The case for KM

Knowledge management in the legal sector

In spite of their notorious hostility to change the potential benefits knowledge management promises firms operating in a sector as knowledge intensive as the legal sector are palpable. Simon Lelic talks to representatives from CMS Cameron McKenna Mondaq Perceptive Technology ResSoft Sherwood PSF Consulting Smartlogik and TFPL and discusses the impact KM has had on the industry.

For any law firm to stay ahead of its rivals in a sector as rigorously competitive as the legal market operational efficiency and the ability to fully exploit the intellectual capital at its disposal are critical. It is therefore reasonable to assume that the rewards promised by an effective knowledge management programme would seem sufficiently enticing to spur any firm looking to extend its competitive advantage to invest in KM. But law firms are notoriously traditionalist and conservative in their attitudes to change which obviously has the potential to create huge problems when it comes to initiating the comprehensive reforms associated with a knowledge management project.

Melissa Hardee partner at CMS Cameron McKenna believes the uptake of KM in the legal sector has been noticeably slower than in other industries blaming what she describes as the natural conservatism of lawyers. “Lawyers like to be able to point to evidence to justify decisions; in terms of investments they make they like to conduct a straight cost-benefit analysis ” she says. “But it is not easy with KM to point to an actual figure representing the improvement to the bottom line. Rather it requires a bit of a leap of faith.” Nigel Oxbrow founder and chief executive of TFPL and Andrew Partridge co-founder and managing director of Mondaq both agree that law firms have lagged behind organisations operating in other sectors. Together with the aforementioned hostility to change Partridge attributes this sluggishness to the fact that ‘non-billable’ activities like KM tend to take a back seat to work that generates revenue directly.

Curiously however the experience of Ian Blackshire sales and marketing director at ResSoft is that law firms have largely kept pace with developments in the field of knowledge management. “If you exclude financial services I think that the take up is probably in line in percentage terms with most other market sectors ” he argues. And both Chris Hooton strategic account manager at Smartlogik and Mike Sharples managing director of Perceptive Technology believe that uptake has actually been more pronounced in the legal sector. As Sharples says: “In the professional services arena other than the big five law firms are probably leading the way for KM adoption.” In fact there is a general consensus that whatever the situation two or three years ago a great deal of progress has been made over the last 12-18 months and there seems to be little doubt that knowledge management has now made a significant impact on the way law firms operate.

Increasingly firms are developing their KM functions beyond just having librarians to having skilled experienced professional support lawyers who are now being paid commensurate with fee-earning lawyers ” says Hardee. “Firms have begun to recognise that having skilled lawyers involved in KM improves their business.” And as Partridge suggests a large number of law firms are developing intranet and extranet sites that allow them to share information with clients to an extent that would have been unthinkable even a couple of years ago. “KM is becoming crucial in managing both relationships with clients and internal collaborations particularly in large firms where relationships can stretch not only over many years but also across practice groups where shared information for cross-selling purposes is key.” In a sense of course and as Julian Boardman-Weston director of Sherwood PSF Consulting points out most successful law firms have been managing knowledge and know-how effectively for years long before the process was formulised as knowledge management. But more recent efforts to target these processes more directly on quality improvement cost reduction and service innovation have in Boardman-Weston’s opinion had an enormous impact at least on a number of the largest firms.

There remains though in Blackshire’s opinion a degree of confusion in the legal market as to what knowledge management really is particularly surrounding KM technologies. “This is made worse in firms that already have a document management system and view KM as just the ability to conduct simple searches on documents ” he says. “Our statistics show that of the top 300 firms only 14 per cent have invested in a KM solution. Of these most are top 50 firms and they tend to be the early adopters of new technology.” Similarly Sharples believes knowledge management means many different things to different firms. “Personally I believe that KM could have a much bigger impact on law firms if it was seen as a firm-wide strategic tool to improve client service and fee income rather than a way of managing precedents and other know-how documents. Knowledge is such an integral part of a law firm’s offering that KM should be seen as a necessary part of any firm’s infrastructure.”

Indeed in many ways the nature of the business law firms undertake lends itself extremely well to the adoption of KM practices. As Boardman-Weston suggests knowledge management offers law firms the chance to improve quality and consistency reduce costs and enhance their reputations among customers and employees with the end results of increased competitive advantage and improved long-term profits. And more specifically to law firms as Hooton says in a market as competitive as that of the legal profession KM can assist “niche players” to become recognised experts in their specialist fields as well as combating the difficulties associated with clients who demand ever faster responses to increasingly complex problems. “For law firms their main asset is their knowledge their intellectual capital ” says Hardee. “Not to look after it – manage it better preserve it get more use out of it – is almost dissipating one’s assets.”

Of course law firms also face their own particular problems when looking to initiate a knowledge management project. “The main problems relate to the structure of law firms ” says Oxbrow. “The operational silos that often exist the divide between ‘professional’ and ‘non-professional’ personnel and the lack of awareness of the value of sharing and communicating knowledge.” This is echoed by Hardee who believes lawyers regard their own knowledge and expertise as representing their individual value to the business. “There is a fundamental problem in implementing KM in the legal sector because of the concerns of lawyers that if they share their knowledge they are diminishing their own unique value to their firm ” she says. “This results in the ‘bottom drawer’ syndrome which is the tendency to keep everything to oneself – copies of useful precedents and other know-how in one’s bottom drawer.” Equally pressing in Boardman-Weston’s opinion is the challenge of trying to embed as much tacit knowledge as possible in the firm so that it does not leave when an employee moves from the firm. And the emphasis on client confidentiality which inhibits how freely lawyers are able to share information with clients as well as other workers can also be problematic as Partridge suggests.

While Blackshire’s experience indicates in his words that “cultural issues are somewhat overstated in KM projects” others believe cultural change is the key to overcoming most of these barriers. Hardee for instance advocates making knowledge contribution part of the firm’s set of key values and conversely making failure to share or abuse of the knowledge management system unacceptable behaviour. Oxbrow believes a passionate and committed team with support from senior partners is also vital and this is reiterated by Sharples: “Getting the support of top level management is half the battle in addressing the need for cultural change within a law firm. Humans in the main will resist change as it brings about risk and uncertainty yet without change there is no future for KM. A change of this magnitude can only be achieved with the full support and commitment of the board.” In a similar vein Boardman-Weston argues that employees need to be made to understand what KM involves and should actively want what knowledge management promises to achieve. If this attitude can be instilled he says the next step is to ensure that KM practices are properly integrated with broader management practices within the firm.

Most practitioners would agree that cultural changes are the most difficult to instigate; as Boardman-Weston says there is no simple solution or formula to follow. But there are a number of tools that can at least make the process of sharing knowledge easier for employees. Sharples for instance emphasises the value portal technology has added to KM initiatives in law firms while Hardee highlights the contribution made by internet/intranet developments as well as computer-aided drafting software and e-learning programs. And as Partridge says KM technologies are becoming more affordable for smaller law firms: “Formerly KM applications had to be purchased separately from companies like Verity. These were out of reach of the small firms that make up the bulk of the legal market. At least on the full text search side these kind of applications are now often bundled free: Windows NT for example includes Index server.” Technology does have its limitations though as Boardman-Weston points out: “The real gold in a law firm is in tacit knowledge. Unfortunately at the present state of technical development no technology exists that can manage tacit knowledge although phones e-mail books and intranets can all help.”

Bearing this in mind a balanced approach to KM implementation should nevertheless allow law firms to reap the benefits. “Ultimately KM will become the key driver for competitive advantage in the future and should result in better legal solutions for our clients which in turn will lead to better results market share and profits for those firms that fully embrace KM as a means of maximising the return on their intellectual capital ” says Sharples. For all the confusion that still surrounds understanding of KM processes and despite arguably the dilatory adoption of knowledge management practices within the legal sector significant advances have been made in an sector traditionally perceived as being largely hostile to change. Many firms have a long way to go but this is true for organisations operating across the industrial spectrum. And as Boardman-Weston says in any professional services business good knowledge management is essential for survival.

This month’s participants:

Julian Boardman-Weston is director of Sherwood PSF Consulting. He can be contacted at: jbw@computercounsel.co.uk

Ian Blackshire is sales and marketing director at ResSoft. He can be contacted at: iblackshire@ressoft.co.uk

Melissa Hardee is a partner at CMS Cameron McKenna. She can be contacted at: mjh@cmck.com

Chris Hooton is strategic account manager at Smartlogik. He can be contacted at chrishooton@smartlogik.com

Nigel Oxbrow is founder and chief executive at TFPL. He can be contacted at nigel.oxbrow@tfpl.com

Andrew Partridge is managing director and co-founder of Mondaq. He can be contacted at: andrew.partridge@mondaq.com

Mike Sharples is managing director at Perceptive Technology. He can be contacted at: mks@perceptivetechnology.com