KM legal: Trends 2007

Knowledge-management activities are now common to most firms, but how sophisticated are these initiatives and how far is IT a supporting factor in successful firm-wide knowledge sharing?

By Katya Linossi

There has been limited empirical and substantive research into knowledge management (KM) in UK law firms, particularly with regards to IT support for knowledge management within the legal sector. Most of the research, information and practice on KM focus on large organisations and there is a lack of empirical research focusing on KM in small and medium-sized enterprises. However, small and medium-sized law firms can benefit just as much from the underlying tools and techniques of KM.

The purpose of this article is to understand KM and, more specifically, the critical success factors for KM in UK law firms. Primary research has been conducted to understand the use of technology to support knowledge management, as well as how the culture and style of small and medium-sized law firms can affect knowledge-management initiatives.

Research method
The primary research activities involved a quantitative survey and a series of semi-structured interviews with three law firms.

Survey
Out of 149 possible respondents, 34 completed the online survey, providing a response rate of 23 per cent. Seventeen respondents from the top-100 law firms completed the survey, as well as 17 respondents from smaller firms (composed of top 100 to 500 firms and small law firms).

Case study
Three law firms were studied so as to allow for cross-case analysis and richer theory building. Two of the firms are ranked within the top 100 to 500 law firms and the third is a medium-sized firm. These firms therefore provide an opportunity to examine the variations that might occur between them.

Findings: Knowledge management and the legal sector
The research indicates that most law firms have tried some form of knowledge management. KM efforts can vary from a database of precedents stored on a network drive to a full-blown KM collection and retrieval tool.

Law firms agree that there are tremendous improvements in client service and competitive advantages to be gained if KM is implemented successfully. In fact, respondents from the survey believe that the most important objectives of KM are to provide a better client service, enable the capture and sharing of knowledge assets across the firm, and to enable employees to gain knowledge when it is required.

However, managing knowledge is challenging in a law-firm context.

Use of IT for knowledge management
The results from the survey indicate that e-mail is the most popular application and it is used to a great extent by all law firms. Practice-management systems, databases with precedents and client cases are also used to a great extent. Therefore, IT still plays an important role in law-firm knowledge-management efforts, especially for the larger law firms. However, the divide between the top 100 and SMFs was not as great as one would have expected. The one reason could be due to the wider availability of cost-effective ASP solutions.

Top-100 law firms have sophisticated tools and systems in place for KM and therefore solicitors in these firms use their intranet and KM system more extensively than SMFs.

The majority of respondents believe that the primary trigger for IT in KM is the firm’s needs and that the principal contribution that IT has to knowledge management, is to improve the effectiveness of the firm. Culture and incentives to share knowledge is the most critical success factor for IT in knowledge management. This indicates the dependence on both an organisational culture that has to be inspired and personal incentives that are necessary to create an active environment of knowledge sharing.

Furthermore, the results for the case study firms, confirm findings that IT can be used as a predictor of support for KM technology since both firms use IT to a larger extent. These firms are also using technology as a driver of change.

Knowledge-sharing perceptions
Despite the slight differences in the use of IT, there is a difference between the way that top-100 firms and SMFs perceive knowledge management. The results for the knowledge-sharing perceptions demonstrate a greater divide.

The most noticeable difference is that SMFs do not perceive that they have a well-organised system for sharing knowledge within and across their practice areas. The question was rather broad and so one can perhaps assume that either knowledge sharing does not occur in SMFs or it does occur to a certain degree, but in an informal and non-systematic manner. A further reason could be due to some practice areas only consisting of one solicitor, so it makes sense that there is no well-organised system.

Similar to the results from Hunter et al’s (2002) study, within-department sharing is present in many of the top law firms, but it is significantly lower across different departments. The results for the SMFs is particularly interesting since only 24 per cent of the respondents believe that their firm has systems for sharing knowledge within departments. This is substantiated by the case-study findings, where either these firms do not have formal strategies or systems in place for KM, or else they are in the process of implementing such systems.

Overall, solicitors in both the top-100 firms and SMFs rarely share their knowledge with colleagues outside of their department, senior staff members are seen by 48 per cent of respondents to be too busy to reflect on their experience and, most importantly, only 18 per cent of respondents believe that knowledge sharing is systematically part of the firm’s culture. One can conclude that the perceptions of top-100 staff members are not completely congruent with the progress that previous studies indicate in terms of KM initiatives (Terret 1998; Web, 1999; Kay, 2002). In addition, even though SMFs may not be able to invest in expensive IT infrastructure or employ dedicated PSLs, it appears that knowledge is not even effectively collected and shared among employees on something as simple as a network folder.

Critical success factors
Results from the survey also demonstrate that both the top 100 and SMFs do not believe that sharing knowledge is part of the firm’s culture. Respondents felt that the most critical success factor for IT in KM is culture and incentives to share knowledge. Technology can therefore contribute to cultural changes but essentially, KM is only partly about technology.

Some further factors that law firms should consider are:

The appropriate KM tools, techniques and technology. Which tools will work best to meet the firm’s needs? Is the necessary technology compatible with the firm’s existing systems and strategy? Are the techniques easy to understand and simple to use?
The measurements for determining success. How will the firm determine if KM has increased efficiency and effectiveness of service?
Providing the appropriate roles and responsibilities – for example, the person or committee responsible for launching KM. Also identify how often the KM manager or KM committee will report to the firm’s management and what information will be reported;
Determine the processes, activities and training requirements necessary to make sure that KM is successfully implemented.

