Raising the bar

Through a series of interviews with a partner in a Canadian business-law firm, Vivek Venkatesh and Steven Shaw uncover its KM-related principles and objectives. They describe the issues related to knowledge protection, tacit-expertise transfer and the use of information technologies to support KM, and outline how the firm promotes a culture of reciprocity, knowledge sharing and reputation growth.

Law firms can be described as social communities of legal practitioners with expertise in the creation, retention, sharing and transfer of legal knowledge. The influence of law firms stretches from within the smaller legal community to the larger group of their clientele. Law firms are ideal candidates for KM-related practices as they are knowledge intensive, and well suited to the use of advanced technologies that re-focus legal practitioners’ work towards the efficient and effective management of legal knowledge.

This article provides a picture of the KM practices of a leading Canadian business-law firm, Acme Legal Associates.1 The firm is run from its two headquarters in Canada and three other offices are located across different continents worldwide. The majority of the firm’s work centres around its corporate and commercial practice, including mergers, acquisitions, taxation issues, banking, finance, commercial real estate, as well as the areas of technology, e-commerce and biotechnology. The firm’s clients include both public and private industrial, commercial and financial enterprises, ranging in size and complexity of operations, from small, single-location businesses to large, multinational companies. The managing partners believe that promoting and maintaining the perception that the firm is a leader in specialised services to the corporate community will increase the value of the firm, and its standing in the legal and business community.

For this article, we focus on KM practices at the Montreal arm of Acme Legal Associates, which houses over 70 lawyers, about half of which are partners. Interviews were conducted with Laura, a partner since 2002 in the Montreal office. Laura’s practice centres on corporate commercial transactions such as mergers, acquisitions, secured financing and bankruptcies.

Legal lens on knowledgeWe believe knowledge represents a rich combination of context, human interpretation, personal experiences and reflection. Despite the common argument that knowledge is seen in organisational processes, routines and even in documents, we are of the opinion that the key process in KM is the human engagement and interpretation that leads to the creation of knowledge. Knowledge creation and dissemination involves the subjective element of comprehension, at an individual, as well as at various group levels, within an organisation. Further, as posited by Nonaka and Konno, we also agree that knowledge is intangible and fluid, and when left unused, loses its value.2

Laura describes knowledge as the interpretation of legal information, and feels that knowledge in the legal context is easily mistaken with ‘knowing the law’. In her opinion, you cannot see and capture knowledge; rather it is experienced through lawyers’ actions as they solve the problems they face. Laura contends that knowledge is also created within communities of practising lawyers specialising in a particular field, and the manner in which each community member interprets the created knowledge affects the quality of its dissemination.

Core, advanced and innovative knowledge in law firms

Most knowledge-intensive organisations would expect their members to distinguish between knowledge of two types: procedural (knowledge of processes and routines) and declarative (knowledge of concepts or facts). Zack extends these notions, and places an emphasis on knowledge that enables organisations to be competitive by outlining the major distinctions between ‘core’, ‘advanced’ and ‘innovative’ knowledge.3 Core knowledge suffices for carrying out daily operations and is representative of basic declarative and procedural knowledge. In law firms, core knowledge might refer, for example, to the lawyers’ knowledge about the law, and the criteria for its applicability. Advanced knowledge allows a firm to be more malleable and competitive, and reflects the adaptability of the firm’s use of available knowledge in a given situation. Law firms view advanced knowledge in terms of the process of applying the law and testing it in a variety of situations. Laura contends that most advanced knowledge is created as transactions are carried out – in the interactions between lawyers and clients – where the effects of applying a law are observed in situ.

Innovative knowledge allows a firm to overshadow its competitors by being a leader in its market; such knowledge is probably protected, extremely valued in the field and strategically positions the firm advantageously against its competitors. We propose that law firms are looking more closely at creating and retaining innovative knowledge by setting up industry-practice groups, where the firm organises itself according to its clients’ needs.4 Instead of general litigation and corporate/commercial departments in the firm, Laura explains how Acme Legal Associates has hired lawyers with expertise in varying industries, from technology to agriculture. Groups of lawyers practising and working together within these client-based fields have set up networks of communication, mostly via their intranet systems and internal mail, to keep themselves updated of their clients’ files and transactions.

