A world apart?

At least as much as any other industry, the legal sector is driven by knowledge, and law firms are beginning to recognise the importance of actively managing their most valuable asset. Yet attitudes towards knowledge management differ considerably between firms depending on the country in which they are based. Stuart Kay outlines the findings of a recent research project that sort to evaluate just how far apart US and UK firms are in terms of KM implementation.

Law is a knowledge-intensive industry. Fundamentally, the business that lawyers are in involves the sale of what they know.

There are numerous ways that knowledge can be defined. It can, for instance, be distinguished from data and information, where data is defined as raw facts and figures, and information is defined as structured or patterned data, or data that has been given some meaning by evaluation. In this context, knowledge could be defined as information plus the ability to use the information to act or innovate: knowledge is the ability to make things happen.

Lawyers use and produce a huge range of different types of information. They are highly skilled professionals with specialist expertise, which they use to help clients achieve solutions to their problems. At a basic level, legal information itself is a commodity that lawyers collate, manufacture and package for sale. Legal knowledge is used to procure, produce and manage legal work. Knowledge management in a law firm is about finding better ways to achieve these tasks. Its objective is to provide a source of competitive advantage.

Law firms are already sophisticated managers of knowledge. They have to be, as this is the nature of their business. In some respects they are therefore justified in thinking that ‘knowledge management’ is merely the latest fashionable term for describing their existing knowledge-sharing initiatives. However, most firms could significantly improve the way in which they manage their knowledge. Though knowledge is at the core of their business, it is surprising how many firms are resistant to investing in improving their collection, storage and dissemination capabilities.

There are many different views of what is encompassed by knowledge management. As one attorney at a law firm in the US put it, “Yeah, we do knowledge management – we’ve got InterAction.” A great number of organisations have InterAction (www.interfacesoftware.com) to help them manage client relationships, but software is of course only one component of knowledge management.

‘Knowledge’ at a law firm includes:

Knowledge of the law;
Knowledge about clients and their industries;
Marketing information;
Financial information (about clients and about the firm).

Those are the basics. The trick to implementing a successful knowledge-management strategy is to pull all of these elements together in a way that makes sense to the lawyers who are doing the transactional work. Not only does the KM solution have to make sense, it must improve productivity (to justify the cost of investing in knowledge-management systems), make lawyers’ jobs easier and perhaps also result in greater work satisfaction (by making lawyers more confident that their output is first rate). In a perfect world, a good knowledge-management system might even offer the opportunity of a better work/life balance to a practising lawyer.

Visiting Britain and the US

Gilbert + Tobin very generously sponsored me to undertake a study of knowledge-management systems among US and UK law firms in early 2002. The goal in visiting legal practices in the US and the UK was to attempt to identify best practice in knowledge management in firms in those countries, and also to identify what might be considered average or standard practice. I do not claim that the findings and observations in this paper are entirely representative, and the conclusions are mine alone, based on my views of what is good knowledge-management practice in a law firm. Hopefully, though, this article should at least offer some insight into the state of current practice among law firms in each country.

In the US, a range of law firms on both the east and west coasts were selected to be surveyed based on whether they met two or more of the following criteria:

Highly ranked in the American Lawyer ‘Tech Scorecard’;
A reputation for innovative thinking about technology or knowledge management;
More than one office nationally or globally (with the commensurate issues regarding knowledge sharing);
Recommended by an informed colleague.

UK firms were selected by reputation or recommendation by colleagues or both. All those selected have predominantly commercial, corporate and commercial litigation practices. Most, but not all, of the firms chosen are also global organisations. Part of the reason for this choice was that there is a greater need for implementation of KM strategies when people are geographically dispersed. In a small firm located in a single office in one city, a degree of knowledge sharing can be achieved by simply wandering into the office next door and having a conversation. This becomes more difficult as the locations, number of people and volume of corporate knowledge grow.

In total, 12 US firms and six UK firms were surveyed. Although most people interviewed were generous with their time and with sharing generalities about their knowledge systems, often they did not share practical details that may have been commercially sensitive. Clearly this will have impacted on the possibility of making specific conclusions, though not on the ability to develop some general theories about the state of knowledge management in the markets in which the surveyed firms operate.

General findings from the US

Many firms in the US are waiting for the killer app that will, in one swift installation, meet all their knowledge-sharing needs. This is, of course, highly unlikely to happen. It would require artificial intelligence of a degree of sophistication that is neither available nor imminent.

Of those US practices that are conscious of the fashion of calling knowledge-sharing initiatives ‘knowledge management’, few have given consideration to the potential scope of the discipline. Most have delegated, either expressly or by failing to take any action, the knowledge-management function to the information-technology director. This may be one of the reasons that the focus on knowledge management in the US is so strongly on technological solutions.

