Service Productivity in Professional Service Firms

This chapter gives an overview of how innovation management can be a driver of productivity in law firms. Hagen Habicht, Friedrich W. Heidemann and Alastair Ross report on a study—the first of its kind carried out within the sector—based on 21 expert interviews in large German law firms. The research questions to be answered were: What are the key challenges and drivers of innovation management as a major driver of productivity in German law firms? And what are major German law firms doing in terms of innovation as a major driver of productivity? In order to answer these questions the companies were interviewed about their latest innovations, their innovation strategies, management efforts, and customer integration which impact a company’s productivity. Major innovation trends and key challenges in the industry are also explored. The study shows that innovation activities within the interviewed law firms increased in the last 3 years. As in the banking and insurance sectors the major drivers for innovation have been the financial crisis and the continuing deregulation of the German legal market. Moreover the study shows that most companies have a medium level of innovation maturity, with pockets of innovation led by a few partners, rather than firm-wide engagement. Arguably there is a need for a culture change within those organizations so as to accelerate the pace of innovation and this shift will be difficult to make since law firms have enjoyed a culture of comparative stability in the past.