Gretta Rusanow explores in a series of articles how and why law firms should focus on knowledge management. Here, she looks at the reasons why now is the time for law firms to take a proactive approach to knowledge management.
In the knowledge-driven
legal market, a law firm’s ability to manage its knowledge is at the heart
of how well it runs its business. While knowledge management is viewed by
some as a management fad, the concept of identifying, capturing, disseminating
and using an organisation’s knowledge is critical to a law firm. Yet many
law firms take an ad hoc approach to the management of this most important
asset.
market trends
A number of trends in the legal services market point to the need for law
firms to focus on ways to work smarter. First, clients have placed increasing
pressure on their law firms to focus on providing high quality legal services
that meet their particular needs. Clients want their law firms to give commercially
sound advice in a reduced time frame. They also want their external lawyers
to be proactive in understanding and catering to their needs. This may mean
reducing legal costs or providing services to clients beyond the management
of specific matters. Recognising this trend, leading law firms have responded
by investing in the analysis of their clients’ needs and are re-focusing their
service offering to meet those needs.
Another key trend has been the increase in opportunities for lawyers to pursue
alternative career paths to practising law in an Australian law firm. Lawyers
may pursue these alternatives because they provide intellectual, financial
and quality of life benefits that may match or exceed those provided by an
Australian law firm. This has resulted in a significant reduction in the time
a graduate spends at a law firm, at great cost to the firm. Law firms must
look for ways to improve retention rates, accelerate the learning curve for
junior lawyers and rationalise work processes to enable smarter resource allocation.
Globalisation has led to the formation of global law firms practising across
jurisdictions and time zones. This has created major challenges for these
law firms, particularly in the management of their infrastructure and client
service delivery model. The trend among large Australian law firms to become
nationally integrated firms has created similar challenges for those firms.
Finally, the entry of multi-disciplinary practices into the legal services
market has caused traditional law firms to examine their service offering.
working smarter
In this environment, law firms must examine how to work smarter. This means
understanding their market position and how industry trends impact their business.
It includes defining a market strategy both to meet the needs of existing
clients and the requirements of desired clients. On the client side, it includes
providing a more consistent service to clients, creating high quality work
product in a faster time frame and leveraging client relationships across
multiple practice areas and jurisdictions. It also involves identifying and
developing new services and products for clients as law firms take a proactive
approach to identifying and meeting the constantly evolving needs of their
clients.
Working smarter also means addressing the allocation of resources within a
law firm. Staff should be fully leveraged, involved in value-added work. Junior
associates should be able to produce high quality first drafts of documents
with minimal partner involvement. Partners should feel confident that they
can delegate tasks to junior staff, thus freeing them up to review work, build
client relationships and develop their practices. To address the trend of
junior lawyers spending less time practices. To address the trend of junior
lawyers spending less time at a law firm than in the past, working smarter
also means focusing on developing lawyers in a shorter time frame.
knowledge management
Knowledge management - the leveraging of a law firm’s collective knowledge
by identifying, capturing, disseminating and using its knowledge is essentially
about working smarter.
Often thought of in terms of technology, knowledge management involves the
creation of processes as well as technology tools to support and facilitate
the sharing of knowledge. Indeed, technology is merely one means of capturing
and disseminating knowledge. Training programs, staff meetings, retreats and
partner open door policies are just some examples of how knowledge management
is wider than technology.
Knowledge management involves understanding the scope of knowledge used by
staff to perform their work. Law firms should take a broad view of their knowledge
including explicit and tacit knowledge. Explicit knowledge is formal and
systematic and can be easily communicated or shared in procedures, steps
and standards. In a law firm, this includes precedents, best practice documents,
legislation and case law. Tacit knowledge is highly personalised, hard to
formalise and difficult to communicate to others. In a law firm, this includes
the skills and expertise of its staff, client information and lessons learned
from past projects.
Taking a broad view of knowledge also means thinking beyond the core legal
knowledge tools used by a lawyer to include all knowledge used by staff within
a law firm to meet its business objectives. For a lawyer, this means managing
knowledge about clients and their industries. It includes developing methodologies
and processes based on their legal practice. Law firms should also consider
how they leverage knowledge captured by support functions of the firm, such
as Finance, Business Development and Human Resources.
Building a culture that promotes knowledge sharing is another essential element
of knowledge management. There are numerous cultural barriers to succeeding
in knowledge management in a law firm. For example, in a firm where a partner’s
remuneration is strictly tied to its billings, there is no incentive to focus
on knowledge management. Under this revenue model, law firms often have a
culture of partner competitiveness where knowledge is power and there is little
evidence of knowledge sharing among peers. Partners are also disinclined to
devote large amounts of non-billable time to knowledge management.
Another key cultural barrier is the time-based billing model. While law firms
continue to charge for work based on time, there is little incentive to invest
in developing knowledge management systems designed to reduce the time it
takes to do work and therefore the revenue generated from that work. Law firms
cannot ignore these fundamental barriers to working smarter.
Dedicating staff to support knowledge management programs is also key. Partners
and lawyers must be involved in the development and review of content. Information
management staff also play an important role in the delivery of content. Several
Australian law firms have created the role of the Chief Knowledge Officer
to coordinate knowledge management initiatives. Leading law firms around the
world have appointed partners in charge of knowledge management, to drive
the adoption of knowledge management into every aspect of the firm’s work.
business objectives
To be successful at knowledge management, a law firm must make a significant
investment in time, resources and cultural change. It should therefore be
clear on its objectives and, most importantly, define those objectives in
the context of the firm’s wider business goals. Ideally, a law firm should
first define its business strategy before investing in knowledge management.
Law firms should examine industry trends, understand how those trends impact
their business and develop a strategy to meet their business objectives in
the context of those trends.
Once a law firm is clear on its business objectives, it should develop a knowledge
management strategy and identify specific knowledge management initiatives
that enable it to achieve those business objectives.
For the law firm that invests in a long-term knowledge management strategy,
the results of successful knowledge management will be happier clients, happier
staff and increased profitability for the firm.
Gretta Rusanow is a lawyer and the CEO of Curve Consulting, a New York
and Sydney based consultancy, where she advises law firms and law departments
around the world on management and technology strategy. Gretta is regarded
as a thought leader in legal industry knowledge management and speaks regularly
on this subject in Australia, Asia, Europe and the US.
| footnotes 1 Nonaka, I. "The knowledge Creating Company", Harvard Business Review on Knowledge Management, 1998, pp27-28 2 ibid |