In many cases, US firms have talented people who are innovative thinkers as their de facto knowledge managers, but most firms haven’t given them the support they need to implement a fully fledged knowledge-management solution. In some cases this has, understandably, resulted in a degree of frustration on the part of the knowledge managers.

The technological approach neglects the people factor in KM systems and generally fails to recognise that knowledge is something more than information. Technology today can relatively easily gather, store and disseminate information – the wealth of material available on the internet is testimony to this. Consequently, a purely technology-based solution has a tendency to exacerbate the problem of information overload, thus overwhelming attorneys with more information than they can possibly use. Knowledge effectively remains locked in the heads of individual attorneys, as it is difficult for others to identify what is high-value information from the mass of information available to them. On the other hand, this approach does mean that there is a relatively high acceptance and visibility of technology in US law firms, which provides a solid foundation on which to build more sophisticated knowledge systems.

In a few cases it seems that US firms merely claim to be ‘doing’ knowledge management for marketing purposes (ie, without actually devoting any significant resources to the discipline). Similarly, only two are doing what could be called fulsome knowledge management, ie, as opposed to merely managing an aspect of knowledge (such as client information or documents), although a third firm has started on the process. Another three firms of those surveyed have given a great deal of thought to the scope of knowledge management, but haven’t yet taken any innovative steps to implement it. The remainder either haven’t given it much thought, are principally concerned with the marketing implications of being perceived to be doing or not doing it, or simply aren’t concerned about it at all.

Those US firms who aren’t particularly concerned about KM seem to hold the view that they would not achieve a significant return on investment from implementing knowledge management. This is a core problem facing knowledge managers in any law firm that relies on billable hours. Law firms in the US, UK and Australia charge for their time rather than for the value of their knowledge. While it may be argued that the value of a lawyer’s knowledge is built into their hourly rate, there is nevertheless an intrinsic disincentive to be efficient about managing knowledge with this system. The less well organised your knowledge is, the more time it will take you to customise it for a client, package it and sell it, and the more you can charge for it.

The tempering factor on this, however, is the market itself – if a competitor is turning around work more quickly (and therefore more cheaply), a lawyer must be able to match the competitor’s performance in order to remain a viable competitor. Yet if the market is not highly competitive by reason of, for example, imperfect knowledge of consumers, the disincentive towards efficiency through knowledge management will remain. This leaves a question over the efficiency and competitiveness of the legal-services market in the US, at least at the higher-value commercial end of that market.

US law firms lag behind the UK and Australia in terms of their conceptualisation of knowledge management. It would appear that the lack of innovative knowledge management in the US means that US firms are in some respects less efficient than Australian and UK practices in both knowledge sharing and, as a corollary, work production.

General findings from the UK

Many UK firms have been doing knowledge management (albeit often by another name) for many years. Linklaters, for instance, constituted its first knowledge-sharing committee in the 1960s. Consequently, knowledge management is a much more sophisticated concept in British firms than it is among their US peers.

Technology is less of a driver in the UK than it is in the US, and more of an enabler. Because British firms have been sharing knowledge more effectively for longer than those in the US, they initially developed more labour intensive, manual systems for doing so (especially prior to the availability of suitable technology). This means that knowledge systems in UK firms tend to be of high quality and to have high added value. The understanding of how technology can be utilised to get the most from knowledge-sharing systems is also more sophisticated in many British firms.

UK practices are more accepting of the labour-intensive filtering, classification and dissemination processes that are necessary to ensure that the knowledge that is shared is of high value. The corresponding business culture and processes are therefore well established. UK firms are instead looking for ways to improve these processes and make them more efficient through the optimal use of technology. British firms also recognise that there is currently no IT solution that will eliminate human input if quality in knowledge systems is to be assured.

Many leading UK firms have well developed precedents and know-how systems that are maintained by full-time professional support lawyers (PSLs), often senior lawyers (and in some cases partners) who are experts in their fields. The role of PSLs, depending on the firm and the practice group, may include the development of precedents, maintenance of know-how databases, filtering and dissemination of current awareness information, and training.

Though lawyers in each of the markets under consideration are relatively high consumers of technology, many of them are notoriously bad at using it. In some firms, PSLs are expected to have a higher than average understanding of technology (though this understanding may still not be particularly well developed in absolute terms). This is likely to impact upon the efficacy with which technology is utilised for knowledge dissemination.

Technology in UK firms is, on average, on a par with that in US firms and in some areas (for instance document assembly and delivery of online legal services) is superior. In contrast, mobile technology is better developed in the US than in the UK. It is not necessarily the technological products that differentiate US and UK firms, as many of those used are the same. Rather, the difference is in the way that they are used – UK firms generally employ them to greater effect.

The use of technology to deliver online legal services is an area in which UK firms are a long way ahead of their US counterparts. Online legal services have barely registered in the thoughts of US firms. For those US practices that have considered implementing online services, the litigation risk in the US market seems to be a significant disincentive.

Many of the UK-based global firms are also more concerned than their US counterparts with convergence and compatibility of technology. This may be because of their relatively greater experience of mergers with European and other international firms, and the integration and knowledge-sharing issues that arise as a consequence. In the larger UK firms, knowledge initiatives tend to be global, driven and informed by the experience of head office, which is usually based in London.

Significantly, most UK firms actively promote a knowledge-sharing culture. This may involve tangible rewards for knowledge sharing, or significant disincentives to hoarding, or both. For example, contributions to knowledge systems are, in some firms, a significant component of a lawyer’s assessment before they are invited join the partnership, and failure to use a current copy of a firm precedent has resulted in termination of employment in at least one firm.

In UK firms, knowledge management is more likely to be informed by a formal strategy that is actively supported and enforced by the partnership. The leading UK firms all have knowledge managers (by one name or another), most of whom are lawyers (rather than IT professionals). Direct legal experience is often a distinct advantage. However, one global firm employs a former management consultant as its knowledge manager and another employs a librarian – both are highly skilled, competent and successful in the KM role.

Summary of major differences between the US and the UK

The principal differences in knowledge-management adoption and attitudes between UK and US firms are summarised in figure 1. An important final observation on the differences between the two is that many British firms commenced knowledge-sharing initiatives before they turned into global mega-firms. Consequently, they are now able to build on the systems that were put in place. In contrast, US firms do not have this legacy of a knowledge-sharing culture. As a consequence, the task of attempting to build knowledge systems in a large firm is often overwhelming, which may be the reason so many US firms struggle to achieve any tangible degree of success.

UK	US
Reward a knowledge sharing culture	Individual attorney success promoted
Partner leadership	Lack of partner interest
Knowledge managers appointed	IT director is de facto knowledge manager
Knowledge-management strategy in place	No equivalent (with some exceptions)
Employ PSLs to develop knowledge systems	No equivalent (with some exceptions)
Leverage knowledge systems to train lawyers	No equivalent (with some exceptions)
Technology an enabler	Looking for the killer app that will ‘do’ KM
Value added precedents systems	Limited use of precedents
Well developed know-how systems	Manual transaction history capture (if any)
Some document assembly	Limited document assembly (if any)
Leverage knowledge to develop e-products	No e-products

Figure 1 - summary of principal differences between the UK and the US

Some brief observations on Australian firms

From our experience, the larger Australian practices tend to have more in common with UK firms than those based in the US. In terms of technology, the larger Australian firms are probably at a similar level to their British peers (though on a lesser scale) and in some cases may have a slight edge, for example in the document-assembly sphere. Both the Australian and the UK firms are ahead of the US-based firms in terms of leveraging technology for knowledge management.

Most of the larger Australian firms (for example, Blake Dawson Waldron, Freehill Hollingdale and Page, Mallesons Stephen Jaques, and Minter Ellison) have invested significantly in precedents and know-how systems, which are in turn supported by precedents lawyers (the predecessors of PSLs). Some of the medium-sized firms are also taking similar steps (for instance Gilbert + Tobin and Gadens). Similarly, and like their larger UK counterparts, a number of Australian firms are developing sophisticated systems for delivering online legal services. The firms that stand out in this area are Blake Dawson Waldron and Gilbert + Tobin.

A world apart?

Law firms operating in the US, the UK and Australia have been grappling with aspects of knowledge management for a long time. Leading firms have implemented systems to better manage portions of their knowledge. With the increasing recognition of the value of intellectual capital over recent years, there has been a corresponding growth in the vocabulary surrounding how to manage it. Law firms are now being challenged by the need to better manage their collective knowledge as an asset of their business. This has ramifications that touch most aspects of their operations. Some firms, particularly the leading UK firms, have embraced this challenge and are in the process of implementing comprehensive knowledge-management systems. Some firms, including leading Australian firms and a small number of leading US firms, are on the threshold of embarking on comprehensive knowledge-management programmes. Most legal practices, and particularly those in the US, are still coming to terms with the concept, however. The ultimate objective of knowledge management is increased competitive advantage, and those firms that succeed in doing KM well are likely to be the survivors in both their regional and the global marketplace.

Liability disclaimer

The material contained in this publication is general and is not intended as advice on any particular matter. No reader should act or fail to act on the basis of any material contained in this publication. Gilbert + Tobin and the author expressly disclaim all and any liability to any persons whatsoever in respect of anything done by any such person in reliance, whether in whole or in part, on this publication. The views expressed in this publication are not necessarily those of the firm or its clients.

Stuart Kay is knowledge manager for Gilbert + Tobin. He can be contacted at skay@gtlaw.com.au