Acme Legal Associates has now been recognised as one of the leading firms dealing with mergers and acquisitions within the petrochemical industry. Such a reputation not only garners the ‘bigger’ clients, but also attracts lawyers from other firms with skills that have been honed by practising in such a specialised field. By developing the perception in the legal community that Acme Legal Associates is a leader in providing quality service to a specific, high-profile industry, the firm has acquired much-needed expertise in terms of experienced lawyers, as well as generated and maintained a competitive level of innovative knowledge.

Managing tacit knowledge in law firms

Interviews with Laura illuminated the importance of recognising the value of tacit knowledge and tacit expertise among lawyers in the firm. She was ready to acknowledge the importance of transmitting explicitly codified knowledge, as is evident in her comment that, “communicating and explaining the procedures to follow while drafting an asset-purchase agreement helps younger corporate lawyers that want to specialise in mergers and acquisitions to learn the ropes”. However, Laura placed special emphasis on how the firm’s culture emphasised the need for more experienced lawyers to teach some of the more implicit rules in legal work to younger lawyers. To this end, Laura pointed to the mentor-apprentice relationships that are formed between partners and students, as well as between partners and associates.

The assignment of apprentices to partners is based on the field of work that the partner is currently specialising in and the field that the younger associate is trained to work in. As mentors, the partners offer younger, less experienced associates the opportunity to conceptualise, within work-teams, the constraints of the legal problem they are tackling, collaborate in drafting documents and meet with clients while a particular deal is being completed. Teamwork is heavily emphasised, and the younger lawyers are expected to learn and employ the expertise that they gain from their interactions with their mentors. Mentors also provide a detailed, personal evaluation to their apprentices upon completion of each file that they work on together. This feedback takes into account the suggestions made by all the senior partners and lawyers who work with the associate or student on the team. Laura believes that this situated approach to legal practice, which we revisit later in this article, combined with a comprehensive performance evaluation helps in the transfer of tacit legal expertise. Such expertise includes, for example, the collective conceptual deliberations a team has about a particular law, and the personal beliefs and values that guide a specific action on a file.

Knowledge management at Acme Legal Associates

According to the KM committee at Acme Legal Associates, the management of knowledge is essentially the co-ordination of knowledge sharing. Laura explains that KM is regarded as the idea that members of the firm share best practices, document precedents, experience and knowledge. The committee defines the goals of KM as:

Efficiency – Reducing the time spent re-inventing the wheel;
Quality control – Ensuring the firm’s best thinking in an area is available to everyone;
Professional development – Providing resources that help the lawyers stay current with cutting-edge legal and business practices.5

Strategies to promote KM

Typically, the strategies employed by an organisation to promote KM should enable knowledge generation, storage and transfer. In addition, law firms need to focus on the management of proprietary corporate knowledge; such knowledge is closely tied to the core competencies of the firm and is often protected by patents, copyrights and non-disclosure policies. When such sensitive information is made known only to the key personnel in a firm, knowledge protection procedures are set in motion.

At Acme Legal Associates, proprietary knowledge, which ranges from strategies for negotiations on specific types of deals to sensitive political information on clients, is disseminated to lawyers on a need-to-know basis. The guarded nature of this knowledge is typical of legal firms dealing with corporate commercial activities and businesses, where lawyers working on a file cannot speak to one another about it due to the sensitivity of the information (for example, the selling price of stocks or prices of initial public offerings).

The control of ‘crucial’ knowledge, which is the knowledge necessary to sustain the organisation within the industry, is strongly recommended by Blaauw and Boersma.6 Mostly manifested in the tacit expertise and problem-solving behaviour of experts within the organisation, crucial knowledge should be promoted within the firm to ensure that it maintains its leadership position within the industry. Laura spoke at length of the importance that is placed on the transfer of tacit expertise, which we consider a form of crucial knowledge. The firm’s culture is projected as one that concentrates on developing the expertise of every lawyer through a situated professional experience and through a close apprenticeship as they work through problems in their respective deals. As a testament to the utility of this ‘situated cognition’-based approach,7 Laura believes that working through legal problems with a more experienced lawyer is perhaps the best way to transfer knowledge within a firm the size of Acme Legal Associates.

