On Tuesday (22 May) I spoke at a panel debate organised by Vodafone general counsel Rosemary Martin (pictured), focusing on innovation, diversity and the law, having been invited to give the hard-nosed view on how the profession operates. The slightly more diplomatic members of the panel were RSG's Reena SenGupta, Dr Louise Ashley of Cass Business School and lawyer and consultant Stephanie Haladner, with Thomson Reuters EMEA general counsel Daragh Fagan putting the public speaking skills of this print journalist to shame with expert chairing.

Anyway, for the four readers into this kind of thing, this is the short introductory speech I gave before the Q&A debate. The flipside of the coin – what the profession does right – is covered in the leader column in Legal Week published today (25 May).

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I should preface my comments by saying I'm focusing on larger commercial law firms and that the legal industry has many strengths, but the context of this discussion will force me to dwell on the negatives. But it's not like I hate the legal industry or anything. My aim is to outline five factors in how the profession is organised that act as barriers to positive change.

1. Clients don't push for change

There's a wealth of material out there arguing that clients can and are driving positive change in the legal industry – whether it is diversity, innovation or just improving service. The majority of it is either based on airy assertions or is the product of substantial exaggeration. The observable facts simply don't support this narrative, however flattering it may be to clients. Law firms instinctively know this. A prime example is alternative billing, which a number of law firms have attempted to push in recent years, only to find that many clients like to talk it up but end up reverting to the trusty billable hour when push comes to shove.

2. The law firm model works just fine

The business model of large law firms works – they make a lot of money. Clients could effect radical changes tomorrow in the industry that would unleash a wave of innovation by making significant changes in their buying decisions. They'd be some collateral damage and whether it would aid diversity is another matter. But there would be change aplenty. However, by and large, clients haven't made those kind of decisions. The bottom line is that law firms are a bit like governments – you get the ones you deserve. The ones you choose. Law firms developed this model because it delivers financially, generally provides a good service and it is what clients signed up to. Is anyone surprised they're not rushing to change?

3. Law is an 'elite' occupation – much of how it behaves flows from this

The legal profession has the luxury of being a high status occupation to which many flock. What usually happens with high status careers is that they become colonized by social elites that have privileged access to high quality education and useful social networks. After a while invisible barriers start to emerge, be they filters or entry requirements, many of which are logical but some will be pretty arbitrary. The incentives push in that direction because the over-supply of labour allows law firms to be economically 'wasteful'. This is the primary reason that women don't reach senior positions in City law firms. Law firms don't need them to stay to keep making money under the tournament of partnership.

Does this elitism produce high standards? Almost certainly. Does it foster service innovation or support diversity? Probably not.

4. Law firms are pack-animals

Law firms are competitive but they remain herding beasts – they club together. They are more worried about avoiding competitive disadvantage than gaining advantage. On the plus side, they do well at refining their model and rapidly adopting good ideas. On the negative, they are at times almost beyond parody in their resistance to the new or what could be termed structural innovation.

5. Two markets, but one still dominates

Law firms are driven by two markets: one for labour and one for clients. Without question, large law firms are more focused on the labour market – ie attracting the best lawyers. That's what motivates them, what keeps them awake at night, so it's not surprising that innovation or rethinking the business model hasn't been foremost in their minds. The post 2008-environment has tilted the market somewhat in favour of clients but the demands of the far more liquid and transparent labour market still dominate. Like investment banks, City law firms remain primarily focused on getting the best people, certainly more than giving clients the best deal. This brings us full circle with clients not enforcing change.

And that's how you get the status quo.