In the current recession, managing partners have a great opportunity to overhaul their information and knowledge-management functions for long-term growth and profitability. To succeed will require addressing critical information and knowledge-management issues, but the results will fundamentally re-shape legal business creating the profitable next-generation law firm.
It is implicit in this approach that, once the unique aspects of knowledge management have been identified, action is taken to resource non-core but necessary tasks as cost effectively as possible. This may mean an outsourced solution or that the firm accepts standardised products, bought ‘off the shelf ', for day-today knowledge requirements to a far greater extent than is currently the case.
Central to this debate and decision-making process is a clear understanding of which elements of the knowledge-management communities' work in the firm involves the creation of unique knowledge or processes that provide the firm with a competitive advantage. To be salient, three criteria need to be met:
- Value creation for the client;
- Building economic advantage for the firm by either improving efficiency (i.e. reducing costs) or giving pricing advantages;
- Being difficult for competitors to imitate in short-order, i.e. the advantage is resilient justifying the investment required for its creation.
An honest assessment is required of how much time is spent ‘turning the handle' on the precedent or practice-note machine creating content that is fundamentally the same as that generated by competitor firms. Indeed, it should be recognised and accepted that the very process by which firms exchange knowledge during their normal course of business, the highly regulated nature of the profession and the common standards that are adopted by leading firms all drive towards the standardisation of this generic documentation.
When discussing issues such as these with managing partners, I have a rule of thumb that well over 90 per cent of the knowledge contained in such systems is fundamentally generic. It is the same core knowledge that resides in the identical systems of peer-group competitors; that's not to say that the wording or the detail is the same but the purpose and the result most certainly is. Why is such a lot of time being spent managing what is common across all firms rather than being focused on, first, developing the small percentage of knowledge that is unique and valuable and, second, then moving on to innovate in new areas that will create a competitive advantage for the firm?
Another question that must be addressed is one of capability. How well equipped is the average member of the knowledge-management team to think outside the box and rise to the challenge of creating innovative knowledge? Indeed how many would have the appetite and be prepared to move outside their current comfort zone to address issues such as this?
We should be clear that market forces cannot be resisted – IT will continue to systemise the creation and delivery of legal services, external providers will look to increase their market penetration into those components of legal knowledge that can be standardised and offer them as outsourced services. Both bars will be inevitably and inexorably raised over time.
The picture of the future that is painted here is a fantastic opportunity for those with vision and ambition; the future for them is bright. Gone are the days of endless drudgery, maintaining huge administrative systems. That joyful task will reside with focused outsourcers who have the infrastructure and capacity to deliver economic value to these elements of knowledge management.
In this new world, firms need to rise to the knowledge-management opportunities and challenges that present themselves and reposition the knowledge-management professional's role as a strategic one. This will mean grasping the advantages provided by outsourcing in its many guises rather than resisting it like modern-day luddites. Indeed a coalition of interests exists between the in-house knowledge team and the external provider. Each party provides a key part of the firm's overall knowledge tapestry and benefits from the synergies created by their different, complementary and aligned roles.
Published in 'Legal information in a recession: A restructuring opportunity