The decisions a corporate lawyer takes in preparing documents such as asset-purchase agreements, as well as the related negotiation and interpersonal skills, are not easily codified. According to Laura, the extent to which this type of tacit knowledge can be transferred vastly depends on the time a lawyer spends observing, asking and learning from colleagues. Moreover, the apprentice method of sharing, and eventually transferring, tacit legal expertise promotes a culture of reciprocity in the firm. Younger lawyers become aware that most legal problems require the formation of complex teams of people with varying expertise, and that the best way to learn is by asking for help from designated experts in various practice areas. Despite this, Laura does not feel that a system needs to be set in place whereby a lawyer seeking help on a particular legal issue can consult a database to seek out the best possible expertise within the office. The relatively small size of the firm enables each lawyer to have intimate knowledge of other lawyers’ achievements. Regular retreats (up to two a year), parties and social gatherings sanctioned by the firm also promote teamwork as a cornerstone of the firm’s culture. Opportunities for socialising underline the need for every lawyer to take personal responsibility for promoting and highlighting their individual expertise within the firm.

It is worthwhile to note that some researchers (such as, Gottschalk and Terrett8) have suggested that lawyers are not noted for their team-based approaches to legal work or for their willingness to share their expertise, and that time spent sharing knowledge and experience is time spent not billing a client and garnering revenue for the firm. Acme Legal Associates provides an example of a fresh, invigorating culture that is emerging among law firms: one that emphasises growth through co-operation, and illuminates loyalty to the firm as a stepping stone to the success of not only individual lawyers, but the firm as a whole.

Redundancy as a tool to promote sharing of tacit expertise Redundancy, a term coined by Nonaka and Takeuchi, refers to the existence of information about business activities and management responsibilities that intentionally overlap, making the interchange between and across various levels of an organisation more effective.9 Redundancy allows people within an organisation, such as a law firm, to view available knowledge from different perspectives, thereby making tacit knowledge more explicit and speeding up the knowledge-creation process. Most associates, partners, students and trainee lawyers belong to at least two practice groups at Acme Legal associates. Each group meets regularly, sometimes on a weekly basis, to discuss issues related to their fields, which may include recent files that the lawyers might have worked on or aspects of law that arose during a transaction worthy of mention. Laura, who belongs to four different groups, speaks about how each member brings individual legal perspectives to a given group, and explains that the notion of adopting various legal lenses to a problem is encouraged within the firm’s culture. Laura believes very strongly that most of the knowledge-creation process occurs at these meetings, where differing, and sometimes opposing, views lead to brainstormed solutions to problems.

IT-based KM at Acme Legal Associates

As far as IT assets are concerned, Acme Legal Associates boasts a secure intranet system, within which lawyers conduct their communications and prepare documents for their individual transactions. The precedent-management system, DocsOpen, stores all documents that are created on the intranet, indexed by the author of the document, file number of the dossier being worked on, document title and type of document. DocsOpen is fully searchable by the above-mentioned indices and is accessible to all lawyers. Laura recognises the DocsOpen system as an important reference tool while working on her transactions. However, she is quick to mention that her first method of procuring information and gaining knowledge is by personally asking questions to lawyers who she believes might have an answer to her problems. She also points out that most lawyers don’t use the DocsOpen system when searching for precedents that are relevant to a specific file. The problem, according to Laura, is that DocsOpen does not index documents by keywords; the large size of the documents (the average size of an asset-purchase agreement can range from 80-200 pages) makes it inefficient to search out key terms and present areas in the document where that term was used. “Rather than waste time in searching for terms in a document using the ‘find’ feature in Word,” she says, “ I prefer to speak to the author of the document or a person whose expertise lies with that specific type of legal problem. That way I can get quicker answers to more specific questions. The problem with the system is that it does not interact with me and doesn’t give me answers to questions that arise from my searches for key terms.”

Oreos is a search engine for lawyers looking for key terms from research memoranda. It solves some of the problems that Laura faces with DocsOpen, but the use of Oreos is limited to research memoranda. There is a designated manager of the system, who retrieves all research memoranda from DocsOpen, which are already indexed on authorship, title and the dossier number attached to it. The manager appends a list of keywords that best describe the contents of the memorandum; this enables lawyers to search based on key terms. Laura commends the development of Oreos, and finds that, for specific research-related legal problems, the solutions are sometimes available through a search on the system.

