Why Not Outsource Innovation to Solo and Small Firms?

I’m still fascinated by the concept of  outsourcing innovation that I referenced in passing in this post from earlier today.  According to this Business Week article, countries like India and China paying American corporations to develop products, or put another way, they are outsourcing innovation.

So I got to thinking…why couldn’t large law firms outsource innovation to solo and small firms.  Let’s face it, with San Francisco-based Thelen being the latest firm to collapse (HT Above the Law ), biglaw needs help — and solo and small firms have always been ahead of the curve., with biglaw shadowing our every move.

Recall, it was a solo who pushed the issue of lawyer advertising to the Supreme Court Bates v. Arizona, and for better or worse, every AmLaw 100 firm these days boasts a robust marketing division.  It was small firms, like Greg Siskind’s shop that pioneered use of the web for advertising with sites like Visalaw, and now, every major firm has one.  it’s been solos who took the lead in integrating blogging, social networking and Twitter into their marketing and relationship building portfolios, venues where biglaw is just starting to tread, lightly.

But olos don’t just pioneer marketing tools; they also create new business models for law firms.  Former solo and Supreme Court expert Tom Goldstein came up with the idea of cold-calling for circuit split cases and handling them pro bono to get before the court – and today, most firms that lack Supreme Court experience will go to any measure to snag a High Court case.  Independents like Enricho Schaeffer are changing the way law is practiced, making the virtual law office accessible to all lawyers like Stephanie Kimbro or providing a new way for lawyers to gain training and build relationships, courtesy of Susan Cartier Liebel’s new Solo Practice University.  And the list goes on; there are dozens of examples of this kind of exciting innovation in solo-land (feel free to post your own examples in the comments).

So why do solo and small firm lawyers innovate?  For starters, as we all know, necessity is the mother of invention, so we’re constantly coming up with ways to bring in clients to pay the mortgage or send our kids to college or free up an afternoon so we can slip out early.  Second, we solos and small firms answer only to ourselves; there are no committees or multiple levels of bureaucracy through which to vet our ideas.  So we can go from idea to implementation almost instaneously.  Finally, we solos don’t experience the same risks in innovation as does a large firm.  If we decide, for example, to explore a new practice area, we might hire a contract lawyer to research it, and help develop marketing materials.  Since we don’t invest much up front, if our hunch turns out wrong, no major loss.  By contrast, when large firms leap they often commit big resources which means that if the strategy doesn’t work, they lose big time.

So why don’t large firms outsource innovation to the experts and insulate themselves from the risk?  I see this model all the time in the utilty business.  Large utilities rarely construct power plants these days, but instead, purchase power from independents which assume the risk of construction overruns or regulatory uncertainty.  A large firm could retain a small firm to explore a new practice area and perhaps create an of counsel relationship to get the practice off the ground.  The small firm would be well compensated for its intellectual capital, and the firm would keep the new practice at the end of the day.  Plus, the small firm might position itself for overflow work or clients too small for the large firm to handle profitably.

As I said in my earlier post, large firms aren’t much interested in sending contract work or referrals to solos.  But at this point, my guess is that they’re fairly desperate for innovation wherever they can find it.  So why not convince them to outsource that need…to you!