Culture
As demonstrated by existing KM literature and the research, KM is best practised in situations that are collaborative and team-oriented. A firm culture where solicitors are stimulated to cooperate with each other, where knowledge transfer between solicitors is rewarded, where success is dependent on knowledge sharing and where time is allocated to knowledge sharing, will lead to a greater extent of IT use to generate, access, transfer, share and codify knowledge.

The case-study firms have an organisational culture that understands and values knowledge management. In addition, these firms understand their own culture and they are supporting it with the appropriate technology and changes. Firm A has communicated the value of knowledge management to employees by involving them in the decision-making process and plans for implementing a knowledge portal solution. KM therefore needs the involvement of everyone in the firm and not just specialist knowledge workers.

Some further tactics commonly used for managing cultural barriers include:

Commitment to knowledge management;
Changing the organisational structure. This includes providing a group that has responsibility for KM, establishing new roles, skills and relationships, as well as creating the visible, senior level role of a chief knowledge officer (CKO) or equivalent. Managers also need to motivate employees to create, share and use knowledge;
Building trust;
Knowledge-sharing incentives.This topic was not explored in the primary research, but it is important to mention. Although many firms are focused on developing their solicitors and encouraging collaboration, the profession’s ongoing reliance on time-based billing can halter many initiatives. To overcome this, some changes are necessary so that either a firm requires fee earners to accumulate a minimum amount of non-billable time in areas of knowledge and professional development or else contributions to knowledge management are recognised in appraisals.

Style
The issue in the legal sector is getting management to recognise the value and importance of KM.

The results for firm B showed that SMEs often acknowledge that adequately capturing, storing, sharing and disseminating knowledge can lead to greater innovation and productivity. However, management was not always prepared to invest the relatively high effort for long-term knowledge-management goals. Thus, knowledge-management activity tends to happen in an informal way, rarely supported by purposely designed IT systems. Firm B has much to gain from developing effective KM systems but they first need to address the culture and structure of the firm. Management may understand knowledge management from a theoretical viewpoint. However, they need to develop their understanding of KM as a key business driver rather than a resource-intensive initiative.

Top management’s commitment to knowledge management is very important. Resistance to change is a barrier which can be difficult to overcome unless the change is endorsed and led by top management. A push from top management would help firm B better manage their knowledge. However, this is complicated because the firm’s power is spread among 44 partners, with different speciality areas, different work and management styles, and vastly different groups under their control. Earning a consensus is not easy especially since there is no specific person or group within the firm that has been assigned the knowledge-management task.

The success or failure of a law-firm KM initiative is not assured by technology alone but rather by the behaviour of the solicitors and the partners. Firm A and C demonstrate that management support and leadership are essential elements to progress their KM initiatives and to get solicitors to adapt to a knowledge culture. These firms also have a progressive attitude and proactive management style. They recognise that to stay competitive, they must adopt new systems and procedures but at the same time they have to carefully plan before making dramatic changes.

Structure and strategy
Even though the purpose of the explorative study was to focus on culture, it became apparent in the interviews that structure and strategy were also important. There are apparent differences in the focus of management responsibility and organisational structure in all three firms. Firm C’s organisational change impacted the patterns of responsibility and the firm’s strategic direction. This, in turn, created a team that is responsible for its strategic IT direction, but also knowledge management.

Restructuring the traditional partnership model to reflect other businesses has been a growing trend among some of the law firms, so that they become more flexible. Just as other industries are bringing in practices and technologies to support organisational disciplines such as CRM, business process management and marketing, the legal sector should be doing the same.

Summary of main findings
IT still plays an important role in law-firm knowledge-management efforts, especially for the larger law firms. The use of IT to support knowledge management differs between top-100 law firms and small to medium-sized law firms, however, not as significantly as indicated in previous studies.

The top-100 law firms do, however, have more sophisticated tools and systems in place, specifically with regards to intranet and knowledge-management systems.

Small to medium-sized law firms that use IT to a large extent, were found to use IT for knowledge management as well. Managing knowledge is challenging in a law-firm context, especially for small to medium-sized firms.

In fact, very few of the respondents believe that knowledge sharing is part of their firm’s culture. The greatest challenges are related to creating the right culture, organisational structure, strategy and use of technology.

It is apparent that law-firm culture has the most significant effect on the implementation of knowledge-management initiatives. Knowledge-management initiatives should therefore either fit within the existing culture of the firm or the culture needs to be changed. Knowledge-supportive organisational culture needs to promote free flow of information among employees across organisational hierarchies, cultivate trust for knowledge sharing, as well as align organisational structure, strategy and use of technology.

The case-study firms provide good examples of a two-pronged approach of technological and cultural changes. These firms understand their own culture and support it with the appropriate technology and required changes, thereby ensuring that knowledge management will take root. However, the change needs to be introduced carefully, cautiously and in a structured manner.

The significant role of leadership and management support is also demonstrated in terms of moulding the knowledge supporting organisational culture. This, in turn, will stimulate knowledge-management initiatives.

Katya Linossi is a consultant at ClearPeople. She can be contacted at klinossi@clearpeople.com