The future of KM

We have examined the role of technologies in furthering the KM-related goals. Acme Legal Associates recognises that the mere existence of IT-enabled, ‘knowledge management’-christened systems does not guarantee the creation and transfer of knowledge at the most apt times, and in the appropriate situations. Organisations must look for methods through which they can motivate their personnel to partake in both knowledge generation and dissemination. Incentives might need to focus on changing the culture of the workplace and establishing new routines and procedures that require commitment from the members of the organisation before the new practice is adopted. Furthermore, new intellectual capital cannot be guaranteed with information technology in place. Variables associated with motivation, creativity, effect and personal beliefs will influence the value individuals place on any KM initiative, technology-based or otherwise. The role of IT is, therefore, seen as an enabler to the new age of knowledge-leveraged enterprises.

Firm culture here seems to play the most important role in determining how knowledge is created, shared and transferred. To harmonise resources, the firm facilitates regular opportunities for meetings within practice areas and industry-practice groups (that is, lawyers organised by clients as opposed to practice areas). The firm’s goal is to ensure that every lawyer has access to relevant materials that might be available within and across the Canadian and global offices. In order to enhance the already substantial collections of agreement precedents, firm memoranda, corporate forms and legal opinions, the firm is looking at ways to develop a specialised search engine for the DocsOpen system that houses all these documents. Laura explains that there are substantial gaps in the document collections, and areas that are well covered have suffered from neglect and require updating. She is also quick to accept that legal knowledge resources are only valuable if lawyers can access them in a simple and efficient fashion. Laura acknowledges the importance of establishing firm-wide intranets that span at least the two Canadian offices to significantly enhance access and usage of the available legal resources.

Law firms across Canada are making major investments in the management of both explicit and tacit knowledge. Recognising that KM is a critical element in business development, firms are devoting substantial resources to maintain their competitiveness and standards of practice. For example, some firms are beginning to develop teams of dedicated knowledge-management lawyers, devoted to building precedent collections and other legal resources.10 This reflects the perceived failure of traditional precedent-building systems that have been largely created and maintained by practising lawyers during their ‘spare time’. Acme Legal Associates’s KM committee should monitor the benefits and cost effectiveness of a variety of KM approaches to ensure their firm takes advantage of the experiences and lessons learnt by their competitors. As the firm grows, the KM committee might find that the promotion of a culture of reciprocity, expertise sharing and loyalty towards the growth of the firm might not be sufficient to transfer the necessary legal expertise when it is needed. Perhaps the next step could be to conduct an analysis of what kinds of services lawyers would need to be more productive and efficient – the role of IT might become more pronounced than is currently seen.

Vivek Venkatesh is a doctoral student in the educational technology programme
at Concordia University in Montreal, Canada. He can be contacted at vivek.venkatesh@education.concordia.ca

Steven Shaw is an associate professor in the educational technology programme
at Concordia University in Montreal, Canada.He can be contacted at
shaws@vax2.concordia.ca

References

1. The name of the law firm and the partner interviewed have been modified to preserve confidentiality

2. Nonaka, I. & Konno, N., ‘The concept of “Ba”: Building a foundation for knowledge creation’ in California Management Review (Haas School of Business, 1998)

3. Zack, M. H., ‘Developing a knowledge strategy’ in California Management Review (Haas School of Business, 1999)

4. See The National (Canadian Bar Association, vol.11, no.2, 2002)

5. Information related to the KM goals have been culled from confidential documents published by the firm’s KM committee

6. Blaauw, G. & Boersma, S. K. T., ‘The control of crucial knowledge’ in Khosrowpour, M. (Ed), Managing Information Technology Resources in the Next Millennium, (Idea Group Publishing, 1999

7. Brown, J. S., Collins, A., & Duguid, P., Situated cognition and the culture of learning in Educational Researcher, (American Educational Research Association, 1989)

8. Gottschalk, P., ‘Use of IT for knowledge management in law firms’ in The Journal of Information, Law and Technology (University of Warwick, 1999).

9. Nonaka, I. & Takeuchi, H., The Knowledge Creating Company: How Japanese Companies Create the Dynasties of Innovation (Oxford University Press, 1995)

10. See The National (Canadian Bar Association)