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Innovation in the Legal Sector

On October 15, 2014, American Friends of Bucerius and the German American Chamber of Commerce, in cooperation with the Bucerius Center on the Legal Profession and the Deutsch-Amerikanische Juristen-Vereinigung, hosted an event as part of the “New Continuing Legal Education” discussion series, featuring Joseph Polizzotto, former Managing Director and General Counsel for the Americas, Deutsche Bank. The discussion was moderated by Markus Hartung, director of Bucerius Center on the Legal Profession, and Dr. Friedrich Blase, Senior Fellow of American Friends of Bucerius.

The event, entitled “Innovation in the Legal Market,” focused on the importance and applicability of innovation to the legal sector. The introductory lecture, given by Markus Hartung, focused on defining innovation in context to the legal market. Traditionally, law firms have not been known as innovative entities. This view has shifted, however, as law firms are now expected to continually improve their services towards more quality and cost-efficiency. Innovation in this sector can exist in legal expertise, value resourcing, corporate strategy, and a variety of other measures.

Following Hartung, Joe Polizzotto spoke on innovation in the legal function in the context of a global bank. Drawing from his experiences at Deutsche Bank, Mr. Polizzotto discussed the changes in-house lawyers have made by embracing innovation. In-house law departments have become far more open to supporting fixed fee arrangements with outside counsel as a means of controlling legal spending, and have also reduced costs by “near-shoring” certain in-house legal functions to lower cost locales. Furthermore, he emphasized the unique opportunity for law firms to become quasi-consultant. Modern day law firms should be asking what they could do for the client. However, consulting services take thought to implement, warned Polizzotto, and minds need to be tapped in order to find creative solutions on how to transfer these services to other areas.

Closing the discussion Dr. Friedrich Blase presented the law firm’s perspective by providing anecdotes of his work on previous projects with demanding clients, including Deutsche Bank. According to Blase, lawyers used to be afraid to approach work on a fixed fee basis (rather than the traditional hourly billing) because they had no way of handling the uncertainty and lacked knowledge for pricing fixed fee legal services. Blase emphasized that law firms needed to stop thinking about effort (or hours) and focus on the added value of project, when determining appropriate fees.

J. Meyer