivation for that going to come from?

In a start up, on the other hand, you assume you’re going to be loss making. We are entirely focused on growth, as we know there are massive benefits of scale to be achieved if we can own our part of the market. And if companies like ours are successful in creating a great technology stack that solves an important legal problem, then we can easily bring over partners with the necessary legal expertise.

In short, if firms are to ever truly innovate they will have to question their most deeply held organisational beliefs – and at the top of that list is the need to always be profitable.

 

Are you finding that your customers are primarily young and tech savvy, or is it a broad spectrum?

Actually, that’s really interesting. So our mean is slightly lower than the industry average, but we still have 35% of our customer base over 55.

That sometimes surprises people but it shouldn’t. People in their 50’s, 60s and 70’s have been using the internet for over 20 years, and almost all of them have smart phones. It’s a massive misconception that the older generation is uncomfortable with technology.

 

How have you engaged this older audience?

Most marketing aimed at the older generation is terrible. It’s always two white haired, old people holding hands while they walk down a beach in white linen. The trouble is that most marketers are young and have this caricature, Saga’esque sense of what someone in their later years looks like, and it’s all wrong. My dad is in his 60’s and he’s just a normal bloke.

We’ve been really careful to avoid this kind of patronising positioning. We just talk to them like normal people.

 

How important has the brand been?

It’s everything. I didn’t understand how important it would be at first, but now I’m convinced – whoever wins the wills market will build a great and loved brand. Needless to say that this is expensive, which is yet another reason why a law firm would struggle to do it.

“The stronger the vision, the less management required”

Building a brand is not only critical from a customer perspective, but also operationally as it allows decentralised decision making. The brand purpose and values act as a framework within which people have the autonomy to work out for themselves how best to achieve their goals.

The stronger the vision, the less management required.

 

What have been the most important channels?

We’ve obviously had a strong focus on digital, both for brand and direct lead generation. However, TV is actually much more affordable than it used to be and gives you far clearer data than people imagine, not to mention the impact on brand credibility; customers generally believe that if they see you on TV then you must be trustworthy.

 

What can leaders of law firms learn from leaders of technology companies?

First of all, I don’t want to give the impression that I don’t respect the leaders of law firms. From my experience they are hugely intelligent people running highly successful businesses, but I do feel that there are things they can learn from the technology space.

I think the main thing would be our obsession with working things through from first principles. It’s a sort of cynical agnosticism that says it’s okay to challenge everything, which is precisely the opposite of how most law firms operate where it feels like the culture can be unquestioning, pre-determined, and driven by hierarchy.

“If you’re always thinking in first principles then you’re always innovating”

This question of culture is not to be underestimated. A lot of great technology companies are built from HR innovation, where they apply different approaches to building teams and getting the best out of people. Whereas the people who get to make decisions in corporate organisations are the ones that have been there the longest and have therefore had it beaten into them that there’s a certain way things are done.

Let’s be honest, if you were an alien sent to Earth with the goal of designing a company to provide consumer legal services, you would never end up with the legal firm structure as it exists today.

If you’re always thinking in first principles then you’re always innovating.

 

Do you believe it’s possible to provide a technology based service at low cost to the customer without losing the human element? If not, does that matter?

It’s the mix of humans and technology that’s so powerful. At first, we didn’t include any human interaction. It was a well designed product but without that human element it just didn’t convert well. Now, however, we have live chat and phone lines, and our customer interaction has become a major strength. We have a response time on live chat of 8 seconds and on the phone of 12 seconds – that’s world class by any standard.

The human element isn’t just about interaction between us and the customer. It’s also about the human stories that emerge out of our service. For the first six months we had just one KPI, and that was the proportion of customers that would include a personal and emotive message within the will. The industry standard is 5%. Ours is 70%.

It’s difficult to overstate the significance of this. We are dealing with death, the most profoundly emotive subject there is, and yet the market seems determined to reduce it to a mere administrative process. We wanted to get the customer really thinking about what the will meant beyond the transfer of material possessions, so we split tested different example text within the message box, such as “Use this money to buy …” and from that simple prompt we found people leaving the most intimate and heart aching messages. It turned an exercise in legal compliance into a deeply emotional experience, and we consider ourselves privileged to be a part of that.

 

Has your firm using any form of AI or robotics to achieve the operational efficiency that has facilitated this low cost model?

We probably should but no, right now we don’t use any of that.

“The fact that we are starting from scratch is a huge luxury as data integrity is everything”

The truth is that while people perceive us as a technology company, the real challenge has been in making the product accessible and having a proposition that compels action.

There are definitely places in the company that you could make a good business case for AI, and the fact that we are starting from scratch is a huge luxury as data integrity is everything – yet another reason why established firms will struggle to innovate.

 

Do you think Managing Partners and CEO’s of future law firms will all need a better grip on technology?

For me, it’s less about technology, and more about an understanding of how to build a product.

This may not be an issue in the corporate space where you can probably continue to justify £10,000 an hour for that specialist, but anything in the consumer space needs a very different approach. The leader needs to be able to build products and sell them. The days of being detached and sitting in meetings all day are gone. You only have to look at how hands-on most successful entrepreneurs are in the technology space, and nowadays every market is in the technology space.