Reaping growth

Law firms are regularly leaking intellectual capital, say David Griffiths and Brian Moon

 

Does your firm know what you know? Does the firm know what it knows as a whole? What are the consequences of not knowing? How valuable is your expertise? Does this have anything to do with knowledge management? It should.

Reality tells us that firms leak knowledge or expertise every year, regardless of the economic environment. The fact is that firms are faced with a problem. The wealth of expertise or experience, and therefore competitive advantage, resides within high performers – what we might call ‘franchise experts’. Many firms experience a trauma when franchise experts retire or, worse still, are lost to competitors.

KM functions should be acknowledging this challenge, scenario planning for it and responding with tactical knowledge retention solutions that protect the needs of the firm, minimising risks to decision-making capability, operational lags, client satisfaction and competitive advantage.

Knowledge, in this instance, is about how best to apply the law and how to most efficiently operate the firm. This specialist expertise resides with the individual and separates one firm from another by reputation and competitive advantage.

KM should be about the development of processes that align the needs of the individual and his expertise with the needs of the organisation in a way that optimises the firm’s competitive edge. This is about the ability of the firm’s knowledge manager to engage and motivate people in knowledge capture, sharing, use and development processes.

For example, a core KM competency should be mapping expertise and knowledge within the firm. Where is it located, what does its footprint look like, is it discrete or widespread and what knowledge resides behind expertise?

Once the knowledge and expertise has been mapped, firms can start to discuss what can be captured and how best to capture it. What is portable, in that it can be written down and stored, and what is deeply embedded within the individual, where it can only be shared through interaction with other people?

Knowledge that can readily be recorded is perhaps better described as information. It is the enabling of that information, or, in terms of law firms, the application of the law and legal practice through the actions of people, which develops knowledge.

The skill of applying and developing knowledge of the law and practice, the act of knowing, brings about the expertise firms crave. KM skills, therefore, should lie chiefly in developing capture processes that embed that knowledge and expertise within the wider firm.

This means resources must be applied to identify both the franchise experts and their potential succession pool, as well as to their ongoing engagement in knowledge transfer activities. These should certainly include a robust programme for knowledge elicitation and continuous action learning or active problem-solving groups.

 

Lack of focus

Findings from the University of Edinburgh’s global KM survey1 suggest that this might not be happening, however.

The first issue for any firm has to be how KM is defined and, from there, how it is communicated and managed through strategy and operational planning. One of the potential problems for law firms is the perception that KM is about information management. This does not align with the strategic needs of the firm and could be a critical issue for KM moving forward.

This is reflected in the perception of satisfaction when discussing the strategic contribution of KM to the firm. Only 12 per cent of respondents were ‘satisfied’ or ‘highly satisfied’ with the strategic performance of KM in their firms.

This is not an issue solely for law firms, though it does appear to be greatly amplified, with satisfaction being only 28 per cent across all sectors and geographic locations.

In drilling down into the potential drivers for this dissatisfaction, the common responses from respondents within law firms were as follows:

• “poor understanding of what KM is”;
• “there is no strategy”;
• “no time to work on KM”;
• “we are too focused on IT solutions”; and
• “we don’t measure performance, so we don’t know if we’re doing a good job. People then think we’re doing a bad job, but there is no strategy!”

The view of KM as an information management or techno-centric solution is perhaps reflected in the background of the people doing the job. Only 39 per cent of respondents claim to hold a KM qualification. Those that say they do hold one state that their qualifications are based in library and information science and information technology. In addition, of the 61 per cent who do not claim to hold a KM qualification, only 18 per cent are working towards a qualification.

The question is whether this meets the needs of law firms in responding to their current challenges. What is also interesting is that only 36 per cent of respondents are either ‘satisfied’ or ‘highly satisfied’ with knowledge-capture or storing process within their firms.

Thirty-two per cent of the law firm respondents state that their firms define knowledge in terms of their operations; this is in comparison to 41 per cent across other sectors and geographic locations. The question is: how can a firm manage what it does not define?

Compounding this problem is that only 26 per cent of firms communicate that definition, compared with 38 per cent in other sectors. Again, if people are to contribute to the firm’s strategic or operational knowledge needs, then it would seem fair to conclude that there is a need to capture and transfer what it is that people should be contributing, such as know-what, know-how, know-why, know-who, know-when and know-where.

Only 43 per cent of responding law firms reflect knowledge needs in their strategic plans, compared with 60 per cent across wider knowledge-intensive sectors. If it is true that the expertise that brings competitive advantage to a firm resides within its people, then it is logical to suggest that the firm’s knowledge needs should be reflected in HR policies and procedures.

However, only 18 per cent of law firm respondents say that knowledge needs are visible in HR policies, 16 per cent note that it is evident in pay and reward schemes and 14 per cent claim that knowledge needs are surfaced in appraisal processes.

 

Action needed

There is clearly a lack of satisfaction when it comes to KM activity. However, the need to capture, re-use, share and develop knowledge is a very real and enduring one.

What is also evident is that there is a need for a greater focus on strategic drivers and the tactical response within firms. To enable this, there is an apparent need to review current KM practices and expertise, in particular whether professional development is provided to scaffold practice and further develop the capabilities of staff to respond to the firm’s strategic and operational demands.

One of the key areas for development is in the field of expertise mapping and knowledge elicitation. This is a skill in itself and the survey suggests that it is perhaps not being acknowledged within law firms.

Not ironically, many of the skills that mark a skilled knowledge elicitor are also highly prized in legal practice, for example during depositions. These include a capacity for structuring an interview process and asking probing questions on-the-fly as detailed information emerges. Developing knowledge elicitation skills can create value beyond a KM function.

Another critical issue is the need to transition KM from the realms of information and IT processes into partnerships that include HR specialists. By improving KM practices, the firm can protect its competitive advantage and minimise risks to its decision-making capability and client satisfaction levels.

 

david@theknowledgecore.com; brian@perigeantechnologies.com

 

Endnote

1 The 2011 Knowledge Management Observatory survey received 354 responses from 58 countries. Of these responses, approximately 16 per cent were from law firms, with representation from the US, UK, Australia